Trying to find a direct access broker to start trading

Discussion in 'Professional Trading' started by beachhouse, Oct 27, 2011.

  1. I am looking for an honest broker who lets retail traders have direct access to the market.

    I notice many retail traders use Scottrade, but I was told that Scottrade routes retail traders' orders to its own market maker Knight Traders.

    I thought of Interactivebrokers, but I was told that IB routes retail traders' orders to its own market maker Timber Hill.

    Is there any honest broker that does not route orders to its own market maker? Just straight brokering between traders and the market? A true direct access broker?
  2. hello! i'm at speedtrader now, i use their platform speedtrader pro. they let you route your order to any of their available routes (they say have like 50 or something).
  3. Are you going to believe everything that is said about Interactive Brokers rather than researching the facts for yourself?

    Every broker is required by SEC Rule 606 to publish a Quarterly Order Routing Report.

    Here is the link to IB's SEC Rule 606 report for 3rd Quarter 2011

    Now tell us all the brokers that have better order routing based on their SEC Rule 606 report than IB does.

    Interactive Brokers is the best known of the direct access brokers and allows you to direct your order to the trading venue of your choice. The vast majority of IB's customers use IB's Smart Routing rather than directing their order. The choice is up to you.

    Please note that IB is far from the perfect broker and doesn't make every customer happy.

  4. I did a little research myself, on the IB website:

    I found that IB's focus of business is on market making, not brokering, it has been so from its early years. Actually, the company was called Timber Hill until 2001. Clearly, market making is where IB makes its money. It wouldn't surprise me that retail traders' orders are routed to its market makers.

    IB Group History
    1977 Thomas Peterffy, the Chairman of the Interactive Brokers Group, buys a seat on the American Stock Exchange (AMEX) and becomes a member, trading as an individual market maker in equity options.

    1978 T.P. & Co. is formed to expand trading activities to several members under badge number 549. The firm is the first to use computer generated fair value sheets printed daily.

    1979 T.P. & Co. expands to four employees, three of whom are AMEX members.

    1980 Plans are made to restructure the operation and to identify price anomalies in several securities at the same time.

    1981 Efforts are made to code and test a system that identifies potential delta neutral trade pairs. Our greatest challenge: how to electronically read the prices of options as they are posted.

    1982 Timber Hill Inc. is formed. Initially, the company trades equity options at the AMEX, clearing through Spear, Leeds & Kellogg. Traders receive telephone instructions identifying pairs and prices.

    1983 Timber Hill creates the first handheld computers used for trading. Their ability to track positions and continually re-price options on one stock quickly gives Timber Hill traders an advantage over their counterparts at the exchange, who continue to use fair value pricing sheets that are updated only once or twice a day.

    Timber Hill begins trading at the Philadelphia Stock Exchange.

    Timber Hill expands to 12 employees.

    1984 Timber Hill begins coding a computerized stock index futures and options trading system.

    Timber Hill becomes a member of The Options Clearing Corporation.

    1985 In February, Timber Hill's new computer system and network is brought online, ushering in a new era of computerized trading. The system allows Timber Hill to centrally price and manage risk on a portfolio of equity derivatives traded in multiple locations around the country.

    Timber Hill becomes a member of the New York Futures Exchange.

    Timber Hill begins trading at the Chicago Mercantile Exchange (CME), the Chicago Board of Trade and the Chicago Board Options Exchange.

    1986 Timber Hill becomes a member of the Pacific Stock Exchange and the Options Division of the New York Stock Exchange (NYSE).

    The trading system is reprogrammed to operate on a network of SUN workstations.

    The firm's traders generate a 430% return on equity for the year with the new system.

    1987 Timber Hill becomes self-clearing in equities, joining the National Securities Clearing Corp. and the Depository Trust Company.

    The stock market crash creates the impetus for cross margining between clearing houses with Timber Hill as a major proponent. (Cross-margining emerges several years later).

    Timber Hill expands to 67 employees.

    1989 Timber Hill becomes a clearing member at the CME.

    1990 Timber Hill Deutschland GmbH is incorporated in Germany, and shortly thereafter, begins trading equity derivatives at the Deutsche Terminborse (DTB), now Eurex. This is Timber Hill's first application of its trading system on a fully automated exchange.

    Timber Hill becomes one of the leading market makers at the DTB, claiming more than 10% of the trading volume.

    1992 Timber Hill expands its European trading to the Swiss Options and Financial Futures Exchange (SOFFEX), another fully automated exchange.

    Timber Hill expands to 142 employees.

    1993 Timber Hill Europe AG is incorporated in Switzerland and takes over the Group's trading at SOFFEX.

    In the United States, Timber Hill floor traders begin using commercially available handheld computers on the exchange floors, communicating by radio with the firm's central pricing systems. The hand-helds allow traders to create electronic trade tickets.

    Interactive Brokers Inc. (now known as IB LLC) is incorporated as a US broker-dealer, making Timber Hill's vast intercontinental electronic network and trade execution services available to customers.

    1994 Timber Hill Europe begins trading at the European Options Exchange in the Netherlands, the OM Exchange in Sweden (an electronic exchange) and the London International Financial Futures and Options Exchange (LIFFE) in the U.K.

    Timber Hill Deutschland becomes a member of the electronic Belgian Futures and Options Exchange.

    IB LLC becomes a member of the NYSE and begins executing stock trades through SuperDot, the electronic order routing system.

    IB LLC is regularly named one of the top ten program traders at the NYSE.

    Timber Hill UK Limited is incorporated. Shortly thereafter, Timber Hill UK takes over Timber Hill's trading at LIFFE.

    Timber Hill Hong Kong Limited is incorporated.

    The Timber Hill Group LLC is formed as the holding company for all of Timber Hill's operating companies.

    1995 Timber Hill France S.A. is incorporated and begins making markets at the Paris Traded Equity Options Market and the Marché à Terme International de France futures exchange.

    Timber Hill Hong Kong begins making markets at the Hong Kong Futures Exchange.

    Timber Hill Europe expands its activities into the Italian Mercato Italiano Futures and Spanish Meff Renta Variable markets.

    IB LLC creates a customer workstation, through which professional customers gain access to exchanges around the world.

    IB LLC executes its first trades for public customers.

    1996 Timber Hill doubles the number of underlying stocks that it trades to more than 800.

    Timber Hill Securities Hong Kong Limited is incorporated and begins trading at the Stock Exchange of Hong Kong.

    1997 The Hong Kong Futures Exchange lists stock index futures on an electronic market. Timber Hill Hong Kong is the only committed market maker.

    Timber Hill Australia Pty Limited is incorporated in Australia.

    Timber Hill Europe begins trading in Norway and becomes a member of the Austrian Derivatives Exchange.

    With strong support from Timber Hill, the S&P 500 E-Mini futures becomes the first US electronic market and the most successful futures contract ever introduced.

    The Timber Hill Group now makes bids and offers for 60,000 items.

    Timber Hill trades just less than 5% (15,000 transactions) of the daily volume in listed equity derivatives worldwide. Timber Hill expands to 284 employees.

    1998 IB begins to clear online trades for retail customers who are connected directly to Globex to trade S&P futures.

    Timber Hill Canada Company is formed.

    1999 IB provides a "smart routing" linkage for multiple listed equity options.

    IB begins to clear online trades for customers trading stocks and equity derivatives through the IB system.

    2000 On average, more than six percent of the daily global volume of exchange-traded equity options and equity futures is now traded across the Timber Hill/IB network.

    Timber Hill becomes a Primary Market Maker on the ISE (International Securities Exchange), the first fully electronic US options exchange.

    Interactive Brokers (U.K.) Limited is formed.

    2001 The corporate name of The Timber Hill Group LLC is changed to the Interactive Brokers Group LLC.

    Timber Hill begins electronic market making in Japan.

    Timber Hill becomes the major market maker for the newly introduced US Single Stock Futures.