Today I saw a higher than expected commission at an option trade that executed at the Boston Option Exchange.
I expected a rebate of $0.45 per contract (as I clearly added liquidity) but instead got an additional fee of $0.65 per contract. The IB site actually shows that this is true, but I thought they made an error on the site:
But the BOX site confirms the fees on the IB site:
So the question: why you have to pay for adding liquidity at BOX while normally (on any other exchange I know) you get a rebate for this (as adding liquidity is generally seen as "good")?
It's all supply and demand. In instruments that have tight bid-offer spread providing liquidity is paid for. In instruments that have a wide bid-offer spread (like most options) liquidity providers are plenty. So, an exchange pays for taking liquidity.
Also a few exchanges are trying to differenciate themselves by providing an unusual rebate structure.
The trick with IB is if a trader opts out of "smart routing", which has potential of sending trades to the exchange from which IB as a broker gets the highest rebates, IB commission often grows by an order of magnitude.