BOX Trading Starts Friday Morning, February 6, 2004

[NoMoreOptions]

IB started the fee. Period.

Quote from Nordic:

Dude, That's my point. At the end of the month, IB ( or who-ever your execution agent is) will end the month on the plus side in fills vs. cancels. Therefore they will not absorb any cancel fees.

:eek:

 

[metooxx]

Quote from NoMoreOptions:

IB started the fee. Period.

No.

 

[metooxx]

Quote from Nordic:

Dude, That's my point. At the end of the month, IB ( or who-ever your execution agent is) will end the month on the plus side in fills vs. cancels. Therefore they will not absorb any cancel fees.

:eek:

Depends if they exceed the 50% threshold. If they don't they pay $0.

They probably don't ...

 

[resinate]

Quote from metooxx:

Depends if they exceed the 50% threshold. If they don't they pay $0.

They probably don't ...

Right... and unless the so-called throughput costs more than .20 per order they make money on each cancel as the cboe cost is 1.00.

 

[def]

Quote from resinate:

Right... and unless the so-called throughput costs more than .20 per order they make money on each cancel as the cboe cost is 1.00.

even if you are correct in your assumption that we don't go over the threshold, you miss a few points:

1. isn't this a catch 22? If we drop the fee wouldn't cancels/modifys increase dramatically

2. do you know the policy on the ISE and other exchanges which charge? according to our last routing stats, the majority of our orders go to the ISE. the cboe is 4th in line.

 

[metooxx]

Quote from def:

even if you are correct in your assumption that we don't go over the threshold, you miss a few points:

1. isn't this a catch 22? If we drop the fee wouldn't cancels/modifys increase dramatically

2. do you know the policy on the ISE and other exchanges which charge? according to our last routing stats, the majority of our orders go to the ISE. the cboe is 4th in line.

1) Yes.

2) Similar, hard to believe the CBOE is behind the AMEX and PHLX;

and if you tell me the PSE is ahead of the CBOE ...

 

[resinate]

Quote from def:

even if you are correct in your assumption that we don't go over the threshold, you miss a few points:

1. isn't this a catch 22? If we drop the fee wouldn't cancels/modifys increase dramatically

2. do you know the policy on the ISE and other exchanges which charge? according to our last routing stats, the majority of our orders go to the ISE. the cboe is 4th in line.

Def,

You are right in that I don't have a complete understanding of IB's options cost structure. I did look up ISE cancel fee which is also 1.00 and similarly requires more executions than cancelations. There are also many rebates and credits at the various exchanges too.....

In regards to your catch 22 point, I have a couple thoughts from the perspective of an otherwise long-time happy IB customer who is bothered by paying these fees every day.

I don't know the level of cancels IB was experiencing before it added the fee. But, my preference would be that you raised the basic per contract charge enough to cover the incurred charges. I assume doing this would still keep IB's fees very competitive.

I also guess that I am not alone in noticing that this fee has converted what was a very cheap option commission into one that is now not so competitive. I hope IB reexamines this issue.

 

[nitro]

Quote from Nordic:

Dude, That's my point. At the end of the month, IB ( or who-ever your execution agent is) will end the month on the plus side in fills vs. cancels. Therefore they will not absorb any cancel fees.

:eek:

Ah,

Got it. I misunderstood.

nitro

 

[nitro]

Quote from def:

...
2. do you know the policy on the ISE and other exchanges which charge? according to our last routing stats, the majority of our orders go to the ISE. the cboe is 4th in line.

David,

Fascinating!!!!! Aren't most people just using SMART? I don't know what your internal algorithm is for routing an order, but why wouldn't whatever it is cause an even distribution of routes amongst exchanges, with the autoex exchanges (ISE & CBOE) getting priority all things being equal?

nitro :eek:

 

[nitro]

Quote from stock777:

I wonder is they haven't had more of an effect than we think. MM's depend on certain , let's call them strategies, to get the price to where they want to do business. In the good old days, they would move stick 1/8, 1/4, maybe 2 or 3 of those levels. Now, they can dance around within 3-10 cents for the same effect.

I don't think this affects large moves, only the scalping type moves.

Yes,

I think that part is true. I know several traders whose whole strategy was based on the fact that spreads were 1/8 - 1/4 wide, and once they went to pennies, they retired from trading.

nitro