Interactive Brokers new commission structure

Discussion in 'Retail Brokers' started by Copernicus, Jan 14, 2006.

  1. i'm not a retail trader but this is better than 90% of prop firms offer now.

    Incremental Shares Fee per Share
    First 300,000 $0.0035
    300,001-3,000,000 $0.0020
    3,000,0001-20,000,000 $0.0015
    20,000,001+ $0.0010
  2. I respectfully disagree. When IB starts offering a PER ORDER commissions structure with ECN pass-through to the client, it will start being competetive with other brokers and prop firms who offer PER ORDER commission. I dont know what prop firms you're referring to, but this commission structure is still a PER SHARE commission as opposed to a PER ORDER commission, and for high volume add-liquidity traders, IB's new structure really fails to compete with the likes of RML, Genesis, Choicetrade, and others who offer a PER ORDER commission and pass-through ECN fees/rebates.

    Comparing adding liquidity trades: with IB's new unbundled structure which charges a starting $0.0035 per share commission to a fixed per-order commission charged by Choicetrade for example ($5 per trade), we can see that the fixed per-order structure used by Choicetrade is better for larger trade sizes (1500 shares and over). If we assume that trade size ranges from 100-5000 shares as below, IB's per share pricing costs a total of $192.55 for all the trades while Choicetrade's fixed per order pricing costs a total of $-5 (ie costs nothing to make all the trades!). Please correct me if im wrong in my analysis. RML, Choicetrade, Genesis, and others do offer it, so why doesnt IB offer a fixed per-order pricing with ECN passthrough pricing also?

    Formulas used:

    Assumed typical $0.002 ECN rebate per share

    Choicetrade commission= 5-(Shares*0.002)
    IB commission = max(0.7, Shares*(0.0035-0.002))


    Choicetrade total commission = $-5 ($5 rebate)
    IB total commission = $192.55
  3. on a straight per share basis, these are good rates.
    usually at a prop you would be looking at, 0.005 at least trading only 300k
  4. Norm


    Could someone please explain what bundled and unbundled mean?
  5. Thanks for your comments..Are you taking into consideration the ECN rebates/charges that have to be added?

    IB still doesnt offer a PER ORDER commission rate while its competitors do. The per share rate of 0.0035 cannot be looked at in a vacuum because we have to add in ECN charges/rebates:

    If youre adding liquidity, IB's per share unbundled commission can never beat Choicetrade/RML/Genesis's PER ORDER commission structure, as shown in my previous post.

    If you're taking away liquidity, and we add 0.003 standard ECN charge to IB's 0.0035 PER SHARE commission, we have:

    0.0035 + 0.003 = 0.0065 per share

    Whether this 0.0065 per share total IB commission for taking liquidity is competetive with other prop firms is entirely possible.

    BUT for adding liquidity its clear that a PER SHARE commission structure can never beat a PER ORDER commission structure.

    My point is the new unbundled structure at IB has done nothing to attract volume traders who most often add liquidity. Hopefully IB will consider offering an unbundled PER ORDER commission structure in the near future to capture those add-liquidity traders too.
  6. The total commission you pay can be broken down into several components:

    1. Broker's commission
    2. ECN rebates/charges
    3. SEC/NASD/other fees

    A bundled commission structure means the broker will charge you an all-inclusive rate which covers all those components.

    An unbundled commission structure means that the commission is split into its components and you have to pay each separately. The second component (ECN rebates/charges) is variable and is affected by whether you use limit orders away from the market price and wait for someone to trade with your order or whether you aggressively trade with other orders at or through the market price.

    eg in IB's case, you can choose a bundled structure of 0.005 per share (which includes everything, a bottomline commission) OR you can choose an unbundled structure which starts off as: 0.0035 per share plus ECN charges plus SEC/NASD/other fees minus ECN rebates. So depending on your trading style, either the bundled or unbundled structure will result in a lower commission

  7. i'm not in the rebate game, thats why per share basis its a great rate.
  8. Ok, thats good, but even so, I dont know if 0.0035 per share is a great rate as far as per share rates are concerned...ive read otherwise on this forum:

    Can anyone confirm or refute whether $0.002 per share is a rate that many people can get at other prop firms like Genesis as claimed in the link above...What about per order pricing? Is $2.50 per order with ECN pass-thru a good rate? Maybe we can have an anonymous poll about what rates people are getting with ECN pass thru (both per share and per order) and take a head count...but i dont know how to set up those polls on ET..somehow we would have to take into account how much volume the person is doing too..or we can just take a poll for the "starting" commission ( ie 0.0035 per share for IB)
  9. yes when i said pretty much anyone can get .002 with genesis i'm talking about doing 15-20k a day vol which is small. but remember genesis has a $200 amonth software fee and they charge another .0005 per order for nyse. also i should have quanified that and said with bigger prop firms like assent,bright and echo you're not getting under .003 unless you're doing some good vol and rarely ever seen .002 with these big prop firms so if you're trading nyse its .0025 per share. for 300k or more vol ib is .002 with no software fee or nyse fee so ib for little or no vol is a great deal. the problem with ib there trading platform is very cumbersome trading big vol as for limit orders you msut have many lines under each quote which is tough. anyone trading naz taking liquidity the .005 all in no sec fee is a great rate and beats a straight .0025 plus or minus ecn's for a liquidity taker

  10. there is no way that you will get 0.0035 anywhere trading only 300k a month.
    #10     Jan 15, 2006