A) What would be the impact on the speed of order fills if IB adds this to their algorithm if first thing first they scan for other things? If this point has been the cause of hesitation by IB, then perhaps that can be offered for the customer to choose which he prefers. B)I agree with you about many brokers, but it seems to me that Thinkorswim does much better.
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IB vs Thinkorswim RE: price improvement
- Thread starter Option Trader
- Start date
its pretty obvious i'm not the only client who has tos and ib that sees these type of better fills are going on at tos. to me tos reminds me of ib 3 are so years ago when ib was 1 step up on all. as i said i like ib but the more i trade with tos and see how they update there platform monthly and how responsive they are i see no stopping them. its not just the fills but tos's platfrom is so darn user friendly and the amount of and ease of info is eye popping. not to mention its so cool looking.
About your point that you don't believe IB keeps the price improvement for itself. Could it be that IB gives you the fill with Timberhill, and the millisecond later scanning for an arbitrage opportunity (i.e. the price improvement that you missed)?Quote from jimrockford:
I would say yes, to your first question. I believe that the recent spate of public reports, that IB failed to give price improvement in a situation where a competitor did give price improvement, probably was a direct result of IB not doing the particular type of hidden liquidity scan I just described. IB interacts with dark pools, but this is not sufficient to eliminate the need for the type of scanning I am proposing.
My belief, in response to your second question, is that IB does not get price improvement, withold it from the customer, and instead keep that price improvement for itself. I believe IB's assurances that its proprietary traders use the same SMART order routing algorithm made available to IB customers. I believe that IB is a basically honest company, that honesty is part of its business model, and that it acts in good faith with respect to order routing.
I would also say this. If IB does take the other side of a customer's buy (sell) trade, at the NBBO ask (bid) price, when in fact, the true hidden ask (bid) is a more advantageous price which would have been achieved by proper scanning for hidden liquidity, then IB does take a benefit for itself at the customer's expense, and I think this is a breach of the broker's duty to his customer. But I also believe that IB sincerely hasn't yet figured this out, and that IB is unaware it is doing this, and that there is no intentional wrongdoing, and that it is only a matter of time before IB does figure it out and make the necessary changes to SMART so that the situation will be corrected. I don't believe that any of IB's retail competitors are doing a better job of order routing than IB, even if there are some specific cases in which a particular competitor does better on a particular order.
Quote from Option Trader:
About your point that you don't believe IB keeps the price improvement for itself. Could it be that IB gives you the fill with Timberhill, and the millisecond later scanning for an arbitrage opportunity (i.e. the price improvement that you missed)?
I already said NO, I do not believe this is occurring, because it would be contrary to IB's public assurances, and also contrary to IB's duty as a broker.
Bewildering: Just made the following trades with Thinkorswim & with IB:
A1) Sold 400 of a particular stock with TOS at the bid of 19.31 & got 19.316 on Thinkorswim.
A2) 26 seconds later, I sold 200 of that stock on IB, and got 19.31 (i.e. no price improvement).
B1) 41 seconds later sold 100 more on TOS and got 19.3145.
B2) 15 seconds later, sold another 100 on IB and got 19.31 (no price improvement).
You guys take it from here.
A1) Sold 400 of a particular stock with TOS at the bid of 19.31 & got 19.316 on Thinkorswim.
A2) 26 seconds later, I sold 200 of that stock on IB, and got 19.31 (i.e. no price improvement).
B1) 41 seconds later sold 100 more on TOS and got 19.3145.
B2) 15 seconds later, sold another 100 on IB and got 19.31 (no price improvement).
You guys take it from here.
I think your observations are pretty valid. Seems like IB is falling behind Thinkorswim in this regard.
How is Thinkorswim in regards to futures trading? I only trade futures and have been looking around at other brokers as a backup to IB. Thanks.
How is Thinkorswim in regards to futures trading? I only trade futures and have been looking around at other brokers as a backup to IB. Thanks.
Sorry, as I only trade stocks & options.Quote from brocklanders:
I think your observations are pretty valid. Seems like IB is falling behind Thinkorswim in this regard.
How is Thinkorswim in regards to futures trading? I only trade futures and have been looking around at other brokers as a backup to IB. Thanks.
I sure hope that Jim Rockford is right that IB is merely overlooking this in their order routing, and I sure hope they do something about it.Quote from brocklanders:
Ok, thanks. Your post got me thinking about Thinkorswim so I'll have to do some more research on them. Let us know if you find out any more info on your price improvement testing. Very good info so far.
Today, the difference between IB versus TOS, was 19.5235 (with TOS) versus 19.51 with IB, which was also the displayed price. Sold 400 shares with TOS, then another 400 shares 22 seconds later. The sale on IB was 5 seconds later at 19.51 at the displayed price of 19.51.
(Note: To support Jim Rockford, the sale with IB did NOT got to "smart" or "IDEAL" which means Timberhill, rather it went to NYSE.)
A minute later sold 100 shares with IB with displayed price of 19.53 at 19.53, then did the same with TOS and got 19.5435. The IB order went on NYSE again, and the TOS order went on ARCA.
Perhaps what is going on with IB smart route is that it's choosing NYSE displayed over ARCA displayed, and simply ignores ARCA hidden orders.
(Note: To support Jim Rockford, the sale with IB did NOT got to "smart" or "IDEAL" which means Timberhill, rather it went to NYSE.)
A minute later sold 100 shares with IB with displayed price of 19.53 at 19.53, then did the same with TOS and got 19.5435. The IB order went on NYSE again, and the TOS order went on ARCA.
Perhaps what is going on with IB smart route is that it's choosing NYSE displayed over ARCA displayed, and simply ignores ARCA hidden orders.