Unfair Timber Hill charge for IB-unbundled pricing

Discussion in 'Retail Brokers' started by ggoom, Mar 17, 2006.

  1. ggoom


    I changed to unbundled pricing this month and overall it is saving me some. However, when I remove liquidity (for NYSE stocks) it is often executed against Timber Hill while either NYSE or ECNs are at NBBO. As you see below (this info is from IB website), Timber Hill charges fee more than normal in this case. I don’t think this is right especially because they give preference to Timber Hill in the SMART routing even though cheaper ECNs are available.

    NYSE on-book: $0
    I-Net NYSE $0.0007
    ARCA NYSE $0.0010
    Brut NYSE $0.0007
    SuperMontage NYSE $0.0007
    B-Trade NYSE $0
    Track NYSE $0.0025
    Timber Hill Auto-ex
    .....NYSE at NBBO $0.0010
    .....Non-NYSE ECN at NBBO $0.0020

    I think they should change the algorithm in the SMART routing so that the order is sent to ECNs first if there are ECNs at NBBO (because this is cheaper than Timber Hill and this is instantaneous execution). If this is not what they want, Timber Hill should charge less; maybe $0.0007 like most other ECNs.

    Don’t get me wrong. I love IB and I prefer this unbundled system. I just think the current Timber Hill’s charge is unfair to customers who use SMART routing.
  2. FredBloggs

    FredBloggs Guest

    so let me get this straight.....

    you send an order via SMART and it always gets executed against timber hill (lets forget about the higher charges and whether they are nbbo for a minute)?

    as we all know, many brokers SELL order flow to other participants


    as we all know, timber hill is OWNED by ib.

    so, does this relegate ib from broker to bucket shop if they are taking the other side of your trades?

    it seems to me that you are not trading against the market, just ib.
  3. JackR



    ggoom says - " However, when I remove liquidity (for NYSE stocks) it is often executed against Timber Hill while either NYSE or ECNs are at NBBO.

    In many different threads an IB rep has pointed out that IB (Timberhill) only takes the trade if it matches or is the NBBO. I think ggoom's complaint is that, when using the unbundled commission rates, and if Timberhill is the counterparty, his total cost is higher (or his sale net is lower) than on any other ECN except Track NYSE or ARCA, solely because of the fee differential.

  4. fhl


    So long as it's safe, secure, insured, who cares who we are trading against?
  5. FredBloggs

    FredBloggs Guest

    sure - these are valid points. if you place an order at $x, it is pointless moaning if you get filled - who ever filled you.

    but isn't there a conflict of interest if your broker is on the other side?

    don bright posted an excellent piece from his web site regarding knight (who also receive a lot of order flow) and how they trade against this order flow.

    if i was trading with a dab other than ib and i was filled by timber hill, would i still have to pay the higher charges?
  6. I get filled at thill on rare occasions, most of my orders end at island or arca; then again im not tradin' with unbundled commish structure.
  7. ggoom


    What Jack said is right. In fact, I like Timber Hill (it is better to have another counterpart to trade and it is fast) EXCEPT its fee.

    Timber Hill is the most expensive except TRAC. Most times Timber Hill charges $0.002 which is at least twice more expensive than the other ECNs. The issue is that this expensive Timber Hill execution occurs when other ECNs are at NBBO.

    For some of you $0.001 is not important, but for some scalpers that can be quite significant.

    As FredBloggs said, if I trade against Timber Hill using another broker say through SuperMontage, how much Timber Hill would charge? $0.0007 based on their current fee structure. Do I pay $0.002 because I am a IB customer? That just does not make sense.

    One more time, I am a still happy IB customer.
  8. FredBloggs

    FredBloggs Guest

    ...even though they are blatently ripping you off.


    trading is a business.

    no room for loyalty here - especially when there are loads of others who will give good service at great prices.
  9. How are they ripping him off?

    The charges are clearly stated and with unbundled it represents just one piece of the overall fee structure.

    You have to look @ the whole picture and compare broker features and price structures.

    The "ib is evil and/or ripping you off" comments are getting old around here.
  10. I bet good money that these IB bashers are losing traders.

    Because most of these complaints are pretty idiotic, and idiots are unlikely to make money in the market.
    #10     Mar 18, 2006