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IB routing to PRIMEX
- Thread starter hpex1
- Start date
If IB is a "Crowd participant" who is a registered user of the "PRIMEX Workstation Watch List" to view the auctions of the "market orders" in a security, and IB is not using "Indications" and is using only "Real-Time Responses" limit orders to hit the PRIMEX displayed "market orders", I do not see a problem with the IB use of PRIMEX provided PRIMEX can give an immediate confirmation of IB's placed order results and immediate return to IB of any unfilled part of IB's orders. That response time should be compared with that of the ECNs. I at times have found Instinet to be a bit slow with confirmations and when everyone wants in or out at the same time, hitting the best bid or offer does not always get the desired results. I do not think we can expect PRIMEX to be perfect, just almost perfect.
I hope that IB will make a careful evaluation of IB's use of PRIMEX and make the proper decision about its inclusion in "Best Execution".
Catoosa
I hope that IB will make a careful evaluation of IB's use of PRIMEX and make the proper decision about its inclusion in "Best Execution".
Catoosa
If PRIMEX worked like an ECN that would be fine, bit it DOES NOT. It works like things did in the "olden days" when NASDAQ was full of bogus bids and offers that the MMs put up. When my orders have been routed there, they are usually delayed and not filled. When they are filled, it is no better than I could have gotten on ISLD, SUPERSOES, or some other ECN.
Someone else said we should study how PRIMEX is supposed to work before we get upset. I don't really care about their documentation or how they say things are supposed to be or what their motivation is. PRIMEX is BAD for me. It has done me no good, and has harmed me. I don't care why, I just need to be able to avoid it. I didn't get any PRIMEX executions yesterday, but things were a little too hectic at times for me to see if it was still delaying my orders. I missed some fills, but I don't know if it was due to PRIMEX or not.
Someone else said we should study how PRIMEX is supposed to work before we get upset. I don't really care about their documentation or how they say things are supposed to be or what their motivation is. PRIMEX is BAD for me. It has done me no good, and has harmed me. I don't care why, I just need to be able to avoid it. I didn't get any PRIMEX executions yesterday, but things were a little too hectic at times for me to see if it was still delaying my orders. I missed some fills, but I don't know if it was due to PRIMEX or not.
See it this way:
A lot of the "retail" order flow will hit Primex where the crowd (the select few mm's) will be able to hit it. So the order flow will less likely hit your bid or offer, while the mm's have less incentive to post their bids/offers making the spread smaller.
In both cases this is terrible for market-transparancy, spreads and an even playing field for insiders and outsiders alike.
Primex is a b*tch and definitely a case for the SEC to look into.
Bachelier
Ps. still, I am optimistic that Primex will be out of business as soon as their full fee-schedule comes in effect (the first months there are no transaction fees).
A lot of the "retail" order flow will hit Primex where the crowd (the select few mm's) will be able to hit it. So the order flow will less likely hit your bid or offer, while the mm's have less incentive to post their bids/offers making the spread smaller.
In both cases this is terrible for market-transparancy, spreads and an even playing field for insiders and outsiders alike.
Primex is a b*tch and definitely a case for the SEC to look into.
Bachelier
Ps. still, I am optimistic that Primex will be out of business as soon as their full fee-schedule comes in effect (the first months there are no transaction fees).
Originally posted by Catoosa
If IB is a "Crowd participant" who is a registered user of the "PRIMEX Workstation Watch List" to view the auctions of the "market orders" in a security, and IB is not using "Indications" and is using only "Real-Time Responses" limit orders to hit the PRIMEX displayed "market orders", I do not see a problem with the IB use of PRIMEX provided PRIMEX can give an immediate confirmation of IB's placed order results and immediate return to IB of any unfilled part of IB's orders. That response time should be compared with that of the ECNs. I at times have found Instinet to be a bit slow with confirmations and when everyone wants in or out at the same time, hitting the best bid or offer does not always get the desired results. I do not think we can expect PRIMEX to be perfect, just almost perfect.
Catoosa
This is not how it works. What IB does is to send marketable orders as "0 seconds exposure" orders to PRIMEX as the first step in their BEST order routing algorithm (marketable limit orders are not eligible for anything except "0 seconds exposure" anyway). Such orders will only interact with pre-registered indications already present in the system at the time of order submission and coinciding market orders on the opposite side of the market with a 15 or 30 seconds exposure window. If PRIs are present there's an immediate execution. If there's no PRIs the order is returned.
Now the question is if the delay that we are seeing when orders are returned unfilled is caused by the PRIMEX system or by some problem within IB's routing system. In the latter case I'm confident that the problem can be worked out. In the former case I would hope that IB will make separate BEST routes available including and excluding PRIMEX. To remove PRIMEX completely and deprive people of the added liquidity, however, would be a really stupid idea. Ther is people who trade in larger size than 100 share lots and they do appreciate the added liquidity that PRIMEX provides. And in any case there's already enough liquidity pools that IB has cut off their customers from accessing.
Dave
Originally posted by saschabr
Hi all,
i was sad when I heard IB changed routing marketable orders to REDI / ARCA. Does anybody know if BEST / BEST_ECN routed market orders are affected by this as well ? This would mean you cannot hit the best bid if it is on REDI / ARCA.
You can hit liquidity on ARCA and REDI provided it sits at the NBBO. What you can't do, however, is hit anything on ARCA/REDI that is out of market. E.g. in the following case
NITE 45.48 100
REDI 45.46 1000
your order will be rejected if you try to hit REDI before NITE is taken out.
Dave
Originally posted by Bachelier
A lot of the "retail" order flow will hit Primex where the crowd (the select few mm's) will be able to hit it. So the order flow will less likely hit your bid or offer, while the mm's have less incentive to post their bids/offers making the spread smaller.
In both cases this is terrible for market-transparancy, spreads and an even playing field for insiders and outsiders alike.
Primex is a b*tch and definitely a case for the SEC to look into.
Bachelier
Ps. still, I am optimistic that Primex will be out of business as soon as their full fee-schedule comes in effect (the first months there are no transaction fees).
I'd say the opposite is much more likely to happen. It's not like most retail order flow has ever hit the market directly. Instead it is typically internalised and auto-executed by wholesale MMs. Thus, it has always been out of reach of direct access traders to trade against. PRIMEX actually provides incentives for MMs to open up their order flow since it facilitates compliance with the SEC's BEST Execution rules. Using match parameters they can commit capital to the order flow the funnel into PRIMEX but at the same time everyone else can interact with that order flow as well by price improving it.
As for widening the spread, I think that's unlikely as long as there's ECNs, which are quoting the inside market most of the time anyway. Of course it's possible that a lot of ECN players will migrate to PRIMEX. While this would likely result in larger displayed spreads I doubt that it would make a difference in terms of "real" spreads as the added liquidity would simply make PRIMEX auctions more competitive resulting in larger price improvements. I can see how the decreased transparency at the inside market would be of concern to L2 scalpers, but decimalization has already killed those kinds of strategies for the most part anyway.
I can imagine that lots of institutions will embrace PRIMEX due to the thinning out of liquidity at the inside market which was caused by decimalization. PRIMEX is an ideal vehicle to work size at the inside market without tipping your hand in terms of displaying quotes.
I also don't see how the fee schedule would kill it as long as it doesn't exceed that of SuperSOES or the benefits in terms of price improvement outweigh the additional cost. And why would the SEC look into a system that they just recently approved?
Dave