NEW story about Penson/Apex. Worth a read for those that clear thru Penson.

[Occam]

Quote from def:

Occam,

You need to do your homework. IB has stated numerous times that we don't internalize.

And yet the IB 606 report contains the following:

5.

Interactive Brokers ATS:
Percentage of total non-directed orders…….. 2.2%
Percentage of non-directed market orders….. 11.9%
Percentage of non-directed limit orders…….. 1.8%
Percentage of non-directed other orders……. 1.3%

....

For non-directed orders for
certain Nasdaq stocks, if IB’s affiliate Timber Hill LLC is willing to provide an execution at
the best available posted price or better for that stock, IB may send the order to Timber Hill for
an immediate automatic execution. In addition, IB operates an alternative trading system (ATS)
in accordance with the requirements under Regulation ATS, where it executes trades internally
on its own platform (not on an exchange or other market) among multiple customers and
liquidity providers.

 

[Options12]

I used to think just def <a href="http://www.elitetrader.com/vb/search.php?s=&action=showresults&searchid=4097343&sortby=lastpost&sortorder=descending">promoted</a> a rogue interpretation of internalization.

Then I listened to IB's CEO decry internalization earlier this year:

We are able to achieve these metrics because instead of internalizing our customers orders or selling them to others who internalize them we subject our orders to our best execution router which we continue to modify and upgrade as different exchange systems and dark pools come along. This is an area that has been gaining more attention in the recent past and whenever I have an opportunity I urge people to look at their broker’s SEC 606 reports, posted on the web, to see where their orders end up.

http://seekingalpha.com/article/320...sses-q4-2011-results-earnings-call-transcript

Can anyone explain why the IB / Timber Hill arrangement does not qualify as internalization?

Read more here: http://www.sec.gov/news/studies/ordpay.htm#PAYMENT

Typically, firms that internalize customer equity orders automatically execute customer orders at the national best bid or offer irrespective of their own quotations. This practice is referred to as price matching. In the options markets, internalization takes on many forms, none of which allow a dealer to exclusively interact with customer order flow without subjecting the customer orders to competition from other market participants.

 

[Robert A. Green]

I imagine that Form 1099-Bs from Penson for so many brokerage firms will be a big problem for 2012 tax reporting. Better keep great records and get your downloads while you can.