Identifying when IB is your counterparty

[ak15]

Quote from cvds16:

Easy, it works the other way around, Timber Hill is quoting markets and when they have an order they look if Timber Hill is the best ... not exactly rocket science ...

Exactly.

 

[Option Trader]

Quote from ak15:

It is not a question of being happy or unhappy. It is a question of reality. Just think about it. You place an order to buy or sell. You get filled in milliseconds. Do you think IB has the time to line up other IB clients to match your order within that time frame?
Also do you mean to tell me that an IB rep over the phone was lying to me when he unequivocally stated that 'Ideal' signifies Timber Hill. This is the only logical explanation. If it was filled by any other ECN they will list the ECN... Arca, Bats, Inet etc.
Any IB client trading stocks will notice that they get filled by Ideal only when they attempt to lift the inside bid or offer or try to buy or sell at well below or above NBBO depending on whether it is a purchase or a sale i.e. you are in a hurry to get out of the position. So IB readily finds other IB clients or other unidentifiable 'dark pools' only in such situations? Get real. The only logical and feasible explanation is Timber Hill.
There are also other ways to determine this outcome. Just do your own dd.

See the following post. IBsoft claims at least when it comes to options that the customer is first. http://www.elitetrader.com/vb/showthread.php?s=&threadid=80553&perpage=6&pagenumber=1

 

[ak15]

Quote from Option Trader:

See the following post. IBsoft claims at least when it comes to options that the customer is first. http://www.elitetrader.com/vb/showthread.php?s=&threadid=80553&perpage=6&pagenumber=1

That may be true. I am talking about stocks only. I don't trade other instruments and can't speak about them.

 

[ids]

Quote, "Not accurate. If you do not see customers' orders how are you able to route specific orders through Ideal? Not only do you see customers orders, you also determine whether Ideal can benefit by routing to them and if not you then route to other ECNS or NYSE."
It is accurate. The question was in context of our Market Making activity. Our Market Maker does not see customer orders. IB-broker sees orders of course but it has no clue about existence of the MM. We separated these two by so-called Chinese wall to avoid conflict of interests. It was done from the start of our existence as a broker by design.

 

[Option Trader]

Quote from ids:

Quote, "Not accurate. If you do not see customers' orders how are you able to route specific orders through Ideal? Not only do you see customers orders, you also determine whether Ideal can benefit by routing to them and if not you then route to other ECNS or NYSE."
It is accurate. The question was in context of our Market Making activity. Our Market Maker does not see customer orders. IB-broker sees everything of course. We separated these two by so-called Chinese wall to avoid conflict of interests. It was done from the beginning by design.

Thank you for this clarifying. Does IB algorithm first check for a fellow IB customer before sending the order for MM activity?

 

[def]

Quote from Option Trader:

Thank you for this clarifying. Does IB algorithm first check for a fellow IB customer before sending the order for MM activity?

No !

Think of Timber Hill as a dark pool of liquidity. The quotes from Timber may form part of the internal NBBO and thus the client side has access to that liquidity.

example:

NBBO = 10 at 10.05
Timber = 9.85 at 10.02

internal NBBO = 10 at 10.02

client places 10.02 bid

result: client gets instant fill for 10.02

 

[Option Trader]

Quote from def:

No !

Think of Timber Hill as a dark pool of liquidity. The quotes from Timber may form part of the internal NBBO and thus the client side has access to that liquidity.

example:

NBBO = 10 at 10.05
Timber = 9.85 at 10.02

internal NBBO = 10 at 10.02

client places 10.02 bid

result: client gets instant fill for 10.02

What happens though if an IB client is sitting at 10.02 as well? Does the Timber order get taken out, or the client's?

 

[def]

Quote from Option Trader:

What happens though if an IB client is sitting at 10.02 as well? Does the Timber order get taken out, or the client's?

In that case the client order will immediately route to an exchange and thus will available for the entire market place for a fill.

 

[Option Trader]

Quote from def:

In that case the client order will immediately route to an exchange and thus will available for the entire market place for a fill.

What I mean is if both Timberhill & a client of IB are sitting at 10.02, and then another IB client submits a buy order at 10.02, who will be his counterparty, Timberhill? OR the other IB client?

 

[kiwi_trader]

You seem to be asking two questions:

1. If an order has been routed to the exchange and another order from IB or TH arrives will it be filled internally rather than the exchange?

2. If IB will match internally rather than relying on the exchange then what is the queuing? Is it first in first out?