Radical IB suggestin - Please vote

Discussion in 'Retail Brokers' started by nitro, Sep 22, 2002.

  1. nitro

    nitro

    I think that IB would rule the world if they rebated traders comissons based on their monthly volume, as long as the shares were executed on TMBR.

    Say for example the following schedule:

    > 100K shares traded per month - get back 10% of your comission rebated
    > 200K shares traded per month - get back 11% of your comission rebated
    > 500K shares traded per month - get back 20% of your comission rebated
    ...
    >1M shares traded per month - get back 50% of your comission rebated

    And so on. The idea is that what IB lost in comissions, it would make back in it's proprietary trading - since it's own traders (IB traders) are adding liquidity to trade "against," that should theoretically be good for them.

    If you look at the breakdown of what IB makes versus what Timber makes, the breakdown in profits is something like 25M for IB, 475M for Timber. Seems like a good strategy for them and a good strategy for us.

    What do you think? Vote on it.
     
  2. def

    def Interactive Brokers

    LOL, we've got the lowest commissions in the industry and you're still squeezing us :)

    A trade with TMBR on the other side does not mean TMBR is making money on the trade.
     
  3. TMBR doesn't need to make money on the trade either, they just need to LOSE LESS than the commission cost, which they get to pocket.

    Honestly, the idea that they openly trade against their customers providing them more liquidity (and Im sure making some extra $$ on the deal), I think is just brilliant. Those people at Timber/IB are some smart MFers!
     
  4. If your trading the volumes of 100K + per month, your profits, in theory, should be such that having IB rebate some of your commissions would be of no real significance. They are already as cheap as it can get. I'd rather pay what we are already paying and have IB invest in its people and systems.
     

  5. You don't have the lowest commissions.
    :p comon your killing me!
     
  6. def

    def Interactive Brokers

    name a retail broker with a lower commission schedule across all product ranges.
     
  7. nitro

    nitro

    Wha?

    Do you daytrade for a living? I don't know about the rest of you, but for every penny I spend on comission (thru IB) I make 1.2 to 1.5 cents. So, If I reduce my comission by 1/10 of a penny, that's like getting nearly a 10% raise without doing a thing! For every 1/10 of a penny a share that my comission gets reduced, I make approximately an extra 10%. So if I make 120K a year, reducing my commissions by 3/10 of a penny will net me approx another 25k a year....

    nitro
     
  8. Yep. I can second that. :D
     
  9. nitro

    nitro

    True def, but I assume that TMBR would have a reason to offer or bid where it does - else why do it? And if it is good at size x, wouldn't like to execute there at size y where y > x because now there are more IB customers (because IB would steal all the active traders from other brokers with the rebate) likely on the other sides of TMBR trades?

    I think everybody wins in this scenario - except other brokers....

    nitro
     
  10. Let's not forget that TMBR may be trying to cross customer orders, or get shares for VWAP orders, institutional orders, hedging options positions, etc...
     
    #10     Sep 25, 2002