Why Does IB Still Not Offer ECN Pegged Orders?

My experience is this: when I direct a Relative Buy or Sell Order with any offset to Island during Regular Trading Hours, I get a message from IB telling me that Relative Orders are only accepted by Island during Regular Trading Hours, which, of course, is exactly when I'm placing them! Unbelievable, until one accepts the fact that, at IB, nothing's truly unbelievable.

Thus, while IB claims to have made changes to their Relative, Pegged-to-Midpoint, and Pegged-to-Primary orders so they finally conform to the NASDAQ protocols for these orders that were approved by the SEC, after years of perverting these protocols to their advantage and their customers' disadvantage, my experience tells me that they've so far effectively made it impossible to actually access the NASDAQ protocols.

I brought this situation to IB's attention 10 days ago, and still have heard absolutely nothing from them, even though it was brought to a supervisor's attention. Again, unbelievable, with the same qualification as above.

So that everyone will know, it's always been possible with IB Relative Orders to have the orders rollback, so long as no offset was specified.

Maybe, someone from IB will respond in some meaningful way and get these problems addressed. Maybe not...

Quote from giggollo:

I would like to thank DAV and others for working on this issue. To summarize, they have recently introduced 2 new order types: a "relative passive" order which allows "negative offsets" and more importantly a true ISLAND relative order which rolls back if the NBBO becomes less aggressive. I have personally tested the latter native Island pegged order and found it to work properly; it follows the NBBO and rolls back if the NBBO becomes less aggressive. The TWS user guide has also been updated to reflect the fact that the native, directed Island pegged order rolls back:

"** Orders with a positive offset that are directed to Island will move up and down with the market.
Orders with a "0" offset are submitted as limit orders at the best bid/ask and will move up and down with the market to continue to match the inside quote."

http://www.interactivebrokers.com/en/trading/orders/relative.php?ib_entity=llc

I invite others on this thread to test for themselves and report back their findings. Note that you must specify the destination to be directed to ISLAND to send the native ISLAND pegged order that rolls back; if you specify SMART as destination you will be getting the old IB-simulated relative order which does not roll back.
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Quote from cwb1014:

My experience is this: when I direct a Relative Buy or Sell Order with any offset to Island during Regular Trading Hours, I get a message from IB telling me that Relative Orders are only accepted by Island during Regular Trading Hours, which, of course, is exactly when I'm placing them! Unbelievable, until one accepts the fact that, at IB, nothing's truly unbelievable.

Thus, while IB claims to have made changes to their Relative, Pegged-to-Midpoint, and Pegged-to-Primary orders so they finally conform to the NASDAQ protocols for these orders that were approved by the SEC, after years of perverting these protocols to their advantage and their customers' disadvantage, my experience tells me that they've so far effectively made it impossible to actually access the NASDAQ protocols.

I brought this situation to IB's attention 10 days ago, and still have heard absolutely nothing from them, even though it was brought to a supervisor's attention. Again, unbelievable, with the same qualification as above.

So that everyone will know, it's always been possible with IB Relative Orders to have the orders rollback, so long as no offset was specified.

Maybe, someone from IB will respond in some meaningful way and get these problems addressed. Maybe not...
More...

Thank you for sharing your experience so that everyone benefits. Although i am not having this problem, I suggest you try the following and get back to us here:

If sending via TWS and not the API, create your relative order but just before sending the order, right-click the order line, click "Modify->Order Ticket" and on the "Basic tab" in the "Time in Force" section, make sure it says "DAY" for "Time In Force", and make sure there are no checkmarks on any checkbox in that section, including "Allow this order to be triggered or filled outside regular trading hours" and "Allow order to be filled during pre-open session". These boxes must be empty. Then click "Accept Changes and Transmit."

If that does not work: Are you sending through the API? Are you sending the order directed to ISLAND? Can you post the exact text of the error string you are getting and a screenshot of just the problematic order line in TWS after removing any personal information from the screenshot?
 
OK. Un-checking "Allow this order to be triggered or filled outside regular trading hours" made it possible to transmit a Relative Order to Island with a peg on it. Thank you for the suggestion.

With that said, this absolutely should not be necessary, as what ought to determine an order's eligibility to execute at Island is the time of day and not whatever parameters a customer has assigned to the order within TWS. Of course, customers need to understand that Pegged Orders (to use NASDAQ's terminology) will not be eligible to execute outside of Regular Market Hours, so if IB wants to pop-up a warning to that effect, that's fine with me, so long as the customer has the option not to show the message again.

The problem here for me and most likely for many other users, and it's a big problem, is that "Allow this order to be triggered or filled outside regular trading hours" is my default setting for Stocks, because I want to be able to trade pre- and post-market. The way things are now, I have to set up Ticker rules for every stock I want to use any type of Pegged Order with, such that they do not allow execution outside of regular trading hours.

It may be possible (I haven 't tested it yet) to work around this by creating an Order Preset for Relative Orders, but it won't be possible to do this with Pegged-to-Market and Pegged-to-Midpoint orders because those order types are not presently available when creating Order Presets. If they were made available, that, of course, might solve the problem.

Hopefully, IB will get this issue fixed so that a) one can specify "Allow this order to be triggered or filled outside regular trading hours", again knowing that this particular type of order will not execute outside of those hours or, possibly, b) Pegged-to-Market and Peg-to-Midpoint are made available when creating Order Presets.

So that you'll know, I use buttons in Book Trader to submit Pegged Orders, so it may be that the issues I'm outlining will not all be germane to persons using other methods of order entry.

Also, by way of testing, I should point out to all parties concerned that it's not possible to test any types of Pegged Orders in their paper trading accounts, because these orders are not available there (at least the last time I checked). Thus, it would be nice if IB would take the time and trouble to do the testing here, risking their own capital instead of expecting us to risk ours to see how these orders do and don't function in reality.

Quote from giggollo:

Thank you for sharing your experience so that everyone benefits. Although i am not having this problem, I suggest you try the following and get back to us here:

If sending via TWS and not the API, create your relative order but just before sending the order, right-click the order line, click "Modify->Order Ticket" and on the "Basic tab" in the "Time in Force" section, make sure it says "DAY" for "Time In Force", and make sure there are no checkmarks on any checkbox in that section, including "Allow this order to be triggered or filled outside regular trading hours" and "Allow order to be filled during pre-open session". These boxes must be empty. Then click "Accept Changes and Transmit."

If that does not work: Are you sending through the API? Are you sending the order directed to ISLAND? Can you post the exact error string you are getting and a screenshot of the order line in TWS if you are sending via TWS?
More...
 
giggollo - what were your per share charges for the native pegged orders? i use unbundled so normal orders are $.0035, but because DAV mentioned it earlier in the thread, I knew to expect the flat rate for these because they are direct routed (which I assumed to be $.005). I couldn't tie out the commissions I was seeing on these, so I asked IB customer service and they told me these are $.013 / share?? I know to always double check information I get from that channel, so I'm hoping this is a mistake...otherwise the entire thing has been a huge waste of time (for me at least).
 
Quote from bs2167:

$.013 / share??
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Are you using the API?

At IB:

US API orders that do not use Smart-routing are:

<= 500 shares, $0.13/share, min. $1.30, max. 0.5% of trade
> 500 shares, $0.008/share, min. $1.30, max. 0.5% of trade
 
There it is...thanks. Took me a while to find that drop down menu on the website - not surprised I missed it the first several times (I'm slow). Based on my testing, up to a full penny per share extra each way kills any advantage these orders provide for me. Wish I had seen that earlier...feel bad for pushing these now, would have never done it if I knew they were that much more expensive from a comm standpoint.

Quote from sprstpd:

Are you using the API?

At IB:

US API orders that do not use Smart-routing are:

<= 500 shares, $0.13/share, min. $1.30, max. 0.5% of trade
> 500 shares, $0.008/share, min. $1.30, max. 0.5% of trade
More...
 
Does anyone have any ideas of anyway around this egregious commissions? Perhaps one other previous brokers mentioned allows pegging orders that roll back without absurd commissions. And to specifically target api orders makes it even more ridiculous.
 
Quote from cwb1014:

OK. Un-checking "Allow this order to be triggered or filled outside regular trading hours" made it possible to transmit a Relative Order to Island with a peg on it. Thank you for the suggestion.

With that said, this absolutely should not be necessary, as what ought to determine an order's eligibility to execute at Island is the time of day and not whatever parameters a customer has assigned to the order within TWS. Of course, customers need to understand that Pegged Orders (to use NASDAQ's terminology) will not be eligible to execute outside of Regular Market Hours, so if IB wants to pop-up a warning to that effect, that's fine with me, so long as the customer has the option not to show the message again.

The problem here for me and most likely for many other users, and it's a big problem, is that "Allow this order to be triggered or filled outside regular trading hours" is my default setting for Stocks, because I want to be able to trade pre- and post-market. The way things are now, I have to set up Ticker rules for every stock I want to use any type of Pegged Order with, such that they do not allow execution outside of regular trading hours.

It may be possible (I haven 't tested it yet) to work around this by creating an Order Preset for Relative Orders, but it won't be possible to do this with Pegged-to-Market and Pegged-to-Midpoint orders because those order types are not presently available when creating Order Presets. If they were made available, that, of course, might solve the problem.

Hopefully, IB will get this issue fixed so that a) one can specify "Allow this order to be triggered or filled outside regular trading hours", again knowing that this particular type of order will not execute outside of those hours or, possibly, b) Pegged-to-Market and Peg-to-Midpoint are made available when creating Order Presets.

So that you'll know, I use buttons in Book Trader to submit Pegged Orders, so it may be that the issues I'm outlining will not all be germane to persons using other methods of order entry.

Also, by way of testing, I should point out to all parties concerned that it's not possible to test any types of Pegged Orders in their paper trading accounts, because these orders are not available there (at least the last time I checked). Thus, it would be nice if IB would take the time and trouble to do the testing here, risking their own capital instead of expecting us to risk ours to see how these orders do and don't function in reality.
More...

This is standard at all brokers. If your TIF is not DAY but is EXT, you'll be unable to send a PEG order. It's this way on all the professional direct access trading platforms.

So IB really charges .0013 to use a native NASDAQ peg order? That's just insane. Insane! So you guys can't get the advantage of peg to midpoint; for example, on BAC, if you buy at 11.115 instead of 11.12, you'll save a half penny; however you may end up paying MORE net even though you saved a half penny gross. Nuts!
 
Giggollo, bs2167, njrookie, et al.

As of today, IB has removed the surcharge (0.013/0.008) for API native (Island directed) relative orders / pegged to market or midpoint orders.
These order types will now be charged the standard rate of 0.005 per share with $1 min per order and 0.5% of value max per order.
We have done everything we can to enhance the pegged orders per our client’s requests and we hope you'll make full use of them, so if any issues arise let us know.
 
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