Out of curiosity, are you a retail trader or do you work at an institution?
Middle-Market or BB or what?
Direct Access Brokers that will not sell your Order Flow to HFT
- Thread starter MRBRETTONWOODS
- Start date
Out of curiosity, are you a retail trader or do you work at an institution?
Middle-Market or BB or what?
And you use something like Ameritrade/Schwab for that? Or something more direct access like IB?
Profit Sharing plan: TOS-I use smart route (Stocks)
Roth IRA:IB- I use DMA (Stocks and Options)
The difference between us is I don't care who I trade with. Only price and commission's. I moved away from TOS for options because of the ticket charge. I've never have ticket charges plus commissions on my trades before. Does not fit my trading style for my size of trades.
Well, I sincerely doubt that you will get the best fills with a PFOF 'broker' considering the intense conflict of interest. That's the nature of the business. Anecdotal evidence from various forums including ET as well as third-parties that have verified price-improvement and execution between various brokers seem to confirm this as well.
If my average option trade is 10 spreads, either two or four legs, and my average stock trade is 500 shares, by your measure, how much money is this costing me? I don't see the cost like you do, but if I'm wrong, how wrong can I be? I don't see it as a big issue. I just like having the choice of DMA or dark pool on each trade.
I'm not sure you understand what DMA means. Someone already posted that so I'll let you look that up.
If you specify a route your broker needs to send that order the way you specified it - if I go out to IB and select NASDAQ as my order route then it must go there - if not it wouldn't be legal. When I take the "cheap auto route" I let my broker decide what they want to do with my trade but if I direct an order it goes exactly where I told that order to go.
Also - IB's internalization is called Timber Hill but again, that's only for certain types of orders and depends on your agreements. They also offer DMA but they do internalize.
Your comments about Penson are also leading me to believe that you don't properly understand the difference between a clearing firm and an execution firm. As a clearing firm Penson (or Apex) is getting the back ends of previously executed trades - they aren't selling anything.
I have no idea who 1254 is but I agree with everything he stated and am confused by a lot of what you said.
Let me clarify that I am aware of IB's market-making subsidiary Timber Hill as well as DMA.
However, in the case of Lightspeed for example, Lightspeed acts as an introducing broker for Penson, this means that all trades are technically conducted through Penson, are they not? However the trades can only be authorized by the introducing broker, but the cost-basis per trade is set by both Penson and Lightspeed.
The majority of brokers that trade through penson, happen to mainly offer smart-routing and sell that order flow to HFT market-making firms in Dark Pools, so that Lightspeed actually offers Penson DMA is a rarity.
I'm sure that you're well-aware that Apex is the result of penson being bailed out by peak6, but even peak6 wouldn't pay to manage the entire business, hence why penson has sold their futures trading and clearing division to Knight Capital.
Yes, I know that all Introducing Brokers have the option to use Penson's DMA, however the costs that Penson sets for DMA are fixed at a rate that is then sent to the broker. The Introducing Broker sets a price on top of the mandated fixed cost that penson sets for share.
The short list is also set by penson is penson is technically the broker, however only the IB can provide trade authorization.
Very few Penson IBs use the Penson DMA, most use smart-routing that is sent to hft market-makers on account of the kickbacks that penson and the ib receive from said firms. So, Penson has an incentive to charge more for direct orders.