would IB ever piggy back your trades?

Quote from HoundDogOne:

But IB would likely manipulate your orders with SMART...
And probably has dozens of sneaky ways to shave a penny here... and a penny there...
All "technically" legal, of course.
Or at least deniable as a "programming error"...
Or at least just a $500,000 fine...
Many years after they make an extra $50,000,000 a penny at a time.

If you are sending market orders into SMART...
Then you are REALLY paying at least DOUBLE the fees you think you are paying.
More...

Do you have ANY evidence of this, or is this just more of your typical horsecrap?

Let's see your evidence.

OldTrader
 
Quote from OldTrader:

Do you have ANY evidence of this, or is this just more of your typical horsecrap?

Let's see your evidence.

OldTrader
More...

He has no evidence, just holds a grudge.
 
SMART is IB's functionality which allows them to offer a market at NBBO or inside on singles and complex inter-exchange spreads and combos in options. It will route to their market provided they offer one, and at NBBO or better.
 
Quote from Bluegar3:

if you have a profitable system would IB ever piggy back your trades or would they never risk such a thing?
More...

sure it happens all the time.

they have access to your account information and all of your trades.they know if you are good or not.

they can monitor your account and know your trading style.

plus, there is nothing you can do about it.

blackguard
 
Quote from storm121:

sure it happens all the time.

they have access to your account information and all of your trades.they know if you are good or not.

they can monitor your account and know your trading style.

plus, there is nothing you can do about it.

blackguard
More...

We've been getting such false accusations from day one. If you took a second to read our routing reports to the regulators, you'd see it spelled out in black an white that SMART routing is designed to obtain the best fill for our clients.

On the option's market making side, if you haven't figured it out yet, Timber Hill are liquidity providers and shows prices are on the screens. If anything, it's the other way around. IB also leads the industry with price improvement on options orders providing better fills on 14.85% of orders vs an industry average of 0.57% (data calculated by TAG, an independent auditing service). If hound dog's argument bore any fruit, we wouldn't be providing price improvement and would be padding our wallets with the difference. However, as our clients find out we are providing better fills than the competition and become more profitable, then in the long term it's a win win situation.

On the cash side, all orders are filled at or better than the NBBO. I don't have figures on price improvement off hand but I'd wager that like options, we're providing significant price improvement over the industry average.

In short, your comments along with hound dogs aren't true. Our active and sophisticated clients know this and our execution quality is the proof.
 
Quote from def:

We've been getting such false accusations from day one. If you took a second to read our routing reports to the regulators, you'd see it spelled out in black an white that SMART routing is designed to obtain the best fill for our clients.

On the option's market making side, if you haven't figured it out yet, Timber Hill are liquidity providers and shows prices are on the screens. If anything, it's the other way around. IB also leads the industry with price improvement on options orders providing better fills on 14.85% of orders vs an industry average of 0.57% (data calculated by TAG, an independent auditing service). If hound dog's argument bore any fruit, we wouldn't be providing price improvement and would be padding our wallets with the difference. However, as our clients find out we are providing better fills than the competition and become more profitable, then in the long term it's a win win situation.

On the cash side, all orders are filled at or better than the NBBO. I don't have figures on price improvement off hand but I'd wager that like options, we're providing significant price improvement over the industry average.

In short, your comments along with hound dogs aren't true. Our active and sophisticated clients know this and our execution quality is the proof.
More...

I have never claimed that IB is doing anything illegal...
Just taking advantage of a Regulatory System that is full of gaping holes.

Def, here's the IB SEC/NASD "Quarterly Routing Report".

http://www.interactivebrokers.ca/download/routing06-30-03.pdf

My ** main point ** has always been...
That sending Market Orders via SMART...
Results is WORSE executions than sending Limit Orders via SMART.
(For Listed Stocks only... options is another world).

This report BACKS UP my assertion.

Go to the top of Page 3.
And see what your "active and sophisticated" Customers are doing:

FACT: 59.6% of NYSE orders are SMART routed

FACT: 90.5% of these SMART orders are Limit Orders... and only 8.5% are Market Orders

One can assume that a lot of those Market Orders were sent in emergency situations...
Like a fast market or at 15:59...
So the "real ratio" of Limit vs Market is FAR greater than 10:1

These simple stats pretty much back up my assertion...
That sending Market Orders into SMART...
Results in worse executions than Limit Orders...
And 90% of your "active and sophisticated" traders know this...
Because they have NO IDEA what REALLY happens to their Market Orders...
And avoid them like the plague.
 
The above "Routing Report" is from 2003... but the point made stands.
2003 is post decimalization... so not all that much has changed.

Def: "On the cash side, all orders are filled at or better than the NBBO."

To address this statement:

(1) There is no official NBBO.

(2) IB calculates a real-time NBBO that is "in compliance".
How can I see the NBBO that SMART uses on my TWS?
And if not... why not?

(3) How can I see IB's IDEAL ECN bid/ask on my TWS?
And if not... why not?

(4) There is NO legal requirement for a broker to fill an order at the NBBO...
Only to provide the Customer with "best execution".

And there is NO definition of "best execution"....
Leaving a broker like IB with HUGE discretion on how to route an order.

http://www.ici.org/funds/abt/faqs_best_execution.html

(5) So Def's above statement CANNOT be true...
Unless IB goes above and beyond what is legally required at GREAT COST...
And gives a HUGE competitive advantage to it's competition.

(6) A broker can cheat a Customer...
Even by filling an order at the NBBO.

It's super easy.
You break it up into several pieces...
And send it to 2-3 different execution centers...
Which often results in an NBBO execution price... but a higher fee overall.

In regards to #6...
Dozens of times per day...
I see orders that are 100% fillable at NYSE...
Broken up by SMART and distributed among NYSE, an ECN, and IDEAL...
For a total fee that is higher than a 100% NYSE fill.

I don't care...
I'll pay 10% more...
It's a freaking drop in the ocean for me.

But still... explain it...
Explain SMART's algorithm for constantly fragmenting orders among several exchanges...
And how this benefits the Customer in spite of the higher fees.

A link to hard information would be paramount...
Because "opinions" from IB Personnel are just a game of "tire out the Customer".
 
hound dog.

Just because a broker can provide an inferior fill doesn't mean we do.

You stated and I quote" But IB would likely manipulate your orders with SMART..." and further state that we'll try to get a penny here or a penny there on SMART orders.

I'll re-state that you are wrong. For starters, as most orders are filled on the major exchanges, IBG has nothing to gain by your alleged belief that we shave a penny here and a penny there. We have everything to gain by providing better fills than our competition and we strive to do so.

A limit order by it's very nature will provide a better fill than a market order as market orders must pay the spread. For that reason most traders use limit orders. The stats you refer to prove nothing.

Your comment in your first post emphatically states that we are purposely not providing the best possible fill. You then claim in your post above that your argument has always been limit is better than market. Seems like you're changing your tune.

The answer to the title of this thread is NO and your comments are wrong.

It's very simple: IB routing is designed to obtain the best fill for clients.
 

<<<

if you have a profitable system would IB ever piggy back your trades or would they never risk such a thing?


sure it happens all the time.

they have access to your account information and all of your trades.they know if you are good or not.

they can monitor your account and know your trading style.

plus, there is nothing you can do about it.

>>>


Does that mean if I have a trading system which does not trade too often, said, for example, only trade 12 times per year and I open an account wit IB and trade such system, IB can monitor my trade record and assuming it is VERY profitable, IB can "mirror" my trade?

Since I do not trade often, IB may be able to genearte return as good as my.

Is it legal for IB to do so? Can any one share some light?

Please note that I did not imply IB have done that already. This is a general question. I just happen to use IB as an example.
You can replace IB with any other FCM.

thanks.
 
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