Boutiques, experienced typically handling exotic strategies, not kids doing data entry; you can get the donut clerks for a fraction. But with seat prices tanking, soon we will be left with only the donut clerks.
metooxx, you say the hard cost of options is .20 per contract. Does that include the cost of manually handled orders and cancel fees? I'm told that on manually handled orders IB actually loses money.
No, exchange, OCC, etc. No, cancel fees, however the only firm I ever hear about paying the cancel fee is SLK. I would think a firm like IB has enough pure retail business to meet the ratio. Creative accounting on manually handled orders I would assume; their infrastructure is already there, but you can allocate expenses where ever you want.
I was told that IB was facing large fees when orders were handled manually at some Exchanges. And this is the main reason why option commissions are high. They implied that the infrastructure was not on the floor and they were facing charges larger than their commission rates. It sounded like they were using "other brokers". I could be wrong on this............
That is not what I taught you were talking about; there was some talk about charges for manually handled orders @ some of the exchanges, I don't remember the particulars, the only one I ever heard that from was SLK. I will check into it and let you know. My vague memory was it was another fee directed @ professional traders with similar structure to the cancel fees.
options brokerage should be lower. consider the fact that market makers have been paying for order flow for the past 2 years. although most don`t pay as much as they used to, i do know that knight is paying 1 dollar per contract on the pacific for qqq. how much of that is really going back to investors. my guess is zero.
ok you win ----> ask and you shall receive. Do not give credit to me though, give credit to guys like mskl who prepared and sent convincing info to our chairman. starting april 15th, IB's options commissions will be $1 per contract (all included).