4305 | 06/05/2023
Interactive Brokers APAC Order Routing Disclosure
1. IBKR's Order Routing System: Clients of one of the IBKR APAC affiliate brokers, including
Interactive Brokers Hong Kong Limited, Interactive Brokers Singapore Pte Ltd and Interactive Brokers
Australia Pty Ltd, among others, have access to Interactive Brokers Group's (hereafter, "IBKR")
proprietary trading tools.
Orders may be submitted to IBKR's high-speed Best Execution Order Routing System
(SmartRoutingSM), which is designed to optimize execution price, speed and total cost of execution for
stocks and options. IBKR constantly changes and enhances the SmartRouting system to adapt to
changes in markets, new exchanges, new trading rules, etc. IBKR's SmartRouting system continually
scans competing market centers and automatically seeks to route orders to the best market, taking into
account factors such as quote size, quote price, exchange or ATS transaction fees or rebates and the
potential availability of price improvement (execution at a better price than the National Best Bid or
Offer ("NBBO"), "Price Improvement"). The IBKR SmartRouting system continually reevaluates
market conditions and prices for pending IBKR client orders and dynamically re-routes orders as
necessary. Unless you direct your order to a specific market center or "algo" provider, IBKR's
SmartRouting system retains control over the routing of your order for execution and does not deliver
your order for another broker to route.
For some products, clients may directly route their orders to a particular market of their choice, although
IBKR recommends that our clients use the IBKR SmartRouting system.
Interactive Brokers LLC ("IBKR USA"), who acts as our executing broker on US securities, also
operates an Alternative Trading System (the "IBKR USA ATS") which supports U.S. Reg.-NMS stocks
only. The IBKR USA ATS, in accordance with SEC Regulation ATS, on which it executes IBKR USA
client orders against each other or against one or more professional liquidity providers who send orders
into the IBKR USA ATS. Order executions on the IBKR USA ATS are faster, eliminate exchange fees,
and may offer Price Improvement. Statistical information regarding the quality of executions for orders
effected through the IBKR USA ATS (e.g., average execution speed, percentage of orders receiving
Price Improvement, etc.) is available on the IBKR USA website at: [Link]
Respecting orders for certain European financial products, you may be able to trade on quotes published
by Interactive Brokers Ireland Limited (“IBKR Ireland”) when it acts as a systematic internaliser (“SI”)
in accordance with applicable law. Your order (or part thereof) for European financial products will only
be routed to IBKR Ireland acting as SI where to do so would provide you with the best overall outcome,
i.e., the best price, after considering other available execution venues, including exchanges and non-
affiliated SI’s that IBKR has access to. IBKR Ireland acts as principal when it executes orders as SI. If
you do not want your orders for European financial products to be eligible for execution via IBKR
Ireland’s internalization process, you may opt out by logging into the Client Portal. Navigate to Account
Settings > Trade and then client on the “Internalization” link. Please note that your opt out will only
apply to whole-share portions of any stock order; you cannot opt out of internalization for the fractional-
share portion of any order you submit. Please be aware that opting out may result in worse execution
quality and/or higher execution costs.
2. Orders Sent Near the Opening of Trading: Please note that markets can be especially volatile near the
opening of a trading session, with prices and available volume often changing rapidly and with data
feeds from various markets potentially being slow or temporarily unavailable. IBKR cannot guarantee
that orders sent at or near the opening of trading necessarily will receive the best posted price. You may
want to consider the use of limit orders at the open, although market orders should be used if certainty of
getting a fill is of greater concern to you than fill price.
Order Conversion and Designation: IBKR may convert certain order types or apply conditions to
certain IBKR client orders in order to facilitate an execution. For example, IBKR may simulate certain
order types using order designations. Simulated order types may be used in cases where an exchange
does not offer an order type or in cases where IBKR does not offer access to the "native" form of certain
order types offered by an exchange. In addition, orders may be sent Immediate or Cancel, Fill-Or-Kill,
All-Or-None, etc., in order to facilitate an immediate, automatic execution, consistent with the
objectives of the client order. To protect client orders from significant and rapidly changing prices,
IBKR may simulate market orders on exchanges by establishing a price ceiling for a buy order or a price
floor for a sell order at a percentage beyond the inside bid/ask. While this cap or floor is set at a level
intended to balance the objectives of execution certainty and minimized price risk, there exists a
possibility that an execution will be delayed or may not take place. In addition, IBKR is required by
exchanges and regulators to maintain "filters" in its systems that prevent executions at prices that might
be deemed to be disruptive to an orderly market (or exchanges may have such filters in their systems).
These filters may cause an otherwise marketable order not to be executed or to be delayed in execution,
even if the client might want the order to be executed immediately at a certain price. In accordance with
our regulatory obligations as a broker, IBKR may also reject orders exceeding certain size thresholds,
based upon factors including the normal volume in the product, the type of order, the marketability of
the order, and other factors which may affect the likelihood that the order could result in market
disruption.
3. Important Characteristics and Risks of Using Stop Orders: A Stop Order - i.e., a Stop (Market)
Order - is an instruction to buy or sell at the market price once your trigger ("stop") price is reached.
Please note that a Stop Order is not guaranteed a specific execution price and may execute significantly
away from its stop price, especially in volatile and/or illiquid markets. Stop Orders may be triggered by
a sharp move in price that might be temporary. If your Stop Order is triggered under these
circumstances, you may buy or sell at an undesirable price. Sell Stop Orders may make price declines
worse during times of extreme volatility. If triggered during a sharp price decline, a Sell Stop Order also
is more likely to result in an execution well below the stop price. Placing a limit price on a Stop Order
may help manage some of these risks. A Stop Order with a limit price - a Stop (Limit) Order - becomes a
limit order when the instrument reaches the stop price. By using a Stop (Limit) Order instead of a
regular Stop Order, you will receive more certainty regarding the execution price, but there is the
possibility that your order will not be executed at all if your limit price is not available in the market
when the order is triggered.
4. Important Characteristics and Risks of Using Market Orders: Please note that a Market Order is an
instruction to execute your order at any price available in the market. A Market Order is not guaranteed
a specific execution price and may execute at an undesirable price. If you would like greater control
over the execution prices you receive, please submit your order using a Limit Order, which is an
instruction to execute your order at or better than the specified limit price.
5. Potential Effects of High Volumes and Market Volatility: High volumes of trading and price
volatility may lead to wider market volatility and extreme market conditions. It is important that IBKR
clients understand the potential risks this presents, including:
A. Delay and Price Issues: High volumes of trading, either around the market open, market close
or other times of day, may cause delays in execution (or associated reporting) and/or
executions at prices significantly different than the market price quoted or displayed at the time
of order entry.
B. Changes to Order Handling and Restrictions on Order Acceptance: Volatile or extreme
market conditions may necessitate changes to IBKR's order handling procedures, margin
requirements, and/or restrictions on the types of orders IBKR will accept. IBKR is not required
to receive or accept orders from clients, particularly in circumstances where IBKR believes
that the associated compliance, legal, financial, credit or other risks are not acceptable. IBKR
may determine that it is necessary to change order handling procedures or margin
requirements, or restrict or prohibit trading, to limit IBKR's and/or clients' exposure to
extraordinary market, financial or other risks. IBKR may make these changes in its sole
discretion, without notice. For example, IBKR may determine that it is necessary to restrict
certain transactions to closing-only status (meaning that clients may close existing positions
but may not open new positions), make certain products non-shortable (meaning that clients
may not open short positions in a particular product), or increase margin requirements.
6. Dark Pools, Liquidity Provider and Affiliate Relationships:
A. Orders
1. Dark Pool and ATS Executions for Clients' Marketable Stock and ETF Orders:
IBKR USA maintains connections to "dark pool" ATSs ("Routeaway Dark Pools")
that may execute client marketable orders in U.S. REG.-NMS stocks. IBKR clients
may benefit from IBKR USA's access to dark pools. Dark pools typically provide a
source of substantial additional liquidity. Dark pools generally charge no execution
fees or lower execution fees than exchanges. Dark pools also provide fast executions
and the possibility of executions at prices more favorable than the prevailing NBBO.
IBKR USA receives rebate payments for routing and executing marketable client
orders for Regulation U.S. REG.-NMS stocks at some Routeaway Dark Pools. As of
May 29, 2018, IBKR USA generally passes the amount (or approximate amount) of
any such rebate to (i) Tiered- commission clients as a venue rebate; and to (ii) Fixed-
commission clients in the form of a reduction to the standard U.S. stock commission.
2. Liquidity Provider Relationships in the IBKR USA ATS and Executions of
Client Orders Against Those Liquidity Providers in the IBKR USA ATS: IBKR
USA has entered arrangements with certain institutions under which such institutions
may send liquidity-adding orders in U.S. REG.-NMS stocks to the IBKR USA ATS.
These orders are held within the IBKR USA ATS and are not displayed in the national
market. If a client marketable order could be immediately executed against such an
order held in the IBKR USA ATS (at the NBBO or at a better price than the NBBO),
the orders may be crossed and the execution reported to the National Market System.
This arrangement provides extra potential liquidity (size) for client orders and may
provide faster executions (since the orders do not have to be routed out to an
exchange), as well as providing the possibility of Price Improvement (since the orders
may be executed at a better price than available on an exchange).
IBKR USA may receive payment in the form of commissions or commission
equivalents from the liquidity providers for these executions in the IBKR USA ATS.
In the event IBKR USA receives any such payment, IBKR USA generally passes the
amount (or approximate amount) of the benefit to the client as follows, to (i) Tiered-
commission clients as a venue rebate; and to (ii) Fixed- commission clients in the
form of a reduction to the standard U.S. stock commission.
3. Client-to-Client Order Crosses in the IBKR USA ATS: For client orders in
Regulation U.S. REG.-NMS stocks that result in client-to-client crosses on the IBKR
USA ATS, IBKR USA charges and/ or provides the following commissions, fees,
and/or rebates:
a. Non-Marketable Orders Directed to and Executed in the IBKR USA
ATS: IBKR USA does not pay rebates or commission breaks to clients for
non-marketable orders directed to and executed in the IBKR USA ATS
("Directed IBKR USA ATS Order(s)").
b. Orders Smart-Routed to and Executed in the IBKR USA ATS Against
Directed IBKR USA ATS Orders: If IBKR USA smart-routes an order to
the IBKR USA ATS and that order is executed against a Directed IBKR
USA ATS Order, IBKR USA will provide:
A fixed per-share rebate to the Tiered-commission client who submitted the
smart- routed order; or
A fixed per-share commission reduction to the Fixed-commission client who
submitted the smart-routed order.
c. Non-Marketable Orders Smart-Routed to the IBKR USA ATS Which
Were Also Eligible for Execution at an Exchange: IBKR USA may smart-
route a non-marketable order to an exchange and later re-route that order to
the IBKR USA ATS (the "Eligible Resting Non- Marketable Order") where
it executes against another client order. In this instance:
a. A Tiered-commission client that submitted the Eligible Resting
Non-Marketable Order will receive the add-liquidity rebate (or pay
the add-liquidity fee, if applicable) that the client would have
received (or paid) if their resting order had executed at the
exchange on which it had been resting.
b. A Fixed-commission client that submitted the Eligible Resting
Non-Marketable Order will pay the typical fixed commission.
d. Orders Smart-Routed to the IBKR USA ATS Which Are Executed
Against Eligible Resting Non- Marketable Order(s): IBKR USA may
smart-route a client order to the IBKR USA ATS so that it executes against
an Eligible Resting Non-Marketable Order. In this instance:
A Tiered-commission client that submitted the order will be charged the
venue take-fee (or receive the venue take-rebate, if applicable) that the
client would have paid at the exchange to which the client's order would
otherwise have been routed.
A Fixed-commission client that submitted the order will pay the standard
fixed commission.
4. Tiered Commission Structure for Orders Routed to Exchanges: Under IBKR's
Tiered commission model, IBKR passes to Tiered commission clients some or all of
certain rebate payments IBKR receives for executing stock orders at exchanges,
although the Tiered commission model is not intended to be a direct pass-through of
exchange and third-party fees and rebates. For example, IBKR may receive enhanced
rebate payments for exceeding volume thresholds on particular markets, but typically
will not directly pass these enhancements to clients. Likewise, IBKR USA does not
pass to clients all of the rebates IBKR may receive for orders in pink sheet or OTCBB
stocks.
5. Options: IBKR does not deliver its option orders to another broker to handle and
route. Rather, IBKR employs its SmartRouting system to try to achieve the best
execution for client option orders. The SmartRouting system is designed to achieve
an execution price at or better than the NBBO by utilizing relationships with liquidity
providers, where applicable, who may provide Price Improvement through the
various auction and Price Improvement mechanisms offered under U.S. option
exchange rules. These relationships may benefit IBKR clients, who may receive Price
Improvement for their options orders. Where applicable, IBKR may receive payment
in the form of commissions or other payments from the liquidity providers for these
executions
Several options exchanges impose "maker-taker" fees and rebates, in which exchange
members are charged for orders that take liquidity (i.e., marketable orders that trade
against a posted quote or limit order) and receive a rebate for orders that add liquidity
to the exchange (i.e., non-marketable limit orders that are posted and then trade
against incoming marketable orders), or vice versa. The charges imposed or rebates
offered by these exchanges affect the total cost of execution, and IBKR's
SmartRouting System takes this into account in determining where to route option
orders - trying to minimize the costs that clients incur. If multiple exchanges are
quoting at the NBBO for an option order and IBKR has discretion as to where to send
the order or a portion of it, IBKR generally will "break the tie" by sending the order
to an exchange where it will receive the most payment for the order.
Under certain circumstances, IBKR may route a marketable option order to an
exchange that is not currently posting the NBBO but which may be willing to execute
the order at the NBBO. Generally, IBKR will do this in order to avoid or reduce the
fee for executing the order, compared to routing to a different exchange. IBKR
generally will share the economic benefit of routing orders in this manner with clients
in the form of reduced execution fees, although IBKR does not guarantee that it will
share such benefit. In addition, in the limited circumstances where IBKR routes
orders in this manner, IBKR generally guarantees a fill at the NBBO at the time the
order was routed.
Under IBKR's Tiered commission model, IBKR passes to Tiered-commission clients
some or all of certain rebate payments IBKR receives for executing option orders,
although the Tiered-commission model is not intended to be a direct pass-through of
exchange and third- party fees and rebates.2 For example, IBKR may receive
enhanced rebate payments for exceeding volume thresholds on particular markets, but
typically will not directly pass these enhancements to clients. Likewise, IBKR does
not pass to clients all of the rebates IBKR may receive for liquidity taking orders,
complex orders or orders executed in price improvement auctions. Traditional
exchange payment for order flow programs result in payments to specialists or
primary market makers, some portion of which may be paid on to IBKR. IBKR does
not pass these payments directly to clients..
7. Affiliate Investments in Exchanges: An affiliate or affiliates of IBKR APAC own(s) minority interests
in OneChicago (security futures exchange) and a substantial, minority investment in the Boston Options
Exchange Group LLC, which operates the BOX Options Exchange.
8. Quarterly Order Routing Reports and Other Order Routing Information Available upon Request:
U.S. Securities and Exchange Commission rules require all brokerage firms to make publicly available
quarterly reports describing their order routing practices. IBKR USA's quarterly order routing reports
are available on the IBKR website at [Link]/regulatory reports, or you can contact IBKR Client
Services.
In addition to the basic quarterly reports, under Rule 606 of SEC Regulation U.S. REG.-NMS, a broker-
dealer is required upon a client request to provide information regarding the identity of the market center
to which the client's orders were routed in the six months prior to the request; whether the order was a
directed or non-directed order, and the time of the transaction, if any, that resulted from such order.
Please contact the IBKR Client Services Desk in writing through the information on the IBKR website
at [Link]/help if you wish to receive the foregoing routing information for any order(s) within the past
six months. Please type "Request for Order Routing Information" in the subject line of your request and
please include your name, user id and account number as well as the date of the order, the security, the
quantity, and any other information necessary to identify the order (e.g., the time of day if there were
several similar orders that day.)
As long as consistent with applicable securities laws and regulations, we may share anonymized account
information or anonymized delayed order information with third parties (and/or share such information
among our affiliates) for the purpose of analysis, research, market data compilation, product creation,
establishing order routing and execution relationships, or for any other lawful purpose.
NOTES:
1. For U.S. options volume in excess of 1,000 contracts per month, IBKR may apply the U.S. option tiered
commission model to the contracts executed above the first 1,000.
2. For clients trading U.S. options, IBKR only offers the Tiered-commission model. For Direct Routed
option orders, the same model applies, but with no volume-tiering for the base commission.