Found this on YouTube: In Depth from and about Interactive Brokers - Raleigh-Durham Group Meeting - 20211109 We invited senior officers of Interactive Brokers (two close to Thomas Peterffy himself) to address our own prepared questions (see attached) gathered from our members in advance and organized by us. David Friedland is Asia Pacific Managing Director at Interactive Brokers and also a long-time official liason with trading groups for all of Interactive Brokers worldwide. Steve Sosnick is Chief Strategist/Head Trader of Interactive Brokers/ Timber Hill. Eric S. Cott is a Consultant with Interactive Brokers Global Institutional Sales & Prime Brokerage for Hedge Funds, Independent Advisors, & Broker Dealers. I think you will find fascinating insights on how Timber Hill made markets, and traded profitably, among other aspects.
very interesting to hear opinions. Thanks for posting this... SS mentions PIP on Box at the 25:30 mark. IMO, one of the worst things that has ever hit the marketplace. This mechanism provides no incentive for liquidity providers to show their best markets and allows the "tech" savvy (HFT's) the ability to use their "invested" advantages to step in front of those who are actually posting markets. This is the primary reason why spreads in the options market have increased to OVER $3 (average bid ask spread) and IMO one of the reasons why Timberhill could no longer compete in the market making arena as all the unsophisticated order flow was ending up in the HFTs hands via PFOF programs and PIP auctions. There was one person who disputed this rule when it came out (LOL) and predicted what was going to happen with the marketplace..... BTW one hardest things I ever did - writing a negative comment letter re a rule tp was trying to promote. Although most in this stubborn industry would disagree with me on this, it interesting to note that I have received a few comments in the last few years suggesting I was accurate with respect to PIP and it has been a cancer to the regular investor since its inception. Take note that initially (post 2003) virtually every Exchange would promote their price improvement statistics. Many in the industry no longer do this because they realize what PIP really is. DEF's comments from the 28:00 - 31:20 are bang on. Understanding why we have rule changes and where they come from are keys to finding your edge in the marketplace. I used to fight these things via comment letters to the SEC but basically gave up many years ago as I realized it wouldn't change anything (although I did write some stuff recently). The HFT's basically control the rule changes because they are the primary customer for the Exchanges but as these rule changes continue to benefit the HFT's it actually creates more inefficiencies in the marketplace which can open the door to those who understand such rules. Clearly not good for the regular investor. Love to tp story of forcing the guy to bust the trade because he ripped the guy off. Reminds me of the arguments I use to have with my competitors (who use to treat their customers the same way) when I used to trade on the Floor. We called it the MS (Maximum Screw). You wonder why the business dried up on this Exchange........ Will listen to the rest when I have the time.
Great video thanks for the share. I’m actually not a fan of IBKRs smart routing myself but agree that it’s an improvement over pfof type of arrangements (it’s good for the small trader/investor). If you think about the flow of a trade: Person buys stock —> sends order to broker —> broker EMS uses a routing tool to fill order against exchanges/ecns/hfts —> order is filled. This is good for smaller investors and traders because you get a very efficient fill price. Once you start trading bigger blocks of shares/contracts, however, this tilts against you. Also lol notice how these guys have been pro trading for many years and are not analyzing “price action” lol. They are simultaneously posting orders across many exchanges and quickly move prices and size as they get new information (an order being filled).
Interesting that Eric Cott says that fidelity send their marketable orders to citadel at 19.45mins. I thought that fidelity did not sell order flow.