Best Thread Interactive Brokers

[urep]

IB Llc -Timber Hill should always be disclosed.

Dear Yacht Fund:

For your reference, our forex quotes/spreads come from large forex banks in the world. Interactive Brokers does not get on either side of the spread.

Yes but the market maker Timber Hill which is owned by IB does trade IB's IDEALPRO FX market. I do think for the sake of full disclosure, posters from IB should always include this. Without including this you give the impression that IB has no financial stake in the trades of IDEAL PRO and that is not true as Timber Hill can take the other side of IB's customers trades.

 

[def]

That is an independent relationship. Timber Hill's quotes compete and trade with the other Interbank's according to their own hedging requirements. If you (or one of the banks) enter a quote better than Timber Hill, you get the fill or order priority.

The difference in the IB model is that the broker is not the sole market maker and the broker is NOT the counter party to each and every trade.

 

[urep]

That is an independent relationship. Timber Hill's quotes compete and trade with the other Interbank's according to their own hedging requirements. If you (or one of the banks) enter a quote better than Timber Hill, you get the fill or order priority.

The difference in the IB model is that the broker is not the sole market maker and the broker is NOT the counter party to each and every trade.

The difference is well noted. How Timber Hill is owned by IB LLC and the extent of it's independence is unknowable to customers, as there is no real way to verify it. Just state the relationship so people won't walk away with an incomplete impression of your operation.

 

[def]

The relationship is mentioned on our site in a number of places as well as discussed in the quarterly routing reports to the SEC. Here's one I pulled from the site "Affiliate Relationships: IB's affiliate Timber Hill LLC makes markets in stocks and acts as a specialist or market maker on all U.S. option exchanges. Other IB affiliates worldwide, including Timber Hill Europe, also act as market makers on global exchanges. As noted above, for non-directed IB customer stock orders routed using IB’s Smart Routing system, if an IB affiliate is willing to provide an execution at the best available posted price or better for that stock, IB may send the order to its affiliate for an immediate automatic execution."

At the end of the day, if you have a 1 pip wide market in Euro/$ which is immediately executable does it really matter who is on the other side? In short, we have nothing to hide and the fill quality speaks for itself.

 

[urep]

IB/Timber Hill

At the end of the day, if you have a 1 pip wide market in Euro/$ which is immediately executable does it really matter who is on the other side? In short, we have nothing to hide and the fill quality speaks for itself.

Yes I've read that disclosure and it doesn't specifically state anything about IB IDEALPRO but to your credit, you have been very forthcoming about Timber Hill's participation. My whole point is that although IB posters can say IB doesn't trade in its IDEALPRO FX and semantically be correct; it is not truly full disclosure since both InteractiveBrokers and Timber Hill are owned by "Interactive Brokers LLC".

If IB LLC is involved in trading FX ; then of course they have some proprietary edge and thus have something to hide.
I've previously asked IB posters if they could tell me what % of IB LLC profits come from Timber Hills market making vs. IB commissions, but have been told that this is proprietary info. Fair enough; but this information is hidden from your customers.

Does it matter who's on the other side of your trade?

Here is an excerpt from "Bill Cara's Blog" who has spent his whole life in the securities business.

{December 30, 2005
Predictions for 2006, Fri., Dec. 30, 2005, 9:45 AM

Who really knows whether capital market prices are going up or down? Actually two parties know: (i) Bill Cara knows because he has this crystal ball , and (ii) your broker-dealer knows because they know more about you than you know yourself.

If you sat in to a card game in a casino, and the dealer could flash cards to one of the players but not you, and that player and the dealer could count cards (but not you), and that player and the dealer both knew (a) how much money you have available to bet, and (b) exactly how you do bet under every permutation and combination that is possible, but you had never met these people before, and believed the game was a fair one, please tell me what chance you think you’d really have of winning that night?

You really have to stop being so credulous (i.e., gullible, naive, trusting, unsuspecting, innocent, and uncritical – per the Bill Gates Thesaurus). You have to recognise that there are players who are shrewd (etc) and deceitful (etc) as well. }

http://www.billcara.com/archives/2005/12/predictions_for.html

 

[def]

Yes I've read that disclosure and it doesn't specifically state anything about IB IDEALPRO but to your credit, you have been very forthcoming about Timber Hill's participation. My whole point is that although IB posters can say IB doesn't trade in its IDEALPRO FX and semantically be correct; it is not truly full disclosure since both InteractiveBrokers and Timber Hill are owned by "Interactive Brokers LLC".

If IB LLC is involved in trading FX ; then of course they have some proprietary edge and thus have something to hide.
I've previously asked IB posters if they could tell me what % of IB LLC profits come from Timber Hills market making vs. IB commissions, but have been told that this is proprietary info. Fair enough; but this information is hidden from your customers.

Does it matter who's on the other side of your trade?

Here is an excerpt from "Bill Cara's Blog" who has spent his whole life in the securities business.

{December 30, 2005
Predictions for 2006, Fri., Dec. 30, 2005, 9:45 AM

Who really knows whether capital market prices are going up or down? Actually two parties know: (i) Bill Cara knows because he has this crystal ball , and (ii) your broker-dealer knows because they know more about you than you know yourself.

If you sat in to a card game in a casino, and the dealer could flash cards to one of the players but not you, and that player and the dealer could count cards (but not you), and that player and the dealer both knew (a) how much money you have available to bet, and (b) exactly how you do bet under every permutation and combination that is possible, but you had never met these people before, and believed the game was a fair one, please tell me what chance you think you’d really have of winning that night?

You really have to stop being so credulous (i.e., gullible, naive, trusting, unsuspecting, innocent, and uncritical – per the Bill Gates Thesaurus). You have to recognise that there are players who are shrewd (etc) and deceitful (etc) as well. }

http://www.billcara.com/archives/2005/12/predictions_for.html

urep, you have valid concerns and I'll make the request to update our site to add IDEALPRO into the disclosure mix. The point you post from Bill Cara's blog might be valid IF Timber had any knowledge of client orders. Timber Hill's markets aren't influenced by client orders and are displayed on the screen. If anything the client has the edge as they can hit or lift the quote on the screen. The proverbial Chinese Wall is in place.

 

[urep]

urep, you have valid concerns and I'll make the request to update our site to add IDEALPRO into the disclosure mix. The point you post from Bill Cara's blog might be valid IF Timber had any knowledge of client orders. Timber Hill's markets aren't influenced by client orders and are displayed on the screen. If anything the client has the edge as they can hit or lift the quote on the screen. The proverbial Chinese Wall is in place.

Def, If I've read right , Timber Hill has first shot to match any client order that comes through as long as it's at the client's price or better. So Timber Hill can step in front of any order from an IB client. How it can do this without some knowledge of the clients order is puzzling to me to say the least. I mean if five orders come through for 1000 shares of XYZ @ $10 and Timber Hill sees it can only take one of those fives then Timber Hill knows it just took a position against one of it's customers.

You can tell me that "The Proverbial Chinese Wall" is in place and it may be that what you're saying is 100% true. You can basically tell me anything and I'm sure every broker that Bill Cara mentions would tell their customers the same thing. I have no way to verify the accuracy of your statement.
I can't even get a breakdown on IB LLC's profits made from market making vs. commissions.

If you can verify this "Wall" then I'm all eyes here; as I would like to believe this to be the case.

 

[def]

What difference does it make if you know the profits from the group's market making arm? IB LLC does not have a proprietary trading arm and thus there is 0 profit from trading. Timber Hill makes markets all over the world and the vast majority of it's profits come from trading (before you jump the gun interest & dividends are other types of income). A tiny fraction of those trades would have IB as the counter party. Nevertheless, the information isn't really that hidden considering the group's equity is posted on the IB site.

As for first shot. It is really quite simple. Think of Timber Hill's quote as an internal ECN. If the NBBO is 100.50 at 100.60 and Timber has an internal offer of 10.55, the internal IB quote then becomes 100.50 at 100.55. More importantly, the IB client gets an instant execution at a pace that could be achieved by routing the order to and from an exchange. The routing stats are posted on IB's web site. If you take a gander, you'll note that such orders are only a very small piece of our business. The quality of such fills are excellent. We monitor and keep track of our execution statistics closely. Our clients are very sophisticated and if our executions weren't exceptional, you'd be hearing about it.

What Bill Cara is talking about and how IB handles client flow are apples and oranges.

I'll put it back to you to prove to me that a client is disadvantaged in any shape or form from how IB handles and routes orders. Executions and the routing of orders are measured in milliseconds. If a client submits an order, it is a brokers job to provide the best possible price in the least amount of time to the client. IB does just that and does it very well.

 

[urep]

What difference does it make if you know the profits from the group's market making arm? IB LLC does not have a proprietary trading arm and thus there is 0 profit from trading. Timber Hill makes markets all over the world and the vast majority of it's profits come from trading (before you jump the gun interest & dividends are other types of income). A tiny fraction of those trades would have IB as the counter party. Nevertheless, the information isn't really that hidden considering the group's equity is posted on the IB site.

As for first shot. It is really quite simple. Think of Timber Hill's quote as an internal ECN. If the NBBO is 100.50 at 100.60 and Timber has an internal offer of 10.55, the internal IB quote then becomes 100.50 at 100.55. More importantly, the IB client gets an instant execution at a pace that could be achieved by routing the order to and from an exchange. The routing stats are posted on IB's web site. If you take a gander, you'll note that such orders are only a very small piece of our business. The quality of such fills are excellent. We monitor and keep track of our execution statistics closely. Our clients are very sophisticated and if our executions weren't exceptional, you'd be hearing about it.

What Bill Cara is talking about and how IB handles client flow are apples and oranges.

I'll put it back to you to prove to me that a client is disadvantaged in any shape or form from how IB handles and routes orders. Executions and the routing of orders are measured in milliseconds. If a client submits an order, it is a brokers job to provide the best possible price in the least amount of time to the client. IB does just that and does it very well.

OK I'm in no position to know how IB or Timber Hill utilizes it's customers data and if that plays any role in how IB LLC makes it's money or not. Unless you want to hand me your computer code and all your market data i cannot prove anything. Since IB LLC owns Timber Hill then isn't Timber Hill essentially IB LLC proprietary trading desk that goes by a different name??

Also, in your hypothetical ECN explanation, what happens if Schwab has the NBBO of 100.55 x 10 and an IB customer comes in at 100.55 for 10; then Timber Hill can take this trade ahead of Schwab @ 100.55 even without having a bid displayed; whereas it couldn't do this if it was a non IB customer. Essentially it can internalize an order as long as it matches NBBO; Yes?


I think the point that Bill Cara is making has less to do with whether one is getting the best execution price, as it does with a broker having information about who is on the other side of trades. Say I'm a brokerage/market maker and I know there are a lot of my small moderately funded retail traders on one side (i.e. =total long 25, 000 shares) of a stock XYZ. As a market maker I know there is a certain amount of money to be made by moving the stock lower and holding it lower until these clients exit their positions. I know these clients are active traders with short holding times and will usually exit a trade if a position moves 5% against them. As a market maker I can make money off the spread at any price I put the stock and given that I'm more well funded than most people in the market ; no one can really stop me. Now if I'm blind to who is behind those trades then I have no reason to take a risk in moving the price a certain way and would not know when it's time to reverse the price. With participant information I have an edge of where money can be made in a market. It's the information about the market participants that is important. Why is it that market makers pay for order flow and why is it there's such a strong aversion by market traders against internalization of orders even with NBBO rules?

In all fairness to IB I do think ,on the whole, you have one of the best and most diverse execution platforms available to a retail customer. So although I'm asking critical questions I hope you don't perceive it as animosity toward IB specifically: since any suspicions I might have about IB are no different then waht I have for Fidelity, Schwab, Ameritrade etc.

 

[def]

OK I'm in no position to know how IB or Timber Hill utilizes it's customers data and if that plays any role in how IB LLC makes it's money or not. Unless you want to hand me your computer code and all your market data i cannot prove anything. Since IB LLC owns Timber Hill then isn't Timber Hill essentially IB LLC proprietary trading desk that goes by a different name??

Also, in your hypothetical ECN explanation, what happens if Schwab has the NBBO of 100.55 x 10 and an IB customer comes in at 100.55 for 10; then Timber Hill can take this trade ahead of Schwab @ 100.55 even without having a bid displayed; whereas it couldn't do this if it was a non IB customer. Essentially it can internalize an order as long as it matches NBBO; Yes?


I think the point that Bill Cara is making has less to do with whether one is getting the best execution price, as it does with a broker having information about who is on the other side of trades. Say I'm a brokerage/market maker and I know there are a lot of my small moderately funded retail traders on one side (i.e. =total long 25, 000 shares) of a stock XYZ. As a market maker I know there is a certain amount of money to be made by moving the stock lower and holding it lower until these clients exit their positions. I know these clients are active traders with short holding times and will usually exit a trade if a position moves 5% against them. As a market maker I can make money off the spread at any price I put the stock and given that I'm more well funded than most people in the market ; no one can really stop me. Now if I'm blind to who is behind those trades then I have no reason to take a risk in moving the price a certain way and would not know when it's time to reverse the price. With participant information I have an edge of where money can be made in a market. It's the information about the market participants that is important. Why is it that market makers pay for order flow and why is it there's such a strong aversion by market traders against internalization of orders even with NBBO rules?

In all fairness to IB I do think ,on the whole, you have one of the best and most diverse execution platforms available to a retail customer. So although I'm asking critical questions I hope you don't perceive it as animosity toward IB specifically: since any suspicions I might have about IB are no different then waht I have for Fidelity, Schwab, Ameritrade etc.

I understand your questions but the best I can come back with is that our execution quality speaks for itself and that the entities are seperate. The order routing is also fully disclosed in declarations to the SEC.

The way that Timber joins the NBBO is not the same of seeing the customer order and backing away or changing the price. The client benefits via a faster execution and possibly price improvement. In the example you provide as to whether or not Timber can jump ahead of the queue, It depends on the venue. If a futures market - no. Trades get novated on the exchange level. On other exchanges or market where Timber could "jump" the queue by internalizing an order I don't see why a client of IB would object - especially when they are receiving a faster execution. Keep in mind it works the other way as well. The hidden benefit is also reduced costs for IB which are reflected in the overall commission level.

Again, I don't think there is much more to add here other than to reiterate that the the key is the quality of execution - which at IB we beleive is second to none.

 

[urep]

I understand your questions but the best I can come back with is that our execution quality speaks for itself and that the entities are seperate. The order routing is also fully disclosed in declarations to the SEC.

The way that Timber joins the NBBO is not the same of seeing the customer order and backing away or changing the price. The client benefits via a faster execution and possibly price improvement. In the example you provide as to whether or not Timber can jump ahead of the queue, It depends on the venue. If a futures market - no. Trades get novated on the exchange level. On other exchanges or market where Timber could "jump" the queue by internalizing an order I don't see why a client of IB would object - especially when they are receiving a faster execution. Keep in mind it works the other way as well. The hidden benefit is also reduced costs for IB which are reflected in the overall commission level.

Again, I don't think there is much more to add here other than to reiterate that the the key is the quality of execution - which at IB we beleive is second to none.

Well I do understand your position too. Again my main point at the beginning was that IB/TimberHill are on the same team and although I always understood it in equities and option markets; I was actually at first confused about IDEALPRO's Forex mrkt. I appreciate that you've clarified this and tried to address my concerns about the disclosure on your web site.



As far as being separate entities I still have major doubts about how this can be and how it is enforced in this day of computerised trading. I actually corresponded with a former option market maker and when I once tried to make the distinction between IB and Timber Hill ; I was told flat out that they are one and the same.
Again it's no different then say National Financial's and Fidelity's set up or any of the other brokerages for that matter, and as these are proprietary set ups I wasn't expecting much in the way of validation either way.

Thanks for taking the time.

Urep

 

[coolTrader]

whats with your rates every one is quoting 11.14 you are quoting 21/22 on GBPUSD

 

[BlackPanther]

Closing positions quickly over the phone

To IB:

I'm relatively happy with IB at the moment, I'm making money most importantly

However, I do have a gripe - I wanted to ensure I had no open positions when I experienced a problem with eSignal.

I called the European office (+4141 something) and got through to an automated menu and then was on hold before I spoke to an operator. Now, whilst compared to speaking to certain other companies this is quick - it took upwards of a minute from start to speaking with an operator (and then I had to hand out my account info etc.), and I am really rather risk averse (keep my losses small kind of trader). The fact I trade high volatility/liquidity stocks and I wasn't able to get through to an operator as quickly as I liked really scared me. I do have backup Internet and am considering the best setup for it now.. however I have a suggestion (unless it already exists and I have missed it!):

How about a number to dial that would close out all positions? When answered it would prompt for account code and then a pin. If this was all correct it would close all active positions. That, to me would be absolutely *fantastic*.

Also, is it possible to run TWS on two PCs simultaneously? E.g. my primary machine, and then have my secondary machine on a different connection so if anything went wrong I could use that to close out a position.

 

[Jerry Medved]

Also, is it possible to run TWS on two PCs simultaneously? E.g. my primary machine, and then have my secondary machine on a different connection so if anything went wrong I could use that to close out a position.

You cannot have TWS open on 2 computers using the same login at the same time.

 

[Interactive Brokers]

To IB:

I'm relatively happy with IB at the moment, I'm making money most importantly

However, I do have a gripe - I wanted to ensure I had no open positions when I experienced a problem with eSignal.

I called the European office (+4141 something) and got through to an automated menu and then was on hold before I spoke to an operator. Now, whilst compared to speaking to certain other companies this is quick - it took upwards of a minute from start to speaking with an operator (and then I had to hand out my account info etc.), and I am really rather risk averse (keep my losses small kind of trader). The fact I trade high volatility/liquidity stocks and I wasn't able to get through to an operator as quickly as I liked really scared me. I do have backup Internet and am considering the best setup for it now.. however I have a suggestion (unless it already exists and I have missed it!):

How about a number to dial that would close out all positions? When answered it would prompt for account code and then a pin. If this was all correct it would close all active positions. That, to me would be absolutely *fantastic*.

Also, is it possible to run TWS on two PCs simultaneously? E.g. my primary machine, and then have my secondary machine on a different connection so if anything went wrong I could use that to close out a position.

Dear Black Panther:

Thank you for your comments and suggestions.

I will pass them along to our head of operations for further review.

For your reference, please refer to the following link to learn about how to get the best service
http://www.interactivebrokers.com/en/general/contact/bestService.php?ib_entity=uk

 

[coolTrader]

To IB:

I'm relatively happy with IB at the moment, I'm making money most importantly

However, I do have a gripe - I wanted to ensure I had no open positions when I experienced a problem with eSignal.

I called the European office (+4141 something) and got through to an automated menu and then was on hold before I spoke to an operator. Now, whilst compared to speaking to certain other companies this is quick - it took upwards of a minute from start to speaking with an operator (and then I had to hand out my account info etc.), and I am really rather risk averse (keep my losses small kind of trader). The fact I trade high volatility/liquidity stocks and I wasn't able to get through to an operator as quickly as I liked really scared me. I do have backup Internet and am considering the best setup for it now.. however I have a suggestion (unless it already exists and I have missed it!):

How about a number to dial that would close out all positions? When answered it would prompt for account code and then a pin. If this was all correct it would close all active positions. That, to me would be absolutely *fantastic*.

Also, is it possible to run TWS on two PCs simultaneously? E.g. my primary machine, and then have my secondary machine on a different connection so if anything went wrong I could use that to close out a position.

i Second that because I had to deal with them this week and had to call Hong Kong! By the time all was over I moved from profit to being stopped out..

Response for dealer desks should be "Can I have your account number" If it has not been entered in on the phone and then we say quote.... close or open...

Also Can you all put your heads together and come up with a way of allowing us to trade markets that are trully 24hrs like forex. You close 10pm - 10:30 I can leave with that but it breaks trades for me..

I have no problem though with your system..

Cheers

 

[Bunyip]

Black Panther,

You can set up a secondary login (additional users) to your IB account via the account management screens (Account administration / User functions) which will allow you to have IB running on separate computers at the same time.

 

[BlackPanther]

Hi Bunyip,

Many thanks! I never thought of that

I still would like a phone solution too, can never have too many back-ups (especially when it comes to the Internet) and I think it has the potential to save their staff quite a few phones calls and time. I'm sure 99% of traders won't care what country they set it up in either, so long as we can get through!

BP

 

[Bozznorge]

I am new to IB, so I hope some of you guys can answer a question.

If I buy stocks with leverage over night, will IB sell the stocks when they charge me for the market data fees?

Bozznorge

 

[Interactive Brokers]

Bozznorge

We will bill you monthly for your market data. The aforementioned has nothing to do with your leverage.