Do NYSE Traders use IB's Smart Order Routing Very Often?

version77 · Nov 17, 2003

Was wondering if any listed traders use IB's Smart order routing
for their trading. And if they do, then why? If they don't then why
not? Some guy on IB's Yahoo user group says he does. And he
says the orders can be filled by Arca, Instinet, Island and TMBR.
I always thought TMBR was for nasdaq orders, not listed... In
fact, this guy "always" routes to Smart. He says otherwise he is at
the "mercy" of the NYSE.

Hurricane · Nov 17, 2003

If I'm putting in a limit order GTC than I definately don't use Smart routing to avoid after hours executions. If there's news after the close that allows my order to go through, I'd rather wait and take my chances at getting price improvement at the next day's NYSE open. If I'm putting in a market order, generally I prefer Smart routing to get quicker executions and occasionally price improvement.

On high volume NYSE stocks, I'm generally satisfied with the executions and don't feel as if I am at their mercy.

IndexTrader · Nov 17, 2003

I always route everything through smart. The one VERY annoying complaint I have with smart is the "crossed quotes" on ETF's where the ask price is less than the bid and trades do not get executed until they "uncross".

This is hell of annoying (not to mention expensive) and I'm not sure its always with Arca or whether it may be IB's smart routing at times.

It also occurs at the worst time, when the market is *moving*.

Quote from version77:

Was wondering if any listed traders use IB's Smart order routing
for their trading. And if they do, then why? If they don't then why
not? Some guy on IB's Yahoo user group says he does. And he
says the orders can be filled by Arca, Instinet, Island and TMBR.
I always thought TMBR was for nasdaq orders, not listed... In
fact, this guy "always" routes to Smart. He says otherwise he is at
the "mercy" of the NYSE.

H2O · Nov 17, 2003

Quote from IndexTrader:

....... and I'm not sure its always with Arca or whether it may be IB's smart routing at times.

Check "Exclude ARCA from SMART routing" in TWS. This way you can make sure you will not get routed through ARCA.

vikana · Nov 17, 2003

Always use SMART. Both intra day and GTC Limits. Works a like a charm. Have not had a single incident of "strange" fills.

IndexTrader · Nov 17, 2003

Tried that option, but unfortunately the b/a spread in some of the stuff I trade widened considerably, so I'll have to put up with it.

Its one of those tradeoffs.

Quote from H2O:

Check "Exclude ARCA from SMART routing" in TWS. This way you can make sure you will not get routed through ARCA.

egusc · Nov 17, 2003

I almost always use smart for NYSE, but there are two ways that it has backfired on me.

First, when there is a freeze in the NYSE book and the specialist gaps the bid and ask. IF someone places and order at an ECN that is better than yours IB smart order price, IB will move your order from the NYSE and fill it on the ECN. Sometimes this does make me money but ussually it cost me money so i always move my order so i don't get filled at the low end of the gap at am ECN.

Second and this is very rare i have been filled by TMBR when i move my price. I think this has only happen twice to me in a couple years.

Many times smart will find an ECN that makes me money, so if i watch the NYSE bid and ask for gaps there is almost no downside that i can think of.

Good luck

sprstpd · Nov 18, 2003

Quote from egusc:

I almost always use smart for NYSE, but there are two ways that it has backfired on me.

First, when there is a freeze in the NYSE book and the specialist gaps the bid and ask. IF someone places and order at an ECN that is better than yours IB smart order price, IB will move your order from the NYSE and fill it on the ECN. Sometimes this does make me money but ussually it cost me money so i always move my order so i don't get filled at the low end of the gap at am ECN.

Second and this is very rare i have been filled by TMBR when i move my price. I think this has only happen twice to me in a couple years.

For the first case, why not use an "OPG" order? A SMART opening order is sent exclusively to the NYSE.

For the second case, why is it bad to be filled by TMBR? Have you noticed a correlation between TMBR fills and losing trades?

dddooo · Nov 18, 2003

Previously I did get a lot of great fills from TMBR. It was primarily happening when price was running away from me and realistically I would not have gotten the fill on NYSE. Unfortunately it's no longer the case.

Right now I am getting very few fills from TMBR - like 1 out of 50 trades and they are all bad. I mean they are immediate and fair, but the price invariably changes in my favor on NYSE within a fraction of second, so in all likelyhood I would have gotten a price improvement from the specialist.

Other then TMBR, I did get a couple of fills from Island and Instinet. The execution was of course immediate but the price again was not any better then the price I could have just as easily gotten on NYSE.

They are not breaking any rules of course and I still have Smart as default routing just in case but SMART has not been "helpful" lately. If things do not improve shortly I will switch to NYSE routing and reserve SMART for extreme situations only.

dlincke · Nov 18, 2003

Quote from IndexTrader:

I always route everything through smart. The one VERY annoying complaint I have with smart is the "crossed quotes" on ETF's where the ask price is less than the bid and trades do not get executed until they "uncross".

This is hell of annoying (not to mention expensive) and I'm not sure its always with Arca or whether it may be IB's smart routing at times.

It also occurs at the worst time, when the market is *moving*.

Eith ETFs like QQQ SMART has been exhibiting some nasty buggy behavior where in about nine out of ten cases non-marketable limit orders placed within two to three cents of the spread would take thirty seconds or more to cancel or modify. This problem seems to have been taken care of, though, as of a few days ago. At the same time IB has also changed the default destination back of Island. Given the circumstane that those problems coincided with Island starting to display their book with ETFs again I would not be suprised if the problems were due IB's routing algorithm colliding with that unexpected behavior.