would IB ever piggy back your trades?

[gurucandidate]

It is naive to think that IB is out to screw their customers. IB"s core clientele is 5-6000 active traders like me who would migrate to other brokers in very short order if we noticed irregularities.

I have been with IB for six or seven years and quite often I get better execution on limit orders and market orders then I expect, so, at least in my case I was actually helped by IB. Wether or not there were further monetary advantages in the transaction that they kept to themselves I do not know.

This is the first time in my experience with any broker (I also traded on the floor where I gave brokers in other pits business) that I have been getting better fills that I expected.

Also, IB is not into directional trading, they are into arb. They have a crack programming crew and they are using their home brewed, improved version of Black-Scholes to make markets across all venues and trading vehicles.

When a trader places an order to sell stock IB may take the other side if the sell offer fits their need to neutralize their overall portfolio or option inventory they have just just opened (just one example),This ability to make a stand in any market and any trading vehicle at "some" price is a great competitive advantage for a global trader.

 

[powerfade]

Quote from atticus:

I never stated it's a hindrance, in fact, I consider it an advantage for the IB client.

Thanks for the clarification.

 

[SethArb]

personally I think there are some firms out there ( hedge funds
investment banks market makers prop firms etc that are trying to make you "puke out" your trades at a loss ( and a profit to them)

:eek:

 

[forex-forex]

Quote from atticus:

IB is the largest option market maker and will often be on the other side of your ticket.

I'm 90% positive that IB is not a market maker, but they do handle the largest volume of option orders.

 

[atticus]

Quote from forex-forex:

I'm 90% positive that IB is not a market maker, but they do handle the largest volume of option orders.

Time to head to the Keno board.

In its proprietary trading business IB engages in market making for its own account in about 6,500 different electronically traded products. Interactive Brokers Group and its affiliates now trade 18.7% of the world’s exchange traded equity options*, and executes approximately 500,000 trades per day.

http://www.interactivebrokers.com/en/general/about/about.php

 

[forex-forex]

What does " IB engages in market making for its own account " mean? To me that sounds like something that doesn't apply to retail accounts.

 

[powerfade]

Quote from forex-forex:

What does " IB engages in market making for its own account " mean?

It means they're a market maker. All market makers are 'engaging in market making for (their) own account', are they not?

atticus?

 

[forex-forex]

Quote from powerfade:

It means they're a market maker. All market makers are 'engaging in market making for (their) own account', are they not?

atticus?

Then why do they bother to send out your orders to be filled? Why not just fill them within their own system?

 

[powerfade]

Quote from forex-forex:

Then why do they bother send out your orders to be filled? Why not just fill them within their own system?

I had assumed that this is their way of routing orders to themselves, aka Timber Hill.

Timber Hill provides an automatic execution service for certain eligible IB customer orders in certain Nasdaq stocks and NYSE and other exchange listed stocks. When IB's Best Execution order routing system searches the available market centers for your order, if Timber Hill is willing to provide an execution at the best available national price or better for that stock, IB may send your order to Timber Hill for an immediate automatic execution.

http://www.interactivebrokers.com/e...imberhillAutoExeService.php?ib_entity=llc#one

 

[atticus]

Quote from powerfade:

It means they're a market maker. All market makers are 'engaging in market making for (their) own account', are they not?

atticus?

Correct. They add liquidity by making a two-way market. They have a large physical presence on the exchanges and make markets upstairs as well. It's a regulatory-designation; they must make a market in any security in which they operate.