Add/Remove Liquidity

Overview: 

The goal of this article is to provide proper understanding of exchange fees and add/remove liquidity fees for the Tiered commission schedule.

 

The concept of adding or removing liquidity is applicable to both stocks and stock/index options. Whether or not an order removes or adds liquidity is dependent on that order being marketable or non-marketable.

Marketable orders REMOVE liquidity.
Marketable orders are either market orders, OR buy/sell limit orders whose limit is at or above/below the current market.

1. For a marketable buy limit order, the limit price is at or above the Ask.

2. For a marketable sell limit order, the limit price is at or below the Bid.

Example:
XYZ’s stock current ASK (offer) size/price is 400 shrs at 46.00. You enter a buy limit order for 100 XYZ stock @ 46.01. This order will be considered marketable because an immediate execution will take place. If there is an exchange charge for removing liquidity, the customer will be charged that fee.


 

Non-Marketable orders ADD liquidity.
Non-marketable orders are buy/sell limit orders in which the limit price is below/above the current market.

1. For a non-marketable buy limit order, the limit price is below the Ask.

2. For a non-marketable sell limit order, the limit price is above the Bid.

Example:
XYZ’s stock current ASK (offer) size/price is 400 shrs at 46.00. You enter a buy limit order for 100 XYZ stock @ 45.99. This order will be considered non-marketable, because it will be posted to the market as the best bid, and instead of being immediately executed.
If and when someone else sends a marketable sell order that causes your buy limit order to be executed, you should receive a rebate (credit), if an add liquidity credit is available.
 
 

PLEASE NOTE:
1. All accounts trading options will be subject to any options exchanges’ remove/add liquidity fees or credits.
2. Per IBKR’s website, only negative numbers under the Remove/Add Liquidity schedules are rebates (credits).
 
For more information visit:

What is the meaning of removing from, or adding liquidity to, the market?

Overview: 

The first point to understand is what a marketable order is.  Marketable orders are either market orders or buy and sell limit orders whose limit price is at or above/below the current market price.  A marketable buy limit order would have a limit price set at or above the current ask in the market.  Conversely, a marketable sell limit order would have a limit price set at or below the current bid in the market. 

Marketable orders remove liquidity from the market. 

Non-marketable orders are buy and sell limit orders in which the limit price is below/above the current market price.  A non-marketable buy limit order would have a limit price that is below the current ask in the market.  Conversely, a non-marketable sell limit order would have a limit price that is above the current bid in the market. 

Non-marketable orders add liquidity to the market.

What do the colors in the Status column of my order lines mean?

Overview: 

Light Gray:  Indicates you are in the process of creating an order and have not yet transmitted it.

Light Blue:  Indicates you have transmitted your order but have not yet received confirmation that it has been accepted by the order destination. 

Pale Purple:  Indicates an order has been accepted by the system (simulated orders) or an exchange (native orders) but that currently the order is not working, due to system, exchange or other issues.  When the order becomes active, the order status color will change appropriately.

Dark Blue:  Indicates an order has been accepted by the system (simulated orders) or an exchange (native orders) and that this order has yet to be elected.  The order status remains dark blue until election criteria are met.  At the time the order is triggered, the order status color will change appropriately.

Green:  Indicates the order has been accepted and is working at the order destination (exchange).

     *When you display the Shortable market data column, this color indicates that at least 1,000 shares are available to sell short.

Dark Green:  This color is used in the Shortable column and indicates that this security can be sold short, but currently there are no shares available for short sale and the system is searching for shares "on the street".

Magenta:  Indicates you have sent a request to cancel the order but have not yet received cancel confirmation from the order destination.  At this point the order is not confirmed canceled.  You could still receive an execution while the cancellation request is pending.

Burnt Orange:  Indicates a cancellation request has been accepted by the system but currently the request is not being recognized due to system, exchange or other issues.  At this point the order is not confirmed canceled.  You could still receive an execution while the cancellation request is pending. 

Red:  Indicates the balance of the order has been confirmed canceled by the system.  This could occur unexpectedly when the destination (exchange) has rejected the order. 

         *In the Shortable column, red indicates that no shares are available for short sale.

         *Once the order is confirmed canceled, the Order Management line will disappear from your trading screen after 30 seconds.  Please see the Customer Agreement found on www.interactivebrokers.com for further information on order confirmation and order cancellation. 

Maroon:  Indicates an attached simulated order type has been accepted by the system and has yet to be elected.  The order is held in the IBKR system (and status remains maroon) until the election criteria are met.  At that time the order is transmitted to the order destination specified and the order status color will change appropriately. 

Why is my Stop Limit Order for Globex listed futures contracts generating an error message regarding the price?

Overview: 

The order handling rules associated with CME Globex futures transactions contain restrictions regarding the relationship between the order limit price and stop price which may not exist in other market venues. In the case of a Sell Stop Limit Order, the limit price must be less than or equal to the stop price (<=).  In the case of a Buy Stop Limit Order, the limit price must be greater than or equal to the stop price (>=).  Sell (Buy) Stop Limit Orders entered outside this convention will generate the following error message: “LMT price should be less than or equal to (equal to or better than) STP price

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