Can someone help me on the IB commission problem?

Z

zhexin2

The following problem has puzzled me for some time, and it is so hard to get response from IB customer service even if I pay them 5000 dollars commission each month. They should use my money to hire more people. Hope someone here can give me some answers.

I am a rebate sensitive trader, and always use limit orders so that I can claim rebate from the exchange. The commission showed on the statement is very confusing. very frequently, if I submit an order of 400 shares, and the order is filled at different exchanges, it seems that IB applies the 0.7-dollar-minimum-per-order policy to each partially filled orders. I am using unbundled commission. After the first week, my commission rate will go down to 0.002 dollar/share level. I gave you two examples on the May24 statement to show the discrepancy:

LCRY 2007-05-24, 09:41:23 ARCA -200 9.0600 9.0000 -1,812.00 12.00 -1.10 P
LCRY 2007-05-24, 09:41:23 ISLAND -100 9.0300 9.0000 -903.00 3.00 -1.05 P
LCRY 2007-05-24, 09:41:23 ARCA -100 9.0500 9.0000 -905.00 5.00 -0.35 P
LCRY 2007-05-24, 09:41:23 ARCA -100 9.0400 9.0000 -904.00 4.00 -0.35 P
LCRY 2007-05-24, 09:41:23 ISLAND -100 9.0100 9.0000 -901.00 1.00 -0.45 P

the second example:

PEGA 2007-05-24, 09:50:58 ISLAND -100 10.0300 10.2100 -1,003.00 -18.00 -0.53 P
PEGA 2007-05-24, 09:57:14 ISLAND -98 10.0500 10.2100 -984.90 -15.68 0.16 P
PEGA 2007-05-24, 09:57:14 ISLAND -100 10.0500 10.2100 -1,005.00 -16.00 0.17 P
PEGA 2007-05-24, 09:57:14 ISLAND -302 10.0500 10.2100 -3,035.10 -48.32 0.00 P

As you see, the commission for 600 shares of LCRY is -2.85 dollar while the 600 shares of PEGA in the second example is -0.2. I used limit for both orders. I know ARCA exchange does not pay rebate as much as ISLAND, but that does not explain the difference. Even without rebate in the first example, my commission should be 600*0.002=1.2 dollars before sec and clearing fees,and sec and clearing fee should not be much.
 
That's the problem with unbundled. They won't provide a breakdown. At least that was the case back when I checked it out. There is no way of knowing what is going on.

It has been speculated that when you get filled with a partial, the rest of the order can somehow be diverted somewhere to take out liquidity and thus make you pay. And I think it was something to do with arca.
 
Quote from zhexin2:

The following problem has puzzled me for some time, and it is so hard to get response from IB customer service even if I pay them 5000 dollars commission each month. They should use my money to hire more people. Hope someone here can give me some answers.

I am a rebate sensitive trader, and always use limit orders so that I can claim rebate from the exchange. The commission showed on the statement is very confusing. very frequently, if I submit an order of 400 shares, and the order is filled at different exchanges, it seems that IB applies the 0.7-dollar-minimum-per-order policy to each partially filled orders. I am using unbundled commission. After the first week, my commission rate will go down to 0.002 dollar/share level. I gave you two examples on the May24 statement to show the discrepancy:

LCRY 2007-05-24, 09:41:23 ARCA -200 9.0600 9.0000 -1,812.00 12.00 -1.10 P
LCRY 2007-05-24, 09:41:23 ISLAND -100 9.0300 9.0000 -903.00 3.00 -1.05 P
LCRY 2007-05-24, 09:41:23 ARCA -100 9.0500 9.0000 -905.00 5.00 -0.35 P
LCRY 2007-05-24, 09:41:23 ARCA -100 9.0400 9.0000 -904.00 4.00 -0.35 P
LCRY 2007-05-24, 09:41:23 ISLAND -100 9.0100 9.0000 -901.00 1.00 -0.45 P

the second example:

PEGA 2007-05-24, 09:50:58 ISLAND -100 10.0300 10.2100 -1,003.00 -18.00 -0.53 P
PEGA 2007-05-24, 09:57:14 ISLAND -98 10.0500 10.2100 -984.90 -15.68 0.16 P
PEGA 2007-05-24, 09:57:14 ISLAND -100 10.0500 10.2100 -1,005.00 -16.00 0.17 P
PEGA 2007-05-24, 09:57:14 ISLAND -302 10.0500 10.2100 -3,035.10 -48.32 0.00 P

As you see, the commission for 600 shares of LCRY is -2.85 dollar while the 600 shares of PEGA in the second example is -0.2. I used limit for both orders. I know ARCA exchange does not pay rebate as much as ISLAND, but that does not explain the difference. Even without rebate in the first example, my commission should be 600*0.002=1.2 dollars before sec and clearing fees,and sec and clearing fee should not be much.
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I wonder if the problem could be that you don't understand order execution.

You said that you always use limit orders so that you can claim rebates. Use of limit orders does not give you any right to claim rebates. If you submit a limit order which interacts with another resting limit order, then you are taking liquidity instead of adding liquidity, and so you must pay fees instead of receiving any rebate, and the guy on the other side of the trade is the guy who gets the rebate. So could your problem be that you were wrongly expecting rebates on certain shares, when you in fact received none and instead had to pay fees you did not expect to pay?
 
jimrockford, I also though about that my limit order hits others. but in fact, It is unlikely. This is because I sent the limit order very early, and it was sitting there for long time before it was executed. Though I change the price constantly, but each time, I only change price to the bid when buy or to the ask when for sell, so it is unlikely I will hit others. But the chance do there I hit others, that is, when I modify the limit order, the price on the exchange has already changed. I guess in so short time, the frequency that the bid raises the price above the previous ask will not be high,and my problem occurs frequently.
 
fhl, even if my order hit others, that still can not explain the problem. In the first example of LCRY, there are two partial fills, each of 100 shares, executed on ISLAND. ISLAND will charge 0.003 to take liquidity, plus 0.002 for commission, I will pay 0.005 *200=1 dollar before sec and regulatory fee. this is still much higher than I paid for the two partial fills on ISLAND, which is 0.45+1.05=1.5. This can only be explained that IB applied 0.7-minimum-per-order policy to each partial fill.
 
Quote from zhexin2:

fhl, even if my order hit others, that still can not explain the problem. In the first example of LCRY, there are two partial fills, each of 100 shares, executed on ISLAND. ISLAND will charge 0.003 to take liquidity, plus 0.002 for commission, I will pay 0.005 *200=1 dollar before sec and regulatory fee. this is still much higher than I paid for the two partial fills on ISLAND, which is 0.45+1.05=1.5. This can only be explained that IB applied 0.7-minimum-per-order policy to each partial fill.
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I think you should call the help desk and ask them to look it up for you. Otherwise, you'll just end up reading pages and pages of guesses.
 
Under IB unbundled system, they pass through exchange rebates. but if you use market orders, unbundled system is more expensive than bundled.
 
Under IB unbundled system, they pass through exchange rebates. but if you use market orders, unbundled system is more expensive than bundled.
 
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