Sorry for not responding for so long. No excuse other than I have just been busy.
archangel,
quick note regarding insurance....
I have discussed insurance with senior management and the gist of their comments are as follows:
The concept behind offering the IB product to retail was to level the playing field for the traders most often "disadvantaged" in the market place. Small but active traders were at a competitive disadvantage given their poor access and high commissions. The concept of a retail investor trading in an out of 5 lot option contracts 20 times a day and making money after commissions is now a possibility. A trader with a few thousand dollars now has the ability and leverage to interact in the market place with as fair a shot at making money as a professional. These types of traders which were the initial target of IB are covered by current levels of insurance. Of course most traders without direct access are often at a competitive disadvantage. As a result, the access we have provided has also attracted a large number of high net worth traders who, like yourself, demand appropriate levels of insurance. IB is a global product offering options and futures on many exchanges and in many different currencies. Thus the discussions over insurance are a bit more complex and have taken longer than anticipated. I understand a number of quotes have been received and additional insurance will be offered shortly. While this is a high priority, the goal of perfecting the system, building the network to handle anticipated growth, and fighting the various regulatory battles have taken precedence. Of
JT,
I've spoken to a few people and can now provide you with a more in depth answer. It should be noted that the comments you are making are in relation to a version of the system that has since been upgraded. You do have some good points and all comments are appreciated. I tackle your comments in order.
1. Best execution is designed to obtain to best price on any given trade. The routing design is of a proprietary nature and is under constant review. The question you ask about our claim to provide best execution has come up from institutional as well as retail clients. With this in mind, external auditors from a major accounting firm were engaged to conduct a study and to confirm whether we were routing orders to the best available price. The study was completed and they confirmed our methods were accurate.
I was also asked to make an additional comment regarding retail execution. While there is probably no equal to our experience with automated electronic trading on an institutional basis, we did in fact run up against some unanticipated situations in regards to NASDAQ execution that we have not seen before. I believe we've been quick to resolve many of those issues.
2. The problem you mentioned in regards to ISLAND is most likely unrelated to anything mentioned on the SI newsgroup. As I understand, island has routing parameters that can only accept a certain percentage of a market on a given day. When that limit is met, they will reject any orders. We now know how to recognize this situation and route orders elsewhere.
3. I understand that bid.ask sizes are a reflection of best execution and what we believe is a reflection of the depth of the market place.
4. shared internet connection was never broken - it was just never programmed. It is on the agenda but programming resources must be allocated to the highest priorities.
5. as mentioned in my last post, IB can not execute someone's order if the counter party posting a market does not honor their quote and is not breaking exchange rules. We do however, note when orders are not matched and attempt to route orders to where we believe orders will be honored.
6. Tremendous progress has been made in that regard. Requests for new markets to be added to the system typically are available within a day.
7. Quality of quotes have been addressed via upgraded software.
Hopefully this answers your questions.
- def
