CFTC Orders Interactive Brokers LLC to Pay Over $1 Million for Supervision Failures
- Thread starter ajacobson
- Start date
They apparently charged customers exchange fees at a rate higher than what they actually owed the exchange. Oddly enough, the fine print at Interactive Brokers says that they do exactly that. They claim that the customer pays the rack rate regarding exchange fees, even if the actual fee is less due to negotiated volume discounts they have with the exchange.
So how egregious is this? Maybe someone with specific industry knowledge can clarify. For over a year I have pondered the idea that I'm paying higher exchange fees (for stock trades, not futures trades as are addressed in the link) than Interactive Brokers is actually paying out to the exchange.
So how egregious is this? Maybe someone with specific industry knowledge can clarify. For over a year I have pondered the idea that I'm paying higher exchange fees (for stock trades, not futures trades as are addressed in the link) than Interactive Brokers is actually paying out to the exchange.
Cocksuckers. If they can get away with it, they will do it every single time. Of course, it is incumbent of Futures traders to know the changes to their exchange fees charged to them, and the charges to their accounts thereof, through exchange communications.
So both sides are at fault.
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Interactive Brokers claims to have negotiated volume discounts. There is no way the retail trader can know what that is.
That's not what they are getting at. The CFTC is maintaining that IB employees overcharged their clients exchange fees when the exchange fee rates went down, but pocketed the excess as profits.
"Specifically, Interactive Brokers failed to implement necessary changes to exchange fee schedules, and thus charged customers executing certain spread trades the non-member exchange fee applicable to outright trades."
The fine print at Interactive Brokers claims they do something similar with stock trades. The assumption appears to be that this isn't allowed by law, exchange rule, whatever. I don't have the industry specific knowledge to know if this is legal or not, but it certainly is distasteful for the retail trader.
Well, the CFTC makes it clear. It is not allowed, and they got busted for it. Don't know why the SEC let's it go on, if they are allowed to do it with stock trades. That's why I trade futures. Cheap, easy, clean. Aside from the spoofing and wash trades, heh.
%%
IF they disclose it, no problem , but should be disclosed. Assume that's legal??
IN 20/20 hindsight, they could have given them a credit; kind of like Nestle not lowering price of coffee/ but giving 15% more coffee + disclosing that in big letters.
[MY pet peeve is disclosure ,but in such small print it's a legal attempt to hide the stinkin' stuff]
I wondered some times if some did that with ETF SEC fees??
Better yet, they could pass their negotiated exchange fees on to the retail customer and offset it with higher commission costs that get added to the exchange fees. That keeps everything transparent even though the retail customer is paying the same amount.
Whichever. From my point of view I just want the absolute best executions and the lowest total cost. Their SMART router is actually pretty good but I'm fully aware they could have conflicts of interest with some exchanges.