Is TMBR cheating
- Thread starter skeptic123
- Start date
def
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TMBR gives instant fills naturally when it can. There seem to be exceptions when an order is sent (you sent a market order) that isn't filled at the advertised price - could be simply because someone beat you to it, or the specialist drops his price. In cases like this, TMBR's quote just becomes part of the internal consolidated quote and orders will be routed back to TMBR if it is better or matches the best market as it knows it can guarantee an immediate fill.
So yes, it seems there are exeptions but the spirit if the FAQ isn't violated as fills are still immediate when routed back and more importantly, cases like the above are more the rare expection than the rule.
So yes, it seems there are exeptions but the spirit if the FAQ isn't violated as fills are still immediate when routed back and more importantly, cases like the above are more the rare expection than the rule.
skeptic123
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def,
First of all thanks a lot for your response. It does explain perfectly what happened today.
Personally I believe this "routing back" thing is wrong and should be eliminated. When I choose "Smart" routing I am willing to give up potential price improvement by the specialist for the sake of immediate execution. Obviously I am not happy when I am getting neither.
Moreover, in my case the bid dropped 3-4 cents, so it was not a big deal. The real problem is that the bid could have easily dropped 50 cents or more. That does not mean there would be trades at the bid or anywhere near it. The specialist can have a large sell order, drop the bid 50 cents, fill the sell order in the middle and resume normal trading. In this case TMBR would pull my order, fill it at the bid and I would get the worst print of the day 25 cents bellow any other trade. I do not think that's right.
Anyway, I guess that is just me, thanks again for the explanation, I will keep it in mind in the future when I use "Smart" routing.
def
Sponsor
I see your argument but the opposite could happen. The specialist pulls the 30 bid and drops it lower. In the event of a spefcialist dropping a bid say 50 cents, TMBR would probably give a much better fill. Alternatively, if an ECN had a higher price, the order would be routed there as well.
You raise a good point about eliminating the re-route back to TMBR but I would venture a guess that the vast majority of clients would prefer the re-route since it could also lead to price improvement.
In the end, the problem here is really not TMBR but the specialist system. They post a price but do not honor it or move it when they see a market order. Given the choice of speed and finality (the knowledge that you will get a fill) over a delayed fill with a small probability for price improvement, our firm (prop side and brokerage) will chose the former.
You raise a good point about eliminating the re-route back to TMBR but I would venture a guess that the vast majority of clients would prefer the re-route since it could also lead to price improvement.
In the end, the problem here is really not TMBR but the specialist system. They post a price but do not honor it or move it when they see a market order. Given the choice of speed and finality (the knowledge that you will get a fill) over a delayed fill with a small probability for price improvement, our firm (prop side and brokerage) will chose the former.
With a market order, it seems like the specialist could definitely hose you just as badly as an instant execution with TMBR could. Are you guaranteed price improvement with the specialist?
Maybe next time put in a limit order at the best bid. If you get a fill through TMBR, then great. If not (because the bid dropped or TMBR is not executing for that stock on that day), cancel the previous order and send a market order directly to the NYSE and hope that you get price improvement.
the TMBR fills are one of the reasons i'm not very interested in joining a prop firm...it's basically a bucket for IB and their clientele that seems to benefit everyone involved...
it's funny, when i read the topic of this thread i thought "hmm, someone else apparently thinks that getting TMBR fills is like cheating, too" but then i realized it was something more negative...but alot of the time, i do feel like i'm cheating with TMBR...
the fills are great; i recall when TMBR first started, i was getting 1-5 second lags on SMART routing (but not thru other routing) for listed stocks (I never used SMART for nasdaq) but nowadays it couldn't be faster...
and personally i like it when my live order gets ganked from the NYSE and filled with TMBR...
skeptic123
Guest
As I said in the previous message "it was just me...". I hear you and of course you should do what the majority of the customers want. I will just keep this information in mind and will likely stop using "Market" orders with "Smart" routing. Either Market/NYSE, or Limit/Smart.
Thanks a lot for your explanations.
Very true. I have occasionally stated TMBR is really a way for IB to give back part of your commission by providing instant fills when the NYSE is about to move away and you know you would never have received a fill there.
I couldn't even say how much SMART saves me as opposed to NYSE. It's like 7 out of 10 times TMBR fills me at a price $.02 - $.15 better than a NYSE market order would have received, 1 out of 10 times it's about a $.01 - $.02 worse than NYSE would have provided (through price improvement) and 2 out of 10 times it's the same price, just faster. If I try to average that out, I save probably $.02 per TMBR fill, and since approximately half of my SMART orders are filled by TMBR, the total average savings per share are $.01 using SMART as opposed to NYSE.
Then again, I don't think TMBR is just "giving away" that money. I would guess it costs IB less to give me a TMBR fill than route my order to the NYSE.
It seems to me that what TMBR is doing when the bid drops to or below their internal bid, is guaranteeing you a fill at that internal bid while it attempts to cancel the NYSE order. During that time, you essentially have the best of both worlds, getting either the NYSE fill because it was too late to cancel, or having TMBR to fall on if the cancel works.
So, if the market is 15.35-15.36 and you send a sell market order via SMART, and the bid then drops to 15.30 without a fill, if TMBR is bidding 15.32 internally, it should then cancel your order and, if cancelled, fill you at 15.32.
If, OTOH, they cancel your order and then back away to 15.30, that would seem to be wrong.
The key is whether they commit to the 15.32 fill at the time that they send the NYSE cancel.
Can we get clarification on this?
So, if the market is 15.35-15.36 and you send a sell market order via SMART, and the bid then drops to 15.30 without a fill, if TMBR is bidding 15.32 internally, it should then cancel your order and, if cancelled, fill you at 15.32.
If, OTOH, they cancel your order and then back away to 15.30, that would seem to be wrong.
The key is whether they commit to the 15.32 fill at the time that they send the NYSE cancel.
Can we get clarification on this?
If TMBR was so great why wouldn't the world puts it stock in TMBR instead of the current 90 something percent in the NYSE? Oh, wait, I forgot, the NYSE has a lock on all orders! Yea right. There's a reason all those orders are going to the NYSE. IF TMBR had such great executions then all those orders would goto them. Right? Especially since the NYSE charges money and doesn't rebate like ECN's do. Hmmm..Food for thought!!!!!