IB TWS APIs - Great until IB crippled them

D

dlincke

I can't believe that IB has introduced APIs to their TWS software only to cripple the interfaces just a few weeks later in a way that makes them unusable for any kinds of advanced applications.

Why would anybody want to use an API which requires that every single options order it generates needs to be manually confirmed??? And of what use is an API that does not allow users the flexibility to route to the exchange/ECN of their choice? There's lot's of well documented problems with the BEST route especially when it comes to options.

This very much reminds of last spring, when IB decided that their customers should not be able to trade with any of the regional exchanges (PHLX, CHGO, CINC, PACX, BOST, Nasdaq Intermarket), any Nasdaq MMs pre-market and after hours, or any not directly connected ECNs (MKXT, LSPD, ATTN, NTRD) outside of market hours.

Looks like IB just killed another great thing.

Dave
 
You only mentioned options orders (I haven't tried the )

I know there are also lots of rules governing automated stock trading (e.g. most everyone is familiar with curbs).

(I haven't yet had a reason to try the API, so I don't know what type of prompts it gives for what... That's not going to stop me from exploring it, though)
 
Originally posted by dlincke
But there's no rules against sending automated stock orders to specific ECNs or eschanges.
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Actually, there are restrictions on auto-quoting ETFs, but I agree that's no reason to limit the APIs in this way, and am just as pissed about it. Why not just prevent the particular behavior that is prohibited instead of just making the API useless?

A conspiracy-minded friend of mine suggested that they're trying to keep us from competing with their proprietary traders. Perhaps IB should explain their reasoning, or come up with a better solution, to put such thoughts to rest.
 
come on, you're joking.

a little history: the market makers such as herzog, cut off IB simply because you guys were too good. Trading against IB clients wasn't profitable.

As for the conspriacy not competing: Do you really think that makes sense - especially in light of the fact the IB just annouced they are a 35% member of a new options exchange with the major drawing card - equal access to all broker dealers.

I am guessing here as I have not been part of the discussions and have not rec'd any feedback from my request for info.... But, I would imagine that there is some concern about too many orders being sent via poorly programmed API's which would clog up the system. If you guys haven't realized yet, the firms tends to release stuff early and work out any quirks later on. The company has has a pretty good history of being reasonable and entertaining client requests.
 
dlincke,

Could you tell me exactly how many keystrokes or mouse clicks are required to send the order?

If it is not too much trouble I would appreciate if you could take a screen shot of the "confirmation window" and either post it/or PM me.

Thanks
 
As much as I have faith in IB, I'm a little concerned over this policy of limiting the API.

Having emailed the chairman of IB, I was told to come up with reasons why "BEST" isn't best. Well after about two minutes I was able to come up with SEVERAL examples (especially in the options market). The last I heard from him, he said that my points were well taken and he would get back to me.

What has me concerned is that Exchanges are starting to charge for cancelled orders and IB does not want to incur these charges so they would prefer that you send your limit order via BEST, where your order is routed, in the case of options, to the ISE and ISLAND for equities (the ISE and ISLAND don't have these charges). However, this limitation will cost traders lots of $$$.

As for IB wanting to limit competition, I would say that it is unlikely. However, if they continue not to allow us "direct" access then I would start to wonder.

A solution may be for users to pay on an individual basis for these fees associated with sending orders or cancelling orders at each ECN/Exchange.

I expect IB to come through but would recommend anyone who is concerned to email management.


I can't believe there isn't more complaints about this. Can you imagine if IB decided that you could only use "BEST" with the TWS?

I don't think IB realizes how crucial access to all markets is. About a month ago, I had a dispute with IB management - to allow us to view which Exchange is bidding/asking in the BEST quote (just like in the TWS) via the DDE link. They refused!! It is such a simple thing to add to DDE and SO IMPORTANT in the options market yet they refused saying, just use BEST and that managements prioritization is "BEST". I would like to know how many option traders simply use "BEST"...............

Hopefully they will get the message!
 
Originally posted by mskl
has me concerned is that Exchanges are starting to charge for cancelled orders and IB does not want to incur these charges so they would prefer that you send your limit order via BEST, where your order is routed, in the case of options, to the ISE and ISLAND for equities (the ISE and ISLAND don't have these charges). However, this limitation will cost traders lots of $$$.

I can't believe there isn't more complaints about this. Can you imagine if IB decided that you could only use "BEST" with the TWS?
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I use BEST all the time for listed and nasdaq equities with no problems. BEST routes your order to the best market regardless of location. BEST does send most non-marketable limit orders to island, which is the most liquid ecn and what most direct access brokers default to anyways.

As for option orders, I have experienced problems with BEST ignoring exchanges that have auto-ex turned off, but overall its pretty robust. I usually get sent to ise, cboem phlx, or pse if any of them have auto-ex on. I don't think any problems with BEST are a result of any cost-savings attempt to IB management.
 
As for option orders, I have experienced problems with BEST ignoring exchanges that have auto-ex turned off, but overall its pretty robust. I usually get sent to ise, cboem phlx, or pse if any of them have auto-ex on. I don't think any problems with BEST are a result of any cost-savings attempt to IB management. [/B]
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wow, how many options do you trade??

if you are an active option trader then you will find that you only have access to about 40% of all customer orders booked in the marketplace. The other 60% of the orders have the auto-ex off. The AMEX and PHLX allow NO access to their customer order book. The CBOE allows access only on a portion of their options (ABP). The PSE and ISE are pretty good but there are some cases where their auto-ex systems are turned off.

Having said this, let's say you are long an option and you are trying to sell it and the current market is $3.20 bid (AMEX) $3.30 ask (CBOE & PSE). If you attempt to sell it at $3.20 via BEST then your order would not go to the AMEX (because IB looks for auto executions only - for obvious reasons) but would go to the ISE where it would NOT be filled. The AMEX would then see that the market is locked (NBB=NBO) and would fill the $3.20 bid themselves then the next bid may be $3.10 bid (CBOE) and if there is no auto then lowering your offer to $3.10 would not get you a fill as the order would once again be sent to the ISE (where they DON'T honor the NBBO) and so on and so on!! By sending the order directly to the AMEX or CBOE then at least you would have a chance at a fill.

Also, if you simply want to enter a limit order via BEST, then your order would be routed to the ISE. It doesn't matter if the particualr option actually trades much on the ISE, it is still sent there. Because there is NO client priority accross all option exchanges then you would be missing out on several trades. ie. you want to sell some calls at $4.10 and the NBBO is $3.70 bid $4.10 ask. When you enter your to sell at $4.10 via BEST, then your order is sent to the ISE. Because these options trade mainly on the CBOE/PHLX then your option could trade 10 times without you getting a fill despite being the first client offering. To actually sell the option you may have to go down to $3.70! YOU NEED the option of deciding where to send your limit orders!! In fact, often it is wise to offer on all five Exchanges ensuring that if it trades at $4.10 then you will get the fill (risking being double filled, although unlikely).

and there are more reasons......................


BTW the PSE has introduced a cancellation fee of $2.00 per order cancellation if the number of cancellations exceeds the number of executions for a member in a given month. And I was told that cost IS an issue for not allowing the direct access.


BEST will only be BEST when:

1) there are NO trade throughs in either options or equities
2) all markets are automatically executable (locked/crossed included)
3) there are no quote errors in the TWS (have you ever used BEST when quotes are incorrect??)
4) there is client priority accross all Exchanges for equity and option products

which will be NEVER!!

BEST is pretty good most of the time but sophisticated traders need the option of sending their orders directly to ECN's/Exchanges as well!


I have faith in management to get it right. Lets hope I'm right!
 
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