Interactive Brokers Smart Routing

D

directionless

I'm referring to this page:

http://www.interactivebrokers.com/en/p.php?f=smartRouting

If I'm on the bid in, say, BAC on IB, and I put that bid there using their smart routing algorithm, will they put me on the bid in those dark pools they are referencing? Does my order "exist" in multiple locations, or do they just sort of pick which slot to stick me in on the best conditions at the time? And when I am on the bid there, do I get preferential treatment on my fills compared to non-retail agents trading on that desk, or am I at the back of some mysterious dark queue? How do I know exactly where I got my fill?

Moreover, can I choose to strictly be on their dark pools instead of using their smart routing algorithm? e.g., I have a thin stock and I want to get out of 10k shares, but don't want to tip the players off that I have large size.

Moreover, if I'm on the bid on BAC, would they also match me against another customer of theirs and give me a cheaper rate, or do they strictly put me in some other venue? In other words, am I competing for the fill with some faster, professional market maker when I get routed to these "special" locations?
 
This is from their website:

The Smartest Trades use IB SmartRoutingSM. IB SmartRouting searches for the best firm stock, option, and combination prices available at the time of your order, and seeks to immediately execute your order electronically.

Have you ever been on the bid or offer that way and received an execution without the market crossing your limit?
 
Quote from directionless:

I'm referring to this page:

http://www.interactivebrokers.com/en/p.php?f=smartRouting

If I'm on the bid in, say, BAC on IB, and I put that bid there using their smart routing algorithm, will they put me on the bid in those dark pools they are referencing? Does my order "exist" in multiple locations, or do they just sort of pick which slot to stick me in on the best conditions at the time? And when I am on the bid there, do I get preferential treatment on my fills compared to non-retail agents trading on that desk, or am I at the back of some mysterious dark queue? How do I know exactly where I got my fill?

Moreover, can I choose to strictly be on their dark pools instead of using their smart routing algorithm? e.g., I have a thin stock and I want to get out of 10k shares, but don't want to tip the players off that I have large size.

Moreover, if I'm on the bid on BAC, would they also match me against another customer of theirs and give me a cheaper rate, or do they strictly put me in some other venue? In other words, am I competing for the fill with some faster, professional market maker when I get routed to these "special" locations?
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I don't know how 'Smart' their SMART Routing is. I wld estimate 80% of all my SMART routed trades go straight to ISLAND. It seems to be the default.
 
Especially the smaller stocks always seem to go to ISLAND.

I can imagine 2 (different) algorithms for routing:

- route to the exchange which is on average (over time and/or stocks) the most liquid

- route to the exchange which has the best bid/offer for the specific stock at the moment of sending the order

The point is that the order has to go somewhere (i.e. to some (1) exchange). As long as the order is hit as fast as it would have been hit on an other exchange the choice is no problem I would say.

The advantage of IB is that the bid/offer is not held back until the bid/offer price is reached by the market.
 
short answer for OP : no
IB smart routing is a joke in today's market and will not search for anything for you,if you trying to buy at bid..like been said above-if you use default settings most of the time your order will be routed to island and will stay there. 100% of odd orders will be routed to island. in fact i believe it will work exact same way as you describe, but in IB's own advantage if you buy at ask. they will sell you sometimes at the price fractionally better than NBBO, either from their own inventory or by searching every venue for better price than your buy at ask order and then will re sell shares to you. once again-it good for buying at ask,but not at the bid
 
Quote from Bob111:

short answer for OP : no
IB smart routing is a joke in today's market and will not search for anything for you,if you trying to buy at bid..like been said above-if you use default settings most of the time your order will be routed to island and will stay there. 100% of odd orders will be routed to island. in fact i believe it will work exact same way as you describe, but in IB's own advantage if you buy at ask. they will sell you sometimes at the price fractionally better than NBBO, either from their own inventory or by searching every venue for better price than your buy at ask order and then will re sell shares to you. once again-it good for buying at ask,but not at the bid
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Another ill-informed post. IB doesn't internalize. Odd lots are a different issue which and catering to those trading less than 100 shares isn't our main focus. IB SMART doesn't route multiple working orders at different exchanges as it needs to avoid overfills. However, it will move orders from one routing venue to another if it can achieve a better fill. The execution and price improvement stats are readily available and the latest independently audited stats show that IB's price improvement for US shares was 27 cents better per hundred shares than the industry.
 
here is an example how smart IB's routing is:

4db386d01d5e.png



for whatever reason "DAY" orders are routed to direct edge and stays there, even after exchange was closed and other venues such as island or arca are open. why order was not re routed on those ECN's? not only that-it's shown in TWS as an active order,when exchange was closed and audit file shows that the order was cancelled @ 17:00PM

go figure...
 
Quote from def:

However, it will move orders from one routing venue to another if it can achieve a better fill.
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with 30 sec intervals,while rest of the crowd on the other side of the our screen is doing same thing in nanoseconds.
 
You're quite good at serially complaining where you don't have all the facts, understanding of scalability nor mention better alternatives. How about you PM me some examples of missed trades. I suspect there aren't many - and do not point out odd lots as they are a different animal all together.

All the while, do keep in mind that we have a team of people that do optimize our code and have the benefit of analyzing execution statistics for millions upon millions of trades. Somehow with all this ineptness, IB's routing still beats the industry significantly with quality of execution.

I'd suggest you get into the HFT game yourself. It will certainly be a more profitable use of your time given the extreme wealth of routing knowledge implied in your posts.
 
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