Quote from thomsonfx:
Cluseau: Do you mean that this is the case for IB ? It is really scary to hear that even IB, the biggest broker for both discretionary and automated trading (or TS ?) I suppose, will trade against client as you described. It seems that they "blacklist" you internally without telling you directly. May I know whether you can still buy any instruments other than the stuff (spot fx?) you traded before ?
Thomson,
Clueless was incorrect. Your orders will only execute with TH if they are at the NBBO or better. There is a risk disclosure on our website, and I've pasted the details below which explains the relationship. For our FX platform, IDEAL-Pro, we act as agent.
Clueless, the SEC requires all brokers to disclose where and how all stock and options orders are routed. All these reports are available on the brokers websites. You may find these an eye opener.
Ours are available here:
http://www.interactivebrokers.com/en/general/about/brokerDealerReports.php?ib_entity=llc
Automatic Execution and Price Improvement: Electronic Communication Networks ("ECNs") and exchange automatic execution systems generally execute orders instantaneously at the posted bid or offer, rather than routing orders to a specialist or a trading crowd for manual handling. Generally, when an IB customer selects Smart Routing, IB routes eligible customer orders to exchanges and market centers currently offering automatic execution of orders. While automatically executed orders may not have an opportunity to be executed at a price better than the market center's posted bid or offer, automatic execution of customer orders is faster and more certain than other methods of execution and eliminates execution of orders at prices inferior to the prices posted at the market when the order was routed to it. Automatic execution of orders also eliminates the ability of a market maker or a specialist to hold a customer order and perhaps decline to execute the order if the market moves in the customerâs favor while the order is pending. Overall, IB believes that use of the Smart Routing system to route orders to the exchange or market center with the best price, combined with automatic execution, provides IB customers with the most favorable order execution.
In addition to automatic execution of orders by certain exchanges and ECNs, IB's market-making affiliates, including Timber Hill LLC and Timber Hill Europe, also provide automatic execution for certain eligible IB customer orders routed through IBâs Smart Routing system, for certain Nasdaq stocks, NYSE stocks, non-U.S.-listed stocks and other securities. When an order is sent using Smart Routing, if an IB affiliate is willing to provide an execution at the best available posted price or better for that stock (sometimes called the national best bid or offer or âNBBOâ), IB may send the order to that affiliate for an immediate automatic execution. Orders sent to IB affiliates for automatic execution may be eligible for price improvement (i.e., they may be executed at a price better than the best posted bid or offer).
Please note that if a quote is posted on a U.S. national securities exchange and the associated size is only 100 shares, this quote may not be considered as part of the best available national price. This is because such quotes usually are âdefault quotesâ that are not automatically executable. Such quotes have no standing under the Intermarket Trading System trade-through rules. "
