I have been doing some experiments and testing, and placed thousands of orders and cancelled them through TWS API (which by the way rendered TWS frozen and unusable). So I'm sure that this month I will reach the 390 order per day threshold and will be tagged as professional. I want to go back to retail status in the future. How easy it is to have IB remove the professional status? I think they do this tagging quarterly. Do I wait till the next quarter and request the removal?
390-order threshold and removal of professional status
- Thread starter LM3886
- Start date
Robert Morse
Sponsor
Based on Question 20, it looks like you must go an entire quarter before the change. That would mean July if you breached the 390 in January or February or March. IMO, do not breach the 390 unless you prefer the Pro-customer status as you either want to make 2 sided markets, which is very hard for a customer, or you make enough money on the extra orders that it does not matter, or you only trade SPX options. https://cdn.cboe.com/resources/regulation/circulars/regulatory/RG16-064.pdf
Thanks Bob for the link. In the doc, I noticed the each modified order due to pegged orders are counted as a new order. Does that effectively rule out any use of pegged orders for retails?
I don't plan to become professional; I only found out this rule yesterday but I believe I already exceeded the threshold for this month.
Robert Morse
Sponsor
LM3886 - I do not claim to be an expert on this. I only read the text like you. We have a system for monitor high volume option clients and I provide a weekly report to help them stay within the monthly limit. As we have a option smart route to avoid most maker/taker fees, no one wants to lose that when they want to take liquidity or pay the higher pro fees or lose their priority on the order book. It does say a pegged order will add to your count. I'm not sure pegged orders have great value with options as there are 16 option exchanges and the odds of getting filled on your order on that exchange before the price of the underlier moves is going to be rare. Most market makers get to buy on the bid and sell on the ask from directed order flow.
Bob, for smart-routed orders, if an order was initially routed to an exchange, and later there was a better price available on another exchange, would the algorithm re-route the order to the latter exchange? If so, does this re-routing count towards 390?
Robert Morse
Sponsor
Again, not my expertise but I expect that is one order#, so one order count. On a side note those directed orders re-routed to another option exchange can get expensive. Many times the initial exchange charges a fee to do that and many times liquidity is on an exchange that charges for taking. That is why our option smart route is so popular.
Thanks. Sorry if it sounds dumb, but I wasn't asking about directed orders. I'm just curious if your smart route algorithm determines the best exchange at the time of order submission and never changes afterwards, or dynamically adjust the destination based on the current condition?