You're either being disingenuous, or you haven't read your company's own Web site:
http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php
Is IB designed to just feed liquidity to Timber Hill?
- Thread starter jonnysharp
- Start date
You're either being disingenuous, or you haven't read your company's own Web site:
http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php
You must be joking. How many million (or should I say billion?) cancel/modifies does Timber Hill send to options exchanges every day? Yet IB "can't handle" the "system strain"
D) of its own clients sending their orders to a real exchange? I would think that volume traders would want a brokerage that can handle the "system strain" of having their order routed to a real exchange rather than an internal matching engine (known somewhat ironically as "Smart") that selectively sends orders to Timber Hill.
My issue is that I want to use pegged to midpoint orders which are native to ISLAND via a API on the cost plus pricing structure, however this doesn't seem possible with IB?
def
Sponsor
I read the question as if the question is does Timber Hill Cherry pick against client orders and in essence give the opportunity to provide an inferior execution so it can do a quick scalp. That is not the case. TH doesn't see client flow. It doesn't make decisions on trading based upon any IB client info. I don't even think that TH is offering the autoex service anymore for US stocks but as I don't keep up to speed on the latest with our US routing, I can't say with 100% certainty. However, it still does not change the story. Clients receive the NBBO or better and IB is not designed to feed liquidity to any of it's affiliates. IB designs routing with one goal in mind - best execution.
As for routing and networks. I'm not going to go into a dissertation on API's, amount of throughput per API and segregation of API's and lease lines (ie. agency API's are usually required to run separately from market maker or house account API's). Market maker API's often have mass load functionality, additional throughput (number of transactions allowed per second) etc. in return for providing continuous quoting on a number of strikes within a required spread. These APIs are run separately from agency business. There is a cost to large number of modify/cancels and we do handle large amounts of volume efficiently but we are not necessarily eager to take on accounts with excessive order to execution ratios. I realize that our API model (which should be noted is provided free of charge) is not going to fit all sizes but business decisions need to be made and traders can make their own informed decisions on what works best for them. Updates on our pricing model will continue to evolve with the markets - ie. perhaps we'll offer a native midpoint choice via SMART in the future but as I state above, I am 100% certain that IB aims to provide the best execution possible to our clients. the proof is in the pudding. we urge anyone to do a side by side test from other brokers and compare.
I suspect that 90% of the "Does IB rip off their customers..." type threads started here are from jealous competitors, or clueless traders. I do think that the OP here had a legitimate question, though.
But the idea that IB/TH would risk a billion dollar operation to steal trader's nickles is preposterous. Yeah I know the nickles add up, but the whole thing is rediculous...
I've done at least 3,000 trades a year, for almost 10 years, through the IB API and the executions are fine, and the cost low. The biggest gripe against IB is the constant knobdickin of TWS. No broker is perfect, but I know IB helps me and many many other traders stay profitable.
Thanks again, def, for your support here.
Good trading to all.
But the idea that IB/TH would risk a billion dollar operation to steal trader's nickles is preposterous. Yeah I know the nickles add up, but the whole thing is rediculous...
I've done at least 3,000 trades a year, for almost 10 years, through the IB API and the executions are fine, and the cost low. The biggest gripe against IB is the constant knobdickin of TWS. No broker is perfect, but I know IB helps me and many many other traders stay profitable.
Thanks again, def, for your support here.
Good trading to all.
The OP's post makes sense ONLY if trader used "market orders"...
And only a clueless n00b would trade without using 99% Limit Orders.
A Limit Order aligns the trader's interest with IB's interests...
Both parties NEED an execution to make money...
The price is set... so IB must max chance of execution...
Therefore, SMART will route order to biggest liquidity center...
Which is where you wanna be sitting.
Rebate traders may need more specialized service.
This may have been good advice 5 years ago...
But if you are not developing and running Bots today...
At the very least Low Frequency Bots...
(This is not exactly Rocket Science)...
Then you will not have a viable trading business.
That's Ok...
Because many people here are not in the business of trading...
But rather in the business of selling services, software and "advice"...
The Sell Side is a much easier game than actually trading for a living.
I am part of the automated crowd, and I want more flexibility. I don't think OP is unreasonable here. Routing flexibility makes or breaks retail brokerage firms for me.
That having been said, yeah, I put longer range signals on IB. But it would be nice if I didn't have to partition flow and capital based on the strength and weaknesses of various brokers and I could use IB as a one-stop shop.
Your answer is disingenuous, IMO. Your implication is that you need to know narrow, specific client information to make money off of your clients. That is definitely not the case, as you and I both know it's adequate to quantify flow on the aggregate to figure out whether it's beneficial to MMs or not. If it were not the case, we would not see all these shenanigans with payment for orderflow from your E-Trade type places. That client flow is worth it to you even if it executes at the NBBO, and even if you give them several mils of price improvement.
However, if you are telling me you don't profit from client flow, why don't you let customers trade against other customers and give us all great discounts? Just between you and me, we don't need the exchanges. I'll provide your clients with liquidity at a discount and a smile.