RE: "If the bid ask is e.g. .10 - .20 and I place a bid to buy at .15"
- No way does the broker retain that order.
- The bid will be raised to 0.15 - your order.
- And it might be filled - or not be filled.
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- Thread starter raf_bcn
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RE: "If the bid ask is e.g. .10 - .20 and I place a bid to buy at .15"
It's the ask that will be lowered to 0.15 actually because OP is posting a sell order. Well according to Robert, IB does retain the right to hold the order in their system. So I guess it's a question for IB. But I am thinking even if IB holds that order in the system and only releases it when it's marketable, as long as it is released a nano-micro-second before it is hit, that limit order should still count as liquidity-adding but so many times IB would count that as liquidity-taking.
In raf_bcn's post I quoted he has placed a buy order at 0.15 when the bid/ask is 0.10/0.20
IB will not hold a straight order, they may hold spread orders until they feel it is marketable. If you placed a limit order to sell below the current offer, you should be adding liquidity and generally you should be getting a rebate. If this is the case you should follow up with IB on why you were charged.
Linkage fees are charged when your order is directed to one exchange and filled on another. Each exchange charges different linkage fees, and they can be high. As much as .70 per contract for customers in penny class options.
Robert Morse
Sponsor
IB does not hold single leg orders. I can't explain why you were charged. The order has to be re-routed because of best execution rules and they can't cross markets. You will have to check each exchange for linkage fees or ask IB for a schedule. I have one for my clients but I can't distribute that.
Yes because in options, the exchanges are very fragmented and are not interlinked. One exchange does not see what's on the other exchanges simultaneously.
I never do spread orders. All my orders are single straight buy/sell orders and you have no idea how many times, I have asked IB why my limit orders in between bid/ask did not get a rebate and their answers were always it was immediately marketable. Quite a few times they actually pushed my limit orders to other exchanges to be filled and as a result turned my otherwise liquidity-adding orders to be market orders because my orders took out existing orders on the other exchange so I not only didn't get the rebate but actually had to pay hefty exchange fees from the other exchange because the other exchange charges higher fees for liquidity-taking orders. They claim they do this so my orders can be filled more quickly.
IB may advertise that they have the lowest cost of commissions among all brokerages but in reality it is not always so.
I don’t use interactive brokers but I do remember looking at their fee structures, their data packages looked more complicated then other brokers. They really broke everything into pieces which does allow the user to pick what they actually need.
Is it possible he’s missing a data package and thinks he’s adding liquidity while he’s actually taking liquidity at an exchange he doesn’t see but since he’s using smart routing it’s going to that exchange?
Not an option guy either so not sure if NBBO is a thing with options and how IB displays NBBO if you don’t have a data package.
Is it possible he’s missing a data package and thinks he’s adding liquidity while he’s actually taking liquidity at an exchange he doesn’t see but since he’s using smart routing it’s going to that exchange?
Not an option guy either so not sure if NBBO is a thing with options and how IB displays NBBO if you don’t have a data package.
Robert Morse
Sponsor
Maybe it would be more productive if you give me a quick call one day. There are 15 option exchanges. If the CBOE is 1.00 x 1.05 but the NBBO is 1.02 x1.03, and you route your order to buy 10 to CBOE at 1.03, either by IB's SMART route for by choosing CBOE, your order will be routed to one of the exchanges where there is an offer of 1.03. You will be charged reroute the order plus whatever the rate is for taking on that exchange. They do not allow locked market, 1.03 x 1.03 on the NBBO.
As a side note, that I have talked about before, our SMART route will avoid maker/taker fees on all but cash settled symbols for "priority customers". That way you can just do your trading without having to analyze where there is liquidity.
Well regardless which exchange has which price, if the NBBO is at 1.02 X1.03, that's what I would see. I won't see the 1.00 X1.05 at CBOE cuz I don't have Level II. So if I enter a buy order to buy at 1.03, then I am buying at the offer, that I would understand that would be a market order and I would be taking liquidity. And I understand the "lock the market" issue. And to resolve that "lock the market" issue, the exchange would've actually rejected my order if I had entered into a particular exchange. But if I entered the limit buy order at 1.03 via SMART order routing, IB would actually treat it as a market order and have it executed right away, that part I understand and have no problem with.
The issue that I encounter with IB is the same as what the OP has experienced. Modifying your example a little bit, I see the NBBO at 1.02 X 1.04, and I enter an order to sell or buy at 1.03, in between the bid/ask, clearly liquidity-adding and IB would count that as liquidity-taking and deny me the rebates just because it was filled a little bit quicker, what they call "immediately marketable". And also the other scenario that I stated where my limit order was sitting on an exchange and got pushed to be executed as a market order on another exchange, IB claimed that the price moved so just like you said, in order to avoid a locked/crossed market, my order had to be executed but the issue is my order was sitting there FIRST, it wasn't a buy-at-offer order, if you could push my order to be executed to be taking someone else's liquidity, WHY couldn't you let someone else hit on my order instead, taking MY liquidity instead of always having me hit someone else's liquidity and for me to lose the rebates and incur the higher liquidity-taking exchange fees?
To me and I am sure to the OP, it's a matter of principle. We should be able to earn rebate fees when we were entitled to them. And I want to earn rebate fees when I trade; it fits my style of trading too. And it's not right that we are denied of what we are entitled to because of these games that either IB or those MM's or I suspect both of them play.
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