Is IB designed to just feed liquidity to Timber Hill?

[def]

Quote from SeekingAlpha2:

Isn't it obvious ??

If you have a stop at say 100

And price gets to 102 and would naturally in this case turn back up to 103 and 105 and 108 letting your trade brake even

IB knows your stop will get the price from 102 to 100 just to trigger your stop to Feed Timberhill which is on other side of your trade.

Isn't it obvious how the scam works, I am not saying price wouldn't most of the time trigger to 100 with or without IB.

But having IB there to screw you even when you won't be, make a huge difference in long term profits.

If I have to explain on this board how the scam work, then this is a wrong board for me

IB does not show any information on clients stops to Timber Hill or anyone else. You allegations above are 100% FALSE.

Please read my previous comments and statements.

 

[etile]

Quote from SeekingAlpha2:

Isn't it obvious ??

If you have a stop at say 100

And price gets to 102 and would naturally in this case turn back up to 103 and 105 and 108 letting your trade brake even

IB knows your stop will get the price from 102 to 100 just to trigger your stop to Feed Timberhill which is on other side of your trade.

Isn't it obvious how the scam works, I am not saying price wouldn't most of the time trigger to 100 with or without IB.

But having IB there to screw you even when you won't be, make a huge difference in long term profits.

If I have to explain on this board how the scam work, then this is a wrong board for me

Stop hunting has been around forever. Make mental stops or keep your trading stops on your side of the server. Problem solved.

 

[Occam]

Quote from def:

Occam will come back without any evidence and state otherwise but he will again be wrong.

Wrong about what? The text I quoted verbatim from IB's Web site (including, of course, that now-removed FAQ)?

And if you say IB doesn't internalize order flow to Timber Hill (even though its disclosure clearly says they may do so), are your posts here a guarantee that IB won't? And will you post here again to revoke your claims if IB/TH "changes their mind"?

Def's marketing-speak responses and apparent ignorance on the topic of internalziation and order management systems don't exactly give me much confidence in his "vehement" D) denials.

As for IB's high-volume customers (if any such actually exist), to a certain degree they're getting what they deserve if they don't do their own DD. If that means they end up getting shaved by unknowingly feeding liquidity to Timber Hill, I guess that's part of life we have to accept in a world with a somewhat toothless SEC.

 

[IBsoft]

Quote from JamesL:

This is one of the main reasons why our group chose not to use IB - we wanted a shop where we could keep everything in-house trading futures and stocks. Sterling (which we wanted to use) even works with them via FIX, but we could never get an accurate answer about this when using API/FIX interface. If a shop can't use them like us, I don't know how you automated guys can effectively use them if it ALWAYS has to be Smart Routing (and before an IB rep says that you can get better executions via Smart Routing, you exits are based on where you enter, so you could get a better entry but executed on a more expensive ECN - not worth the hassle IMO).

You state that you chose not to use IB. Could you please explain why? We try to give our customers the best possible and cheapest possible fills. That is the service we are offering.

 

[IBsoft]

Quote from jonnysharp:

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?

We have just changed the commission schedule. The API directed stock order pricing does not apply to the directed native pegged stock orders.

 

[IBsoft]

Quote from clearinghouse:

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.

IB strives to be a one-stop shop. Could you please explain addition of what flexibility would improve the quality and cost of the fills and why?

 

[IBsoft]

Quote from western:

Been using IB for 10 years so I'm a loyal customer...

BUT I do also think the brokerage side of IB is structured to feed liquidity to timber hill.

It does not mean IB is actively bucketing your orders or doing anything to harm your orders. Your trades wouldn't do any better at another brokerage, but IB obviously sees the value in having alot of order flow run through their system.

This is why IB has NEVER implemented full ECN functionality. You can route directly to island or arca, but you can't use any of the ecns' smart functions. You must use IB's own smart routing.

I believe this is also why IB never implemented the new software package they acquired from futuretrade a few years back.

For those of you who remember, futuretrade had a very advanced trading platform that looked quite similar to the other modern platforms like instaquote, redi, etc. IB originally promised to transition from TWS to this new modern platform, but it never happened.

I'm guessing management at IB decided that the new platform gave too much functionality to the user and might reduce order flow through IB smart.

IB indeed does not implement all the order types the various ECNs offer. Instead we opt for putting as much logic into 'Smart' as we can for the following reasons:
- in the constantly changing fragmented market place we want the trader to focus on making trading decisions instead of worrying about where he should route his order to get a good and low cost fill; the latter is the service we provide
- there are too many ECN order types to fully understand, implement, maintain and support (by the customer service); if one takes into account that majority of them would not actually be used by our clientele, offering them would not be economical

 

[bone]

My clients have to close their IB accounts because IB apparently doesn't know how to margin a futures spread correctly. They have also complained in the past about IB not offering the exchange supported implied futures spreads - I do not know if that is the case any more. But I do know that the Chicago FCMs take their business, and the Chicago FCMs surely know how to apply the SPAN inter and intra-commodity margin credits - even on an intraday basis.

 

[comintel]

Quote from bone:

My clients have to close their IB accounts because IB apparently doesn't know how to margin a futures spread correctly. They have also complained in the past about IB not offering the exchange supported implied futures spreads - I do not know if that is the case any more.

Here is a reply I received from IB just a few days ago:

Initial Description: Need exchange-native ICE WTI-COIL (Brent) Spread
Response from xxxx at 30-Jun-2011

Mr. XXX,

As you are likely aware, presently, we only offer this spread as a non-guaranteed combo. Please feel free to submit a request on our feature poll for the native combo.
http://www.interactivebrokers.com/en/general/poll/poll.php
There are no announced plans to offer the native combo on this pair at the present time.

Here also for reference is their earlier reply on their new illiquidity surcharge:

Initial Description: Illiquidity Charge
Response from yyy at 17-Jun-2011

Dear Trader,

In an effort to accurately recognize the correlation and liquidity risk inherent in longer-dated derivative contracts (which includes ALL non-single-stock derivatives), IB is implementing an ¿Illiquidity Charge¿ (defined as an in-house additional initial margin) for these positions.

Since this only affects initial margin, this charge can not directly result in a margin deficit, though it will decrease an account¿s buying power. Therefore you see a difference between initial and maintenance margin.

For each contract, there will be a start date and an end date - depending on the product category and maturity calendar (monthly vs. quarterly etc). Contracts that mature on or after will have illiquidity charge (additional initial margin) = 125% of existing maintenance margin. Contracts that mature before or on do not have an additional charge. Contracts that mature between the and are charged the prorated amount.

As indicated, this will not affect the maintenance margin requirements, only the initial margin. Your current margin requirement has taken into account the spread margin reduction. Please note, in terms of calendar spreads, if one (or both) legs of the spread are being assessed an illiquidity charge, this will be on top of any existing spread offset margin reduction and will apply to each affected leg separately. Any portion of the initial margin requirement over and above the indicated standard margin for that contract, should be attributed to an illiquidity charge.

Please feel free to post a response to the ticket if I can be of any further assistance on this matter. If the answer provided addresses the issue, we would appreciate your closing the ticket through the Message Center in Account Management. If you need real-time assistance, please contact us via phone or chat platform.
www.interactivebrokers.com/en/p.php?f=customerService&ib_entity=llc

Thank you for using Interactive Brokers.

Best Regards,
IB Customer Service

 

[Spearhead]

Quote from IBsoft:

IB indeed does not implement all the order types the various ECNs offer. Instead we opt for putting as much logic into 'Smart' as we can for the following reasons:
- in the constantly changing fragmented market place we want the trader to focus on making trading decisions instead of worrying about where he should route his order to get a good and low cost fill; the latter is the service we provide
- there are too many ECN order types to fully understand, implement, maintain and support (by the customer service); if one takes into account that majority of them would not actually be used by our clientele, offering them would not be economical

Just read through the entire thread and I'm still confused.. Does Timber Hill have any visibility into all SMART orders regardless of whether they are the execution venue? I assume that as part of the 'price improvement' logic, the order would have to be transmitted to them to see if they can fill the order at a better price, right?

I'm not contending that TH would actually make it a policy to trade against IB's customers, but assuming they are given visibility of all the SMART orders, it would be theoretically possible, right?