Why is my option commission so high?

[traider]

IB's order routing practices to deny us traders of rebate fees that we are supposed to get has nothing to do with HFT. I have discussed them in numerous threads here on ET if you want to find them. Other people have noticed the same thing too. @def knows it and being an employee of IB, he just cannot comment on it but he knows what's going on and he's not denying it. And ironically IB actually gives you hell for any suspicion of HFT trading practices. I just canceled a few orders that I didn't even send to their server which does not impact the market in any way and I got a manager of IB yelling at me telling me they are HFT. LOL Just shows the quality of people that IB employs. Yes yes it is a discount brokerage so you get what you paid for but I would feel better if they at least admit it and try to resolve it so instead of having someone here to always try to deny it, spin it or blame it on the traders but then again it's IB.

If you create an order but don't transmit do you mean that it actually counts towards their order cancellation ratio? That is really bad for algo traders.

 

[JSOP]

If you create an order but don't transmit do you mean that it actually counts towards their order cancellation ratio? That is really bad for algo traders.

Well it shouldn't. The order is not even there so it wouldn't be seen by the algorithms used by the algo traders to trade so why would it impact algo traders? That manager was just being an a$$, a dumb a$$, that is.

 

[LM3886]

Just out of curiousity,what's the beef with PFO???

I have found it to be an advantage as opposed to a disadvantage

Wikipedia says "market makers often fill retail orders at a better price than the best price available on public exchanges."

 

[qlai]

@JSOP , are you saying that if you send a passive order directly to exchange, it would execute but not qualify for a rebate? Are you talking about options? I'm also confused what you mean by "creating an order but not sending it" causing someone at IB to actually call you?

 

[taowave]

All I know is I am frequently filled on the bid when buying or at the offer when selling with TOS.I have no idea how they do it....

Wikipedia says "market makers often fill retail orders at a better price than the best price available on public exchanges."

 

[def]

IB's order routing practices to deny us traders of rebate fees that we are supposed to get has nothing to do with HFT. I have discussed them in numerous threads here on ET if you want to find them. Other people have noticed the same thing too. @def knows it and being an employee of IB, he just cannot comment on it but he knows what's going on and he's not denying it. And ironically IB actually gives you hell for any suspicion of HFT trading practices. I just canceled a few orders that I didn't even send to their server which does not impact the market in any way and I got a manager of IB yelling at me telling me they are HFT. LOL Just shows the quality of people that IB employs. Yes yes it is a discount brokerage so you get what you paid for but I would feel better if they at least admit it and try to resolve it so instead of having someone here to always try to deny it, spin it or blame it on the traders but then again it's IB.

How about this: I disagree with you and I know of no routing practices that deny clients of rebates purposely. Is that clear enough?

As for cancelling orders not sent to servers - they shouldn't be counted as part cancellations and I suspect something is not being fully clear above - if you send me details via PM I'd be happy to look.

 

[JSOP]

@JSOP , are you saying that if you send a passive order directly to exchange, it would execute but not qualify for a rebate?

Yes. Even though I have instructed IB to send them to the exchanges via direct routing, what IB does is that it holds them on their servers and not really send them claiming that they are not at NBBO (but isn't that what limit orders are? I mean if I send the orders at NBBO they would be market orders) and then send them to the exchanges just at the last minute when the price is at NBBO and because they are at NBBO now they get instantly hit and become market orders and not only I get denied rebate fees I actually had to pay fees for removing liquidity. That's how IB basically turns liquidity-adding orders to liquidity-removing orders. I have encountered this numerous times trading with IB and have raised stints about them with IB numerous times. I have encountered numerous threads on ET here from traders who talked about this same practice and I have discussed them at length about them.

Are you talking about options?

No, stocks.

I'm also confused what you mean by "creating an order but not sending it" causing someone at IB to actually call you?

I created orders to preview them first to check the margin and never sent them by clicking the "submit" button because I needed to modify them to comply with the margin requirements first and apparently that manager could still see that on his system and accused me of "spoofing". LOL I told him I never even sent those orders to the market or even to IB's servers but he said "Doesn't matter. It's still spoofing and it's not allowed!!!". LOL I know he was just being an a$$ picking on me because I was raising a stint about their routing practices and they refused to acknowledge and make me whole when they know what they did was wrong. Anyway I didn't want to bother anymore cuz I was leaving IB and closing my account and going elsewhere. Trading for me is a business and I really don't have time and energy for stupid a$$'s. When something doesn't work out, I just vote with my wallet.

 

[LM3886]

Even though I have instructed IB to send them to the exchanges via direct routing, what IB does is that it holds them on their servers and not really send them claiming that they are not at NBBO (but isn't that what limit orders are? I mean if I send the orders at NBBO they would be market orders) and then send them to the exchanges just at the last minute when the price is at NBBO and because they are at NBBO now they get instantly hit and become market orders and not only I get denied rebate fees I actually had to pay fees for removing liquidity. That's how IB basically turns liquidity-adding orders to liquidity-removing orders.

That probably explains why I'm often charged liquidity-removing fees. But just curious what benefit does IB get by doing this? The fees go to the exchange not the broker. Maybe they own the exchange.

 

[JSOP]

How about this: I disagree with you and I know of no routing practices that deny clients of rebates purposely. Is that clear enough?

As for cancelling orders not sent to servers - they shouldn't be counted as part cancellations and I suspect something is not being fully clear above - if you send me details via PM I'd be happy to look.

See my response to @qlai above regarding IB's order routing practices. If you didn't know about routing practices of IB before, now you do.

Regarding canceling orders not sent to servers, perhaps the best you can do is send some kind of internal memo to educate IB employees that canceling orders not sent to servers shouldn't be counted as part cancelations and shouldn't be considered "spoofing" so they could advise their clients correctly but like I said, I suspect that the managers know it. He was just being an a$$ on purpose just to discredit me on my order routing complaints. And like I said, I vote with my wallet but I appreciate your efforts.

 

[JSOP]

That probably explains why I'm often charged liquidity-removing fees. But just curious what benefit does IB get by doing this? The fees go to the exchange not the broker. Maybe they own the exchange.

Read their disclosure. IB earns rebate fees from exchanges for orders that they sent. My guess, they get bigger cut if it's market orders. Their disclosures state specifically that they do not share with retail traders all of the fees that they earn from exchanges.