It is unfair to single out IB regarding this issue. The vague definition of "best execution" insures it is open season for "not too blatant" customer fleecing. Unfortunately the root of the problem is so to speak "in your face", embedded in the very word "broker-dealer". For as long as a broker can be a dealer, or accept payment for order flow from a dealer there is nothing you can do about it. Best to think of it as a cost of doing business.
TH DOES NOT INTERNALIZE CLIENT FLOW FOR US EQUITIES - PERIOD. Just because other brokers do does not mean all choose to do so. Our clients know how good their fills are, our clients see where their orders are executed and our clients are benefiting from the greatest price improvement amongst all the major brokers. Can it be stated more clearly than that? Your second paragraph doesn't jive with best execution. But I'll run with that anyway. In IDEALPRO - (FX) IB clients can trade with other IB clients as client orders become part of the book. But execution is determined by routing to the best price. This includes the IB client quotes along with the other 10-15 other liquidity providers who combined often form a market that is often 1/2 to 1 pip wide for many of the majors. If you guys (and I know some posting on this topic are competitors) are looking for a conspiracy or somewhere to knock IB down, this is not your optimal target. Best execution is the core of IB's business model and it is taken very seriously at all levels.
Yet your own company's Web site states precisely the contrary -- or at least it did, up until today. The FAQ on Timber Hill's auto-execuition was just taken down after I posted the link to it. Interesting, to say the least. http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php Fortunately, Google's cache still has it: That is internalization, to the letter. Are you still going to deny this? Or did IB's policy of internalizing against its clients trades (as per its own FAQ, up until June 17) change? Just today? I think that any high-volume trader would be reckless to trade with IB, unless they were VERY careful about monitoring their own executions. Even then, I'd have my doubts, because it's so easy to silently lose a few cents/share of what would have been the true best execution, which isn't really even knowable unless you send the order to a real exchange.
It was taken down since TH no longer provides any quotes to IB for US equities and was thus incorrect. That has been the case for some time. Look, you apparently have an axe to grind. Believe what you want. I've stated our focus on providing best execution. You're a naysayer so I challenge you to go side by side with IB with your broker and post who has the better fills. I'm confident IB will come out on top.
12 hours ago I found the linked document just useful info... nothing criminal in it... till some big shot at Interactive Brokers proved me wrong by ordering to take it down. I saved a copy of the linked Web-page and after skimming through it I don't see any reference to quotes provided by Timber Hill. Even if there was a reference to quotes, wasn't it just a minor omission that could be edited out instead of taking down the whole page full of useful info? Anyways, the page read:
There is no Axe to grind and where is your proof You are not providing any proof only your words. Why should we trust you? Very suspicious that just now IB took down/changed the site when this came out on ET. And for all we know IB still does it
When IB changed the last traded execution definition and never fully explained why IB is the only broker that needed to do it. And it caused greater slippage. Now I know it is to feed Timber Hill My honest message to IB, greed will destroy you in the long run if you let it slip out of control Maybe though short term CEOs understand all that and just want to make a quick buck and crash the company, as in like who cares I got my money
So I have an "ax to grind" because I point out that what you say contradicts what IB's own web sites says (or said, up until yesterday)? Or that represents a "conspiracy theory" or that I'm a competitor? You're right about one thing, in a sense -- as short-term traders, many of us are competitors to IBKR. I am a trader, and Timber Hill is also a trader, and therefore my competition, which (factoring out the brokerage) is fine. However, I think that any trader who now uses IB is being foolish, as they're sending their orders to their competitor, who may or may not trade against their position (depending on whether we choose to believe you or IB's just-deleted Web page -- and if IB/Timber Hill really did quitely change their policy on this, why can't it just quietly change it back?). Any way you slice it, IB's stucture has the potential for conflict of interest, unless Timber Hill is completely split off from the brokerage side. And this thread, in and of itself, proves quite a bit to anyone who's informed enough to realize what the issues with internalization really are.