Anyone has received the following warning?
Action Required: Internalization Trading Execution
What did you chose? I think I won’t change anything.
Given how rarely I trade, as long as they at least beat the public ask/bids, I don’t really think I care.
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I assume they will cross your buy to other client’s sell? Or are they suddenly become prop company and will cross against their books?
Reddit - Dive into anything has the full text, they (or their affiliate) can fully internalize it, not just cross clients.
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I think you have to explicitly opt out? Not doing anything means accepting the change. Not changing anything means you will have to do something.
You are correct. I meant to let them do it. At the end of the day it doesn’t make a difference anyway. I might pay a bit less if they change and they might make a bit of money as well.
Hey guys,
Did anyone else receive a similar message and if so did they opt out?
"Dear Client,
We are writing to advise you of a change in how IBKR will handle certain orders to buy or sell stocks.
Up until now, IBKR has always acted solely as the customer’s agent in executing all customer orders in exchange-traded products (except for fractional shares of stock), meaning that a third-party was the counter-party to all orders.
Please note that IBKR may now internalize certain customer stock orders (or portions of those orders). “Internalization” is when a broker or its affiliate acts as the counter-party to a customer’s order. IBKR is making this change to improve execution quality (i.e., increase price improvement) and/or reduce customer execution costs without reducing execution quality.
In addition, please note that IBKR must provide “best execution” for every customer order regardless of whether it internalizes the order or executes it as the customer’s agent. IBKR therefore will only internalize an order if it determines that internalization offers the best available execution. If it does not, IBKR will execute the order with a third-party on an agency basis, as it has done so in the past.
If you do not want your orders to be eligible for execution via IBKR’s internalization process, you may opt out by logging in to Portal Navigate to User (“Head/Shoulders” icon) > Settings - Trading and click on the “Internalization” link.
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.
Why yould you opt out ? Personnaly I think you are still guaranteed the best rate from the broker (difficult to check, but I guess compliance will be up there a**)
I guess they are building up a funds of high liquidity ETFs and stocks from which they can go in and out.