SPY options problem at IB

[riskfreetrading]

Quote from def:

You are wrong, the NYSE offers options via ARCA.

You are also wrong about routing. The exchanges have linkage agreements and if they are not NBBO, they will route the order to other exchanges.

Should you have any doubt, all this and more is available from the NYSE web site.

Def:

Suppose you have two customers A, B whose brokers are A and B. Broker A sells flow/route to exchange A, and brokers b sells flow/route to exchange B. Customer A offers, Customers B bids.

Suppose that at a given time, their offer and bid prices are equal, and these are the only offers and bids on the market (1 contract each side).

I understand that from routing agreements, both orders should get filled.

But, are there exceptions to this, such as what if the order flows were sold, or what if some contracts are not electronic, or some exchanges not agreeing/delaying implementation of this?

Iif both orders were sold by the brokers, and if there is a re-routing, then there is a loss for those (market makers, exchanges, etc) who bought the order flow. So, I am more inclined to understand if there are exceptions as otherwise a member of the exchange who paid for that order will be incurring a charge and getting nothing in return.

 

[def]

Quote from xflat2186:

Thanks for correcting my on the NYSE. I know they are very interested in getting back into the listred options business. As I said... I could have been wrong. Since leaving the floor I have not been involved with retail order flow issues.

And as the US options get more complex in regards to routing/competition, I'm also much less knowledgeable as I'm based in Asia.

Riskfreetrading, I don't know the case in your example other than with IB, getting the best price should take priority over payment and I presume we would route to get the fill.

 

[xflat2186]

def, you're correct in price to the retail customer taking priority over the payment for order flow deals of the broker.

 

[roncer]

xflat2186,

Please note there is no error in my commentary on IB staff person Zack's explanation after his conversation with exchange personel. I taped our conversation and then posted this thread. It was word for word quotes.

Ron

 

[xflat2186]

As I said perhaps he misunderstood your question. I personally did not hear the convo and I am just commenting on the words I read.

 

[loufah]

Quote from xflat2186:

You are fully guaranteed the NBBO no matter who your broker is and which exchange your orders are routed to. If Ameritrade says otherwise I would move to someone else.

Thanks. I don't trade much at Ameritrade these days, but I'll call them next time this happens. In the past, my orders there have sometimes locked or crossed the market because they get routed to one exchange with a wide spread and that exchange wouldn't fill the order nor release it, they just posted it. Truly frustrating when you're willing to buy at the best ask and can't get filled.