Losing Execution Priority using IB TWS

F

flbum

I'm having a problem with losing execution priority on orders directed to Island. I use Interactive Brokers standalone TWS and Island directed orders (not SMART routed). I have both buy and sell orders for the same stock simultaneously. When I get a partial or full execution on one side, the order on the other side gets thrown to the back of the line in priority at my price level. I suspect that my order is being removed and resubmitted. The interesting thing is that in the event of a partial execution, the order which is partially executed gets reduced in size, but maintains its priority at my price level while the order on the other side loses execution priority. Also, I can manually change the order on one side without affecting my execution priority on the other side.

I spoke with IB technical support. He suggested that I was probably using an outdated or incompatible version of java. I used the link on the IB website to java.com and verified that I was running the latest version of java.

Has anyone else experienced this problem? Any explanation, fix, or workaround? I hope that the answer isn't that I have to avoid routing orders to both buy and sell sides on Island simultaneously or take my flogging.
 
I don't use IB, and this is a guess. But it might have to update how the ticket is marked on the other side if you have already gotten filled on oneside. Now that some of the position has been executed the other side has to be changed from SELL to SHORT, or BUY to COVER. This would mean having to cancel and resubmit the ticket which would put you at the back of the priority line.
 
Thanks for the insight. That would make sense in most cases, but not mine. At this point in time, I only trade long and sell from my portfolio.

Perhaps IB just automatically resubmits the order without checking, just in case there has been a change in short/long status.
 
The idea that this would have something to do with Java is beyond ridiculous.

That said...
I'm not at all surprised that such a bizarre thing is happening.

You will probably get nowhere with your inquiries becuse:

(a) some guy in a tech support phone bank...
Is not likely to know much about routing and execution issues.

(b) IB is unlikely to discuss routing issues in detail.

(c) this may be Island related... or IB/Island business arrangement related.

That said...
Your concern is legit...
And your best bet is the Istitutional Desk at 1-866-694-2757.

Try talking to at least 5 different people.
Hopefully... you will get more than a runaround.
 
Quote from DAV:

If you're flat in your account, your initial sell is a sell short.
If a buy order executes, your sell becomes sell long.
Partial fills would reduce the sell short side and add a sell long side.
This could result in priority being maintained.
This is all handled according to exchange requirements.
More...

Interesting answer...
Though his problem is that priority is NOT maintained on sell order.

Only SMART could be cancel/replacing the sell order...
Thus losing it's position... to the detriment of the Customer.

IF the sell order is a short sale...
Why would IB modify it in any way based on other fills...
Using "net long/short" logic?

How, specifically, is this an Island "exchange requirement"?
With no "uptick rule"... how is "net long/short" relevant anymore to an exchange?
 
Quote from dst:

Only non-cleared IB customers has an option to declare a SELL as SELL SHORT in TWS, for the other users we mark the orders according to their positions.
More...

It's becoming clear that you do this...
But it's more than "marking"...
You are constantly cancel/replacing orders...
According to the OP.

As of August 1st...
And the abolition of the short sale "uptick rule"...
** To an exchange **...
All sell orders are handled in an identical way...
So a sellers NET POSITION is of no relevance.

Either I'm missing something VERY SPECIFIC...
Or IB has simply failed to adapt SMART routing properly to a post August 1st world.

And this is the kind of thing...
That a trader would only spot in illiquid stocks...
So it's "safe" for IB to neglect to upgrade this part of the SMART algorithm...
To the Customer's detriment.

Personally...
After > 200,000 trades in 2+ years...
I'm sorry to say...
I do not trust SMART at all...
It's designed to benefit only IB's bottom line.
 
Quote from QuantPlus:


...
As of August 1st...
And the abolition of the short sale "uptick rule"...
** To an exchange **...
All sell orders are handled in an identical way...
So a sellers NET POSITION is of no relevance.
...
More...

QuantPlus, this is not true.

The orders still have to be marked sell or sell short for compliance, and broker must show that for short sales we have located the shares prior to sending the order to the exchange. Order routing and elimination of downtick rule is only one aspect where short sale flag is used.
 
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