I don't agree that option spreads offer the highest rebate in PFOF, but let's put that aside. I'd rather have my option order placed on an option exchange COB to allow all market makers and customers to have the ability to trade with me. That would be my preference. Price discovery is most important to me. Are you sure your IB orders are not routed to a DMM where they get PFOF?
Unless I'm mistaken, the only payments that IB receives are liquidity rebates from Exchanges. And, if you suspect that IB only routes your orders to exchanges paying the highest rebates, then you have the option to route wherever you want. I'm not sure that any other retail firm gives customers that same latitude. I would guess that if a Tasty customer (or, TOS or RH etal) checked their statement, they'd notice that virtually none of their option spreads were executed on an actual Exchange.
Semantics. https://www.interactivebrokers.com/en/index.php?f=563 P4. They get paid by Market Makers to route orders to them. They just use their own routes not a third party.
This was very helpful, thanks for the link. I thought I had remembered seeing this somewhere, but couldn't find it. What's interesting was IB said it wasn't possible to direct a spread when I called them. I wonder if they will still potentially hold the spread if you send it as a directed order.
All stock options trades that a retail customer makes on TOS, RH or Tasty are executed on a listed exchange. They may be shopped elsewhere, but they will be executed on an exchange. This is not to say large players may make off exchange option trades, for example Goldman may enter into a specific option arrangement with a customer.
Correct except the are are a few option dark pools and some are based on a RFQ. Printing the trade on an option exchange is easy, but the trade was agreed to pending exchange reporting.
Then, why do the Rule 606 disclosures from the heavy discount brokerages show a majority of orders routed to Citadel, Virtu etal?