Is IB designed to just feed liquidity to Timber Hill?

It is unfair to single out IB regarding this issue.
The vague definition of "best execution"
insures it is open season for "not too blatant" customer fleecing.
Unfortunately the root of the problem is
so to speak "in your face", embedded in the very
word "broker-dealer". For as long as a broker can be
a dealer, or accept payment for order flow from a dealer
there is nothing you can do about it.
Best to think of it as a cost of doing business.
 
Quote from clearinghouse:

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.
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TH DOES NOT INTERNALIZE CLIENT FLOW FOR US EQUITIES - PERIOD. Just because other brokers do does not mean all choose to do so. Our clients know how good their fills are, our clients see where their orders are executed and our clients are benefiting from the greatest price improvement amongst all the major brokers.

Can it be stated more clearly than that? Your second paragraph doesn't jive with best execution. But I'll run with that anyway. In IDEALPRO - (FX) IB clients can trade with other IB clients as client orders become part of the book. But execution is determined by routing to the best price. This includes the IB client quotes along with the other 10-15 other liquidity providers who combined often form a market that is often 1/2 to 1 pip wide for many of the majors.

If you guys (and I know some posting on this topic are competitors) are looking for a conspiracy or somewhere to knock IB down, this is not your optimal target. Best execution is the core of IB's business model and it is taken very seriously at all levels.
 
Quote from def:

TH DOES NOT INTERNALIZE CLIENT FLOW FOR US EQUITIES - PERIOD. Just because other brokers do does not mean all choose to do so.
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Yet your own company's Web site states precisely the contrary -- or at least it did, up until today. The FAQ on Timber Hill's auto-execuition was just taken down after I posted the link to it. Interesting, to say the least.

http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php

Fortunately, Google's cache still has it:

Timber Hill provides an automatic execution service for certain eligible IB customer orders in certain Nasdaq stocks and NYSE and other exchange listed stocks. When IB's Best Execution order routing system searches the available market centers for your order, if Timber Hill is willing to provide an execution at the best available national price or better for that stock, IB may send your order to Timber Hill for an immediate automatic execution.
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That is internalization, to the letter. Are you still going to deny this? Or did IB's policy of internalizing against its clients trades (as per its own FAQ, up until June 17) change? Just today?

I think that any high-volume trader would be reckless to trade with IB, unless they were VERY careful about monitoring their own executions. Even then, I'd have my doubts, because it's so easy to silently lose a few cents/share of what would have been the true best execution, which isn't really even knowable unless you send the order to a real exchange.
 
Quote from Occam:

Yet your own company's Web site states precisely the contrary -- or at least it did, up until today. The FAQ on Timber Hill's auto-execuition was just taken down after I posted the link to it. Interesting, to say the least.

http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php

Fortunately, Google's cache still has it:



That is internalization, to the letter. Are you still going to deny this? Or did IB's policy of internalizing against its clients trades (as per its own FAQ, up until June 17) change? Just today?

I think that any high-volume trader would be reckless to trade with IB, unless they were VERY careful about monitoring their own executions. Even then, I'd have my doubts, because it's so easy to silently lose a few cents/share of what would have been the true best execution, which isn't really even knowable unless you send the order to a real exchange.
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It was taken down since TH no longer provides any quotes to IB for US equities and was thus incorrect. That has been the case for some time.

Look, you apparently have an axe to grind. Believe what you want. I've stated our focus on providing best execution. You're a naysayer so I challenge you to go side by side with IB with your broker and post who has the better fills. I'm confident IB will come out on top.
 
Quote from Occam:

Yet your own company's Web site states precisely the contrary -- or at least it did, up until today. The FAQ on Timber Hill's auto-execuition was just taken down after I posted the link to it. Interesting, to say the least.

http://www.interactivebrokers.com/en/general/education/faqs/timberhillAutoExeService.php
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12 hours ago I found the linked document just useful info... nothing criminal in it... till some big shot at Interactive Brokers proved me wrong by ordering to take it down.

Quote from def:

It was taken down since TH no longer provides any quotes to IB for US equities and was thus incorrect. That has been the case for some time.
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I saved a copy of the linked Web-page and after skimming through it I don't see any reference to quotes provided by Timber Hill. Even if there was a reference to quotes, wasn't it just a minor omission that could be edited out instead of taking down the whole page full of useful info?

Anyways, the page read:
Timber Hill's Automatic Execution Service FAQ

What is the Timber Hill Automatic Execution Service for IB customers?

Timber Hill provides an automatic execution service for certain eligible IB customer orders in certain Nasdaq stocks and NYSE and other exchange listed stocks. When IB's Best Execution order routing system searches the available market centers for your order, if Timber Hill is willing to provide an execution at the best available national price or better for that stock, IB may send your order to Timber Hill for an immediate automatic execution.

How can I benefit from the service?

If your order is eligible for automatic execution, you will get as good a price as any price available in the national market system and, most importantly, your order will get executed immediately, with no delay or chance of the market price moving away from your order before it is executed.

Does the service include both Nasdaq stocks and exchange-listed stocks?

The service includes certain Nasdaq stocks as well as certain listed stocks.

How does this affect IB's order-by-order Best Execution routing system?

Orders will be routed individually to the best market. Timber Hill is included in the list of available routing destinations. If Timber Hill is willing to provide an execution at the best available national price or better, your order will be eligible to receive an instant, automatic execution.

Will my orders have a chance for price improvement?

Yes. Orders routed to Timber Hill may be executed at better than the national best bid or offer. Moreover, if an order receives price improvement, it will be instantaneous and will not cause delay in execution. This is in contrast to the practice of some other specialists and market makers -- who may hold on to your order while they look for price improvement but may never execute your order if the market moves in your favor.

What is meant by "Best Available National Price"?

Best available national price means the best quote posted in the consolidated quote system that is valid for purposes of the intermarket trading system trade-through rule. Please note that if a quote is posted by a U.S. national securities exchange and the associated size is only 100 shares, this quote may not be considered as part of the best available national price. This is because such quotes are usually "default" quotes that may not be valid. Thus, if the New York Stock Exchange is posting the highest bid or lowest offer in the market but the bid or offer is for only 100 shares, this bid or offer is not considered to be the best available national price and Timber Hill is not required to execute an order in that stock at that price or better.

Will Timber Hill ever hold on to my order if it is routed to the Timber Hill Automatic Execution Service?

No. All orders routed by IB to Timber Hill will be immediately automatically executed, with no delay and no human intervention. IB will not route any orders to Timber Hill that are not immediately executable. Thus, Timber Hill will not handle or represent non-marketable limit orders.

How can I be sure that orders sent to Timber Hill's Automatic Execution Service are receiving best execution?

First, you will see on your Trader Workstation that orders sent to the Timber Hill Automatic Execution Service are being executed immediately at the best national price or better. In addition, every month Timber Hill will post SEC-required statistics regarding the orders executed on the Service. These statistics will show speed of execution, size, price improvement and other valuable data.

What if I want to route an order directly to Timber Hill?

IB is unable to offer that service at this time.

Can Timber Hill "peek" at my orders and trade ahead of me before my order is executed?

No. Strict procedures prevent disclosure of your orders prior to their automatic execution by Timber Hill. Again, unlike some other specialists and market makers, with the Timber Hill Automatic Execution service, you will see your orders being executed immediately.

How will I know if my order was automatically executed with Timber Hill?

If an order was automatically executed through the Timber Hill service, this will be indicated on your daily statement.
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Quote from def:

It was taken down since TH no longer provides any quotes to IB for US equities and was thus incorrect. That has been the case for some time.

Look, you apparently have an axe to grind. Believe what you want. I've stated our focus on providing best execution. You're a naysayer so I challenge you to go side by side with IB with your broker and post who has the better fills. I'm confident IB will come out on top.
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There is no Axe to grind and where is your proof

You are not providing any proof only your words.
Why should we trust you?

Very suspicious that just now IB took down/changed the site when this came out on ET.
And for all we know IB still does it
 
When IB changed the last traded execution definition and never fully explained why IB is the only broker that needed to do it. And it caused greater slippage.

Now I know it is to feed Timber Hill

My honest message to IB, greed will destroy you in the long run if you let it slip out of control

Maybe though short term CEOs understand all that and just want to make a quick buck and crash the company, as in like who cares I got my money :cool:
 
Quote from def:

It was taken down since TH no longer provides any quotes to IB for US equities and was thus incorrect. That has been the case for some time.

Look, you apparently have an axe to grind. Believe what you want. I've stated our focus on providing best execution. You're a naysayer so I challenge you to go side by side with IB with your broker and post who has the better fills. I'm confident IB will come out on top.
More...

So I have an "ax to grind" because I point out that what you say contradicts what IB's own web sites says (or said, up until yesterday)? Or that represents a "conspiracy theory" or that I'm a competitor?

You're right about one thing, in a sense -- as short-term traders, many of us are competitors to IBKR. I am a trader, and Timber Hill is also a trader, and therefore my competition, which (factoring out the brokerage) is fine.

However, I think that any trader who now uses IB is being foolish, as they're sending their orders to their competitor, who may or may not trade against their position (depending on whether we choose to believe you or IB's just-deleted Web page -- and if IB/Timber Hill really did quitely change their policy on this, why can't it just quietly change it back?).

Any way you slice it, IB's stucture has the potential for conflict of interest, unless Timber Hill is completely split off from the brokerage side. And this thread, in and of itself, proves quite a bit to anyone who's informed enough to realize what the issues with internalization really are.
 
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