Can't get rebates anymore

[JSOP]

I've been trading options on IBKR for almost a year now. I have always been able to get rebates for placing limit orders on many different underlyings, such as W, WORK, LUV, and CHWY.

Suddenly I cannot get rebates anymore! My commissions are always positive.

Does anyone know what is going on?

Make sure the "Sweep to Fill" field on the Order Ticket is unchecked and make sure "Post-Only" field is checked off so this way your order is guaranteed to be a passive liquidity-adding order sitting on the exchange to be hit by someone else. And I always sent orders to specific exchanges that pay the highest rebates for liquid-adding orders instead of using "SMART". With "SMART" order routing, you really have no control over where they send your orders. I had some success earning rebates with this arrangement until IB decided not to send my orders to the exchanges right away when they were supposed to and instead held them in their internal server and only sent them out at the last minute when my limit price was reached and thus turning my passive liquidity-adding orders into liquidity-taking orders thus denying my rebates. And all of sudden, I would be hit with massive positive commissions.

I complained to IB several times about this and their excuses were always because they were trying to do better price matching for me, the price moved and blah blah blah bull**** like that. I dunno if that's what is happening with your orders but certainly talk to IB to see what they say.

 

[elt894]

For your orders that used to get rebates, which exchanges were they executed on? Then check the current exchange rebates listed here and also check which exchanges your current orders are being sent to.

My guess is a new rebate schedule went into effect for one of the exchanges on the first of the month. For example, ISE reduced their rebates on complex spreads as of May 1, and for some reason IB has been changing their routing over the last few months to send more of my orders there, which is costing me a bundle. By far my biggest gripe with IB is that you can't direct route option orders without paying higher fees.

Perhaps @def can weigh in whether the routing or exchange fee schedule changed recently.

 

[traider]

do u need significant volume for -ve comms? I trade quite a number of options but have never gotten -ve comms before. Best is 0.6 from emerald

 

[manic]

After doing more research, I wonder if this has to do with the "Penny Pilot" program? I am not really sure what it is, but it seems that most exchanges offer different rebates depending on whether a stock is included in the program or not. Perhaps some of the underlyings I trade experienced a status change starting in July.

Edit: Did some more research and found that this is indeed the cause. The stocks that no longer offer negative commissions were all added to the program in July. The stocks that still offer negative commissions were not added. A few stocks that were removed from the program now offer negative commissions.

I should clarify that rebates are possible with all stocks, but only the non-penny pilot offer rebates large enough to overcome IBKR's commission and turn the net commission negative.

 

[elt894]

do u need significant volume for -ve comms? I trade quite a number of options but have never gotten -ve comms before. Best is 0.6 from emerald

Not necessarily. Have a look at Emerald's fees. If you're adding liquidity in a non-penny pilot symbol, you get a rebate of $0.85. IB charges $0.65 at the lowest tier, so you receive close to $0.20 in rebates (minus some regulatory fees).

 

[elt894]

After doing more research, I wonder if this has to do with the "Penny Pilot" program? I am not really sure what it is, but it seems that most exchanges offer different rebates depending on whether a stock is included in the program or not. Perhaps some of the underlyings I trade experienced a status change starting in July.

Could be. The penny pilot program are the few hundred symbols with the highest option volume. There's a list of them here.

 

[traider]

Not necessarily. Have a look at Emerald's fees. If you're adding liquidity in a non-penny pilot symbol, you get a rebate of $0.85. IB charges $0.65 at the lowest tier, so you receive close to $0.20 in rebates (minus some regulatory fees).

Sold 222.5 BABA Put Jul 10. I was charged 0.67 for Emerald. It was definitely adding liquidity.
How do you get 0.20?

 

[elt894]

Sold 222.5 BABA Put Jul 10. I was charged 0.67 for Emerald. It was definitely adding liquidity.
How do you get 0.20?

BABA is a penny pilot symbol, so the rebate from Emerald is 0.43, not 0.85. I'm guessing you sold a single contract, so you pay IB's minimum commission of 1.00, rather than 0.65 per contract. Then there's about 0.10 in regulatory fees. 1.00 - 0.43 + 0.10 = 0.67.