Could be wrong, but I thought the reason was that some ECNs charge cancel fees. IB's model is geared towards its SMART routing where it can control the cost of displaying your order into the marketplace. If you directly control where your order gets routed, then their model assumptions are no longer valid. They penalize automation of direct orders because automation has the capability (through a huge amount of orders) of skewing their pricing model. I don't think that they charge you cancel fees for manual orders because they don't expect anybody to send in a huge amount of these manual orders (and thus it will have a negligible affect on their pricing model).
What is going on with IB?
- Thread starter minimi
- Start date
Could be wrong, but I thought the reason was that some ECNs charge cancel fees. IB's model is geared towards its SMART routing where it can control the cost of displaying your order into the marketplace. If you directly control where your order gets routed, then their model assumptions are no longer valid. They penalize automation of direct orders because automation has the capability (through a huge amount of orders) of skewing their pricing model. I don't think that they charge you cancel fees for manual orders because they don't expect anybody to send in a huge amount of these manual orders (and thus it will have a negligible affect on their pricing model).
Quote from iceman1:
The SEC and the greedy CBOE ought to be ashamed of themselves. But then does any governmental or financial body have much shame (much less integrity)... anymore, in the good old USA?! Did they ever?!
Ice
I agree. The longer government and governmental agencies have been in place, the more corrupt they seem to get, City, County, State, USA, or the same in other countries for that matter.
Ancient Rome fell only after greatness. As well as the Mayas and ... and.... History does repeat itself. That's the only edge you need.
def
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Minimi: j_medved put things correctly. I didn't ask you to leave. Although making comments like "is IB ripping us off" without going directly to the firm for an explanation led me to state that if you're not happy, you are free to close your account (BTW, how come no one complains about IB eating all internal wire costs and volunteers to leave a few bucks in their account). The best I can do is pass on information to the accounts group that you'd like to see the information on your statements. (although, I venture to guess some of our very active option traders don't want to see 100's or even thousands of extra lines on their daily statements).
Options fees: the ISE also charges.
Axeman et al: Cancel fee charges for API equity orders.
1. There is a credit against executions;
2. if you use SMART (which includes the TMBR route), there are no charges.
I believe the NYSE and other ECN's charge for cancels and as was stated in a previous post, this allows IB to control its costs. Keep in mind many other brokers pass on all additional fees over their commission (SEC, ecn pass through etc), IB doesn't. Originally only SMART routing was offered to API clients due to concerns over costs and other factors. There was demand for sending to individual routes and this was the compromise.
Options fees: the ISE also charges.
Axeman et al: Cancel fee charges for API equity orders.
1. There is a credit against executions;
2. if you use SMART (which includes the TMBR route), there are no charges.
I believe the NYSE and other ECN's charge for cancels and as was stated in a previous post, this allows IB to control its costs. Keep in mind many other brokers pass on all additional fees over their commission (SEC, ecn pass through etc), IB doesn't. Originally only SMART routing was offered to API clients due to concerns over costs and other factors. There was demand for sending to individual routes and this was the compromise.
Actually, if you had stopped to think minimi you would have had the opposite reaction. In fact it is a very postive sign that IB is passing these charges on in a transparent (as practical) manner while other brokers are (momentarily) eating the fees.
You see, IB cut their commissions to the bone from the beginning, so when the exchanges increase fees IB has no recourse but to pass them on. This is positive evidence in my view of IB's pro-active cost-cutting from the outset.
In contrast, another broker can simply 'eat' the cancel fees because they've built a lot of up-front fat into the commissions they charge you.
Think about it - and vote w/ your commissions.
"Another question arises, if you sharpshooters are worrying about the nickle and dime option fees, then you can't be making very much trading them. Bigger problem than the cancel fees."
Stock77, if you're saying this you really don't understand some of the games people play with options. I make a decent income in options although I had to change my whole way of trading because of this rule and I'm making half as much as I used to, I'm less flexible. For some people costs are a question of life and death in trading.
:eek:
Stock77, if you're saying this you really don't understand some of the games people play with options. I make a decent income in options although I had to change my whole way of trading because of this rule and I'm making half as much as I used to, I'm less flexible. For some people costs are a question of life and death in trading.
:eek:
I will take all the nickels and dimes you have. You can even mail them to me at the bulk rate.