Considerations for Optimizing Order Efficiency

Account holders are encouraged to routinely monitor their order submissions with the objective of optimizing efficiency and minimizing 'wasted' or non-executed orders.  As inefficient orders have the potential to consume a disproportionate amount of system resources. IB measures the effectiveness of client orders through the Order Efficiency Ratio (OER).  This ratio compares aggregate daily order activity relative to that portion of activity which results in an execution and is determined as follows:   OER = (Order Submissions + Order Revisions + Order Cancellations) / (Executed Orders + 1) Outlined below is a list of considerations which can assist with optimizing (reducing) one's OER:   1. Cancellation of Day Orders - strategies which use 'Day' as the Time in Force setting and are restricted to Regular Trading Hours should not initiate order cancellations after 16:00 ET, but rather rely upon IB processes which automatically act to cancel such orders. While the client initiated cancellation request which serve to increase the OER, IB's cancellation will not. 2. Modification vs. Cancellation - logic which acts to cancel and subsequently replace orders should be substituted with logic which simply modifies the existing orders. This will serve to reduce the process from two order actions to a single order action, thereby improving the OER. 3. Conditional Orders - when utilizing strategies which involve the pricing of one product relative to another, consideration should be given to minimizing unnecessary price and quantity order modifications. As an example, an order modification based upon a price change should only be triggered if the prior price is no longer competitive and the new suggested price is competitive. 4. Meaningful Revisions – logic which serves to modify existing orders without substantially increasing the likelihood of the modified order interacting with the NBBO should be avoided. An example of this would be the modification of a buy order from $30.50 to $30.55 on a stock having a bid-ask of $31.25 - $31.26. 5. RTH Orders – logic which modifies orders set to execute solely during Regular Trading Hours based upon price changes taking place outside those hours should be optimized to only make such modifications during or just prior to the time at which the orders are activated. 6. Order Stacking - Any strategy that incorporates and transmits the stacking of orders on the same side of a particular underlying should minimize transmitting those that are not immediately marketable until the orders which have a greater likelihood of interacting with the NBBO have executed. 7. Use of IB Order Types - as the revision logic embedded within IB-supported order types is not considered an order action for the purposes of the OER, consideration should be given to using IB order types, whenever practical, as opposed to replicating such logic within the client order management logic. Logic which is commonly initiated by clients and whose behavior can be readily replicated by IB order types include: the dynamic management of orders expressed in terms of an options implied volatility (Volatility Orders), orders to set a stop price at a fixed amount relative to the market price (Trailing Stop Orders), and orders designed to automatically maintain a limit price relative to the NBBO (Pegged-to-Market Orders). The above is not intended to be an exhaustive list of steps for optimizing one's orders but rather those which address the most frequently observed inefficiencies in client order management logic, are relatively simple to implement and which provide the opportunity for substantive and enduring improvements. For further information or questions, please contact the Customer Service Technical Assistance Center.  

List of Chinese Stocks Subject to Increased Margin Requirements

  ISSUER NAME   SYMBOL   PRIMARY LISTING EXCHANGE 3SBIO INC-ADR  SSRX  NASDAQ AAA ENERGY INC  AAV  FWB ABRA MINING LTD AII ASX ACORN INTERNATIONAL INC-ADR  ATV  NYSE ACTIONS SEMICONDUCTOR CO-ADR  ACTS  NASDAQ AGRIA CORP - ADR  GRO  NYSE AIRMEDIA GROUP INC-ADR  AMCN  NASDAQ AIRTAC INTERNATIONAL GROUP  1590 TAI AMBOW EDUCATION HOLDING-ADR  AMBO  NYSE ANDATEE CHINA MARINE FUEL SE  AF0  SWB ANDATEE CHINA MARINE FUEL SE  AMCF  NASDAQ APOLLO SOLAR ENERGY INC  FXA  SWB A-POWER ENERGY GENERATION  APWR  NASDAQ A-POWER ENERGY GENERATION  4OS  FWB ASIAINFO-LINKAGE INC ASIA NASDAQ ASIAINFO-LINKAGE INC  AFB  IBIS ATA INC-ADR  ATAI  NASDAQ BCD SEMICONDUCTOR MANUFA-ADR  BCDS  NASDAQ BIOSTAR PHARMACEUTICALS INC  7BN  SWB BIOSTAR PHARMACEUTICALS INC  BSPM  NASDAQ BITAUTO HOLDINGS LTD-ADR  BITA  NYSE BODISEN BIOTECH INC  DZ9  FWB BOHAI PHARMACEUTICALS GROUP  3B2  SWB BONA FILM GROUP LTD-SPON ADR  BONA  NASDAQ BOYUAN CONSTRUCTION GROUP IN  BOY  TSE CAMELOT INFORMATION SYS-ADS CIS NYSE CHANGYOU.COM LTD-ADR  CYOU  NASDAQ CHARM COMMUNICATIONS INC-ADR  CHRM  NASDAQ CHEMSPEC INTL LTD - ADR  CPC  NYSE CHINA 3C GROUP  GXS  SWB CHINA BAK BATTERY INC  B6J  FWB CHINA BAK BATTERY INC  CBAK  NASDAQ CHINA CABLECOM HOLDINGS LTD  CCUN  IBIS CHINA CABLECOM HOLDINGS LTD  CABL  NASDAQ CHINA CENTURY DRAGON MEDIA I  ZDR  SWB CHINA CERAMICS CO LTD  CCCLU  NASDAQ CHINA CERAMICS CO LTD  C9E  SWB CHINA CGAME INC  CA6N  IBIS CHINA CGAME INC  CCGM  NASDAQ CHINA DASHENG BIOTECHNOLOGY  16D  FWB CHINA DIGITAL TV HOLDING-ADR  STV  NYSE CHINA DISTANCE EDUCATION-ADR  DL  NYSE CHINA ENERGY CORP  ZCE  SWB CHINA ENERGY RECOVERY INC CNI FWB CHINA FINANCE ONLINE CO-ADR  JRJC  NASDAQ CHINA GENGSHENG MINERALS INC  CGS  FWB CHINA GRENTECH CORP LTD-ADR  GRRF  NASDAQ CHINA INDUSTRIAL WASTE MANAG GD9 TIQSSWB CHINA KANGTAI CACTUS BIO-TEC IWN1 FWB CHINA LINEN TEXTILE INDUSTRY C60 SWB CHINA MASS MEDIA CORP-ADR  CMM  NYSE CHINA MEDICAL TECH-SPON ADR  CMED  NASDAQ CHINA MEDICINE CORP  XM2  SWB CHINA NEPSTAR CHAIN DRUG-ADR  NPD  NYSE CHINA NUOKANG BIO-PH-SP ADR  NKBP  NASDAQ CHINA ORGANIC AGRICULTURE IN  4CA  FWB CHINA POWER EQUIPMENT INC  5XP  TIQSSWB CHINA REDSTONE GROUP INC RS0 SWB CHINA RITAR POWER CORP  YXC  SWB CHINA RUNJI CEMENT INC WRJ SWB CHINA SHENGDA PACKAGING GROU  0CH  FWB CHINA SHENGDA PACKAGING GROU  CPGI  NASDAQ CHINA SHENGHUO PHARMACEUTICA  54C  IBIS CHINA SHENGHUO PHARMACEUTICA  KUN  AMEX CHINA SHUANGJI CEMENT LTD  C99N  FWB CHINA SOLAR & CLEAN ENERGY S NCS2 FWB CHINA SUN GROUP HIGH-TECH CO BP7 FWB CHINA SUNERGY CO LTD-ADR  CSUN  NASDAQ CHINA TECHFAITH WIRELESS-ADR  CNTF  NASDAQ CHINA TMK BATTERY SYSTEMS IN T35 SWB CHINA WATER GROUP INC  DI1  FWB CHINA XD PLASTICS CO LTD  02Y  FWB CHINA XINIYA FASHIO-SPON ADR  XNY  NYSE CHINA ZENIX AUTO INTERNA-ADR  ZX  NYSE CHINACACHE INTERNAT-SPON ADR  CCIH  NASDAQ CHINAEDU CORP-ADR  CEDU  NASDAQ CLEANTECH SOLUTIONS INTERNAT CLNT NASDAQ CLEANTECH SOLUTIONS INTERNAT CWZN FWB CNINSURE INC-ADR CISG NASDAQ CONCORD MEDICAL - SPON ADR  CCM  NYSE COUNTRY STYLE COOKI-SPON ADR  CCSC  NYSE DAQO NEW ENERGY CORP-ADR  DQ  NYSE DEHAIER MEDICAL SYSTEMS LTD  J8D  FWB DEHAIER MEDICAL SYSTEMS LTD  DHRM  NASDAQ DUOYUAN PRINTING INC DPT FWB EASTERN ENVIRONMENT SOLUTION V5E SWB E-COMMERCE CHINA-SPON ADR  DANG  NYSE EFUTURE INFORMATION TECHNOLO  4EF  FWB ELONG INC-SPONSORED ADR  LONG  NASDAQ ETERNAL TECHNOLOGIES GROUP  ETO  FWB FORLINK SOFTWARE CORP  YNO1  FWB FUNTALK CHINA HOLDINGS LTD  FTLK  NASDAQ FUQI INTERNATIONAL INC 3F6A IBIS FUWEI FILMS HOLDINGS CO LTD  F4B  IBIS GC CHINA TURBINE CORP 7GC SWB GLG LIFE TECH CORPORATION  GLG  TSE GLOBAL EDUCATION & TECH-ADR  GEDU  NASDAQ GOLD HORSE INTERNATIONAL INC 0GH SWB GUSHAN ENVIRONMENTAL ENE-ADR  GU  NYSE HANGFENG EVERGREEN INC  HF  TSE HARTCOURT COMPANIES INC  HCT  SWB HIGHPOWER INTERNATIONAL INC  HKN  SWB HIGHPOWER INTERNATIONAL INC  HPJ  NASDAQ HISOFT TECHNOLOGY INT-ADR  HSFT  NASDAQ HOLLYSYS AUTOMATION TECHNOLO  46H  FWB HOLLYSYS AUTOMATION TECHNOLO  HOLI  NASDAQ IFM INVESTMENTS LTD-ADS  CTC  NYSE ITONIS INC  IX2  IBIS JA SOLAR HOLDINGS CO LTD-ADR JASO NASDAQ JADE ART GROUP INC JAC SWB JIAYUAN.COM INTERNATIONA-ADR  DATE  NASDAQ JINGWEI INTERNATIONAL LTD  WJI  SWB JINKOSOLAR HOLDING CO-ADR JKS NYSE JINPAN INTERNATIONAL LTD  3QN  FWB JINPAN INTERNATIONAL LTD  JST  NASDAQ KANDI TECHNOLOGIES CORP  K8A  FWB KINGTONE WIRELESSINFO SO-ADR  KONE  NASDAQ KU6 MEDIA CO LTD-SPN ADR  KUTV  NASDAQ LDK SOLAR CO LTD -ADR LDK NYSE LEGEND MEDIA INC LM2 SWB LENTUO INTERNATI-SPON ADS  LAS  NYSE LINKWELL CORP  LHX  SWB LIZHAN ENVIRONMENTAL CORP  LZEN  NASDAQ MECOX LANE LTD-ADR  MCOX  NASDAQ MIGAO CORPORATION  MGO  TSE MINCO SILVER CORPORATION  MSV  TSE MINDRAY MEDICAL INTL LTD-ADR MR NYSE NETQIN MOBILE INC - ADR  NQ  NYSE NEW DRAGON ASIA CORP  BQ4  IBIS NOAH EDUCATION HOLDINGS-ADR  NED  NYSE ORIGIN AGRITECH LTD  39O  SWB ORIGIN AGRITECH LTD  SEED  NASDAQ ORSUS XELENT TECHNOLOGIES IN  O5X  FWB ORSUS XELENT TECHNOLOGIES IN  ORS  AMEX OSSEN INNOVATION CO-SPON ADR  OSN  NASDAQ PHOENIX NEW MEDIA LTD -ADS  FENG  NYSE PRIME ACQUISITION CORP  PACQ  NASDAQ PRIME ACQUISITION CORP  PACQU  NASDAQ QIAO XING MOBILE COMMUNICATI  F2A  IBIS QIAO XING MOBILE COMMUNICATI  QXM  NYSE QIAO XING UNIVERSAL RESOURCE  QXU  FWB QIAO XING UNIVERSAL RESOURCE  XING  NASDAQ RDA MICROELECTRON-SPON ADR  RDA  NASDAQ RECON TECHNOLOGY LTD HRC FWB RECON TECHNOLOGY LTD  RCON  NASDAQ RENESOLA LTD-ADR SOL NYSE SANCON RESOURCES RECOVERY IN FTVA SWB SEARCHMEDIA HOLDINGS LTD  IDI  AMEX SEARCHMEDIA HOLDINGS LTD-UTS  IDI U  AMEX SGOCO GROUP LTD  SGOC  NASDAQ SHANGPHARMA CORP-ADR  SHP  NYSE SHENGTAI PHARMACEUTICAL INC ESZ SWB SINA CORP  YIN  FWB SINO GAS & ENERGY HOLDINGS L  SEH  ASX SINO GAS INTERNATIONAL HOLDI QGS SWB SINOBIOMED INC  G8U  FWB SINOHUB INC  7S3  FWB SINOTECH ENERGY LTD-SPON ADR  CTE  NASDAQ SINOVAC BIOTECH LTD  SVQ  FWB SINOVAC BIOTECH LTD  SVA  NASDAQ SKY DIGITAL STORES CORP  YN3  FWB SKY-MOBI LTD-SP ADR  MOBI  NASDAQ SKYSTAR BIO-PHARMACEUTICAL  GNJC  FWB SOHU.COM INC  XOU  FWB SUNTECH POWER HOLDINGS-ADR STP NYSE SYSWIN INC-SPON ADS  SYSW  NYSE TAL EDUCATION GROUP- ADR  XRS  NYSE TAOMEE HOLDINGS LTD-SP ADR TAOM NYSE TELESTONE TECHNOLOGIES CORP  MSOA  FWB THE9 LTD-ADR  NCTY  NASDAQ TIANLI AGRITECH INC  7TA  FWB TIANLI AGRITECH INC  OINK  NASDAQ TIBET PHARMACEUTICALS INC  TXP  SWB TIBET PHARMACEUTICALS INC  TBET  NASDAQ TRINA SOLAR LTD-SPON ADR TSL NYSE TRI-TECH HOLDING INC  TTW  FWB TRI-TECH HOLDING INC  TRIT  NASDAQ TRUNKBOW INTERNATIONAL HOLDI  TBJ  IBIS TRUNKBOW INTERNATIONAL HOLDI  TBOW  NASDAQ U.S. CHINA MINING GROUP INC RJ2B SWB UTSTARCOM INC  UTS  FWB UTSTARCOM INC  UTSI  NASDAQ UTSTARCOM INC  UTSI  MEXI VIMICRO INTERNATIONAL CO-ADR  VIMC  NASDAQ VISIONCHINA MEDIA INC-ADR  VISN  NASDAQ WSP HOLDINGS LTD-ADR  WH  NYSE XINHUA CHINA LTD  X5R  IBIS XINYINHAI TECHNOLOGY LTD 3XI SWB XINYUAN REAL ESTATE CO L-ADR  XIN  NYSE YAYI INTERNATIONAL INC  8YJ  SWB YINGLI GREEN ENERGY HOLD-ADR YGE NYSE YOUKU.COM INC-SPON ADR YOKU NYSE YUCHENG TECHNOLOGIES LTD  YCT  SWB YUCHENG TECHNOLOGIES LTD  YTEC  NASDAQ ZHENG HE GLOBAL CAPITAL LTD  ZHE  ASX ZHONGPIN INC  CWP  FWB ZOOM TECHNOLOGIES INC  ZT2A  FWB ZUOAN FASHION LTD-SPON ADR  ZA  NYSE

Overview of SEC Fees

Under Section 31 of the Securities Exchange Act of 1934, U.S. national securities exchanges are obligated to pay transaction fees to the SEC based on the volume of securities that are sold on their markets. Exchange rules require their broker-dealer members to pay a share of these fees who, in turn, pass the responsibility of paying the fees to their customers.

This fee is intended to allow the SEC to recover costs associated with its supervision and regulation of the U.S. securities markets and securities professionals. It applies to stocks, options and single stock futures (on a round turn basis); however, IB does not pass on the fee in the case of single stock futures trades.  Note that this fee is assessed only to the sale side of security transactions, thereby applying to the grantor of an option (fee based upon the option premium received at time of sale) and the exerciser of a put or call assignee (fee based upon option strike price).

For the fiscal year 2015 the fee was assessed at a rate of $0.0000184 per $1.00 of sales proceeds, however, the rate is subject to annual and,in some cases, mid-year adjustments should realized transaction volume generate fees sufficiently below or in excess of targeted funding levels.1

Examples of the transactions impacted by this fee and sample calculations are outlined in the table below.

Transaction

Subject to Fee?

Example

Calculation

Stock Purchase

No

N/A

N/A

Stock Sale (cost plus commission option)

Yes

Sell 1,000 shares MSFT@ $25.87

$0.0000184 * $25.87 * 1,000 = $0.476008

Call Purchase

No

N/A

N/A

Put Purchase

No

N/A

N/A

Call Sale

Yes

Sell 10 MSFT June ’11 $25 calls @ $1.17

$0.0000184 * $1.17 * 100 * 10 = $0.021528

Put Sale

Yes

Sell 10 MSFT June ’11 $25 puts @ $0.41

$0.0000184 * $0.41 * 100 * 10 = $0.007544

Call Exercise

No

N/A

N/A

Put Exercise

Yes

Exercise of 10 MSFT June ’11 $25 puts

$0.0000184 * $25.00 * 100 * 10 = $0.46

Call Assignment

Yes

Assignment of 10 MSFT June ’11 $25 calls

$0.0000184 * $25.00 * 100 * 10 = $0.46

Put Assignment

No

N/A

N/A

 

1Information regarding current Section 31 fees may be found on the SEC's Frequently Requested Documents page located at: http://www.sec.gov/divisions/marketreg/mrfreqreq.shtml#feerate

 

 

FAQs - U.S. Securities Option Expiration

Table Of Contents: How do I provide exercise instructions? Do I have to notify IB if I want my long option exercised? What if I have a long option which I do not want exercised? What can I do to prevent the assignment of a short option? Is it possible for a short option which is in-the-money not to be assigned? Can IB exercise the out-of-the-money long leg of my spread position only if my in-the-money short leg is assigned? What happens to my long stock position if a short option which is part of a covered write is assigned? Am I charged a commission for exercise or assignments? What happens if I am unable to meet the margin requirement on a stock delivery resulting from an option exercise or assignment?   Q&A: How do I provide exercise instructions? Instructions are to be entered through the TWS Option Exercise window. Procedures for exercising an option using the IB Trader Workstation can be found in the TWS User's Guide. Important Note: In the event that an option exercise cannot be submitted via the TWS, an option exercise request with all pertinent details (including option symbol, account number and exact quantity), should be created in a ticket via the Account Management window. In the Account Management window, click on "Inquiry/Problem Ticket". The ticket should include the words "Option Exercise Request" in the subject line. Please provide a contact number and clearly state in your ticket why the TWS Option Exercise window was not available for use. back to top   Do I have to notify IB if I want my long option exercised? In the case of exchange listed U.S. securities options, the clearinghouse (OCC) will automatically exercise all cash and physically settled options which are in-the-money by at least $0.01 at expiration (e.g., a call option having a strike price of $25.00 will be automatically exercised if the stock price is $25.01 or more and a put option having a strike price of $25.00 will be automatically exercised if the stock price is $24.99 or less). In accordance with this process, referred to as exercise by exception, account holders are not required to provide IB with instructions to exercise any long options which are in-the-money by at least $0.01 at expiration.  Important Note: in certain situations (e.g., underlying stock halt, corporate action), OCC may elect to remove a particular class of options from the exercise by exception process, thereby requiring the account holder to provide positive notice of their intent to exercise their long option contracts regardless of the extent they may be in-the-money. In these situations, IB will make every effort to provide advance notice to the account holder of their obligation to respond, however, account holders purchasing such options on the last day of trading are not likely to be afforded any notice.  back to top   What if I have a long option which I do not want exercised? If a long option is not in-the-money by at least $0.01 at expiration it will not be automatically exercised by OCC. If it is in-the-money by at least that amount and you do not wish to have it exercised, you would need to provide IB with contrary instructions to let the option lapse. These instructions would need to be entered through the TWS Option Exercise window prior to the deadline as stated on the IB website. back to top   What can I do to prevent the assignment of a short option? The only action one can take to prevent being assigned on a short option position is to buy back in the option prior to the close of trade on its last trading day (for equity options this is usually the Friday preceding the expiration date). When you sell an option, you provided the purchaser with the right to exercise which they generally will do if the option is in-the-money at expiration. back to top   Is it possible for a short option which is in-the-money not to be assigned? While is unlikely that holders of in-the-money long options will elect to let the option lapse without exercising them, certain holders may do so due to transaction costs or risk considerations. In conjunction with its expiration processing, OCC will assign option exercises to short position holders via a random lottery process which, in turn, is applied by brokers to their customer accounts. It is possible through these random processes that short positions in your account be part of those which were not assigned. back to top   Can IB exercise the out-of-the-money long leg of my spread position only if my in-the-money short leg is assigned? No. There is no provision for issuing conditional exercise instructions to OCC. OCC determines the assignment of options based upon a random process which is initiated only after the deadline for submitting all exercise instructions has ended. In order to avoid the delivery of a long or short underlying stock position when only the short leg of an option spread is in-the-money at expiration, the account holder would need to either close out that short position or consider exercising an at-the-money long option. back to top   What happens to my long stock position if a short option which is part of a covered write is assigned? If the short call leg of a covered write position is assigned, the long stock position will be applied to satisfy the stock delivery obligation on the short call. The price at which that long stock position will be closed out is equal to the short call option strike price. back to top   Am I charged a commission for exercise or assignments? There is no commissions charged as the result of the delivery of a long or short position resulting from option exercise or assignment of a U.S. security option (note that this is not always the case for non-U.S. options). back to top   What happens if I am unable to meet the margin requirement on a stock delivery resulting from an option exercise or assignment? If an option exercise or assignment results in the delivery of a long or short stock position and the account holder does not maintain sufficient equity to meet the ensuing margin requirement, IB will act to liquidate positions to restore margin compliance. While IB retains the right to liquidate at any time in such situations, liquidations involving U.S. security positions will typically begin at approximately 9:40 AM ET as of the business day following expiration. back to top  

Contract Search Tool

How to submit a contract search query

Non-Guaranteed Combination Orders

A combination order is a special type of order that is constructed of multiple separate positions, or ‘legs’, but executed as a single transaction.  The legs of the combination may be comprised of the same position type (e.g. stock vs. stock, option vs. option or SSF vs. SSF) or different position types (e.g. stock vs. option, SSF vs. option or EFP).  It’s important to note that many combination order types, while submitted via the IB trading platform as a combination, are not native to (i.e., supported by) the exchanges and therefore may not be guaranteed by IB.  Accordingly, IB’s policy is to guarantee only Smart-Routed U.S. stock vs. option and option vs. option combination orders. As combination orders which are not guaranteed are exposed to the risk of partial execution, both in terms of the quantity of legs and their balance, IB requires account holders to acknowledge the 'Non-Guaranteed' attribute at the point of order entry.  There are two methods for setting this attribute:
  • Method 1 - Users can select the Non-Guaranteed attribute in the Misc. section on the Order Ticket for a particular order
  • Method 2 - Users can add the Non-Guaranteed column to the Order Management section of the TWS
  Notes:
  • Non-Guaranteed combination orders are not available for Financial Advisor allocation orders
  The risk of such 'Non-Guaranteed' orders is illustrated through the example below: Example Assume the following quotes for a Stock vs. Stock combination order to purchase shares of Microsoft (MSFT) and sell shares of Appl (AAPL). Current markets MSFT - 26.30 bid, 26.31 offer AAPL - 250.25 bid, 250.30 offer A generic combination is created to buy 1 share AAPL and sell 1 share MSFT, the implied quote would be 223.94 bid, 224 offer. The following order is entered: Buy 200 AAPL, Sell 200 MSFT Pay 224 Based on the current markets, the order would appear to be executable.
  • A buy of 200 shares of AAPL are routed with a 250.30 limit. Only 100 execute.
  • A sell of 200 shares of MSFT are routed with a 26.30 limit. No execution is received as the market moves to 26.29 bid.
With a Non-Guaranteed combination, the 100 shares of AAPL would be placed in the client account, even though no MSFT shares were executed.  The remainder of the combination order will continue to work until executed in its entirety or until it is canceled.

TWS Messages - Order quantity must be fully displayed for this instrument

Order types which provide privacy by either hiding the entire order quantity (i.e., Hidden Orders) or allowing the display of only a specified portion of the submitted order quantity (i.e., Iceberg/Reserves) are not supported for all product types and venues. Examples of venues for which Hidden and Iceberg/Reserve stock orders are not supported are Pink Sheet and OTCBB.  Hidden or Iceberg/Reserve orders submitted to these venues will be rejected and will generate the following message: "Order quantity must be fully displayed for this instrument". Orders receiving this rejection message will require the removal of any hidden or display size attribute prior to resubmission. Additional information regarding product types and venues for which these order types are supported is available through the links below: Iceberg/Reserve: http://individuals.interactivebrokers.com/en/trading/orders/iceberg.php?ib_entity=llc Hidden : http://individuals.interactivebrokers.com/en/trading/orders/hidden.php?ib_entity=llc  

Equity & Index Option Position Limits

Position limits are defined on regulatory websites and may change periodically.  Some contracts also have near-term limit requirements (near-term position limits are applied to the side of the market for those contracts that are in the closest expiring month issued).  Traders are responsible for monitoring their positions as well as the defined limit quantities to ensure compliance.  The following information defines how position limits are calculated;   Option position limits are determined as follows:
  • Bullish market direction -- long call & short put positions are aggregated and quantified in terms of equivalent shares of stock.
  • Bearish market direction -- long put & short call positions are aggregated and quantified in terms of equivalent shares of stock.
The following examples, using the 25,000 option contract limit, illustrate the operation of position limits:
  • Customer A, who is long 25,000 XYZ calls, may at the same time be short 25,000 XYZ calls, since long and short positions in the same class of options (i.e., in calls only or in puts only) are on opposite sides of the market and are not aggregated
  • Customer B, who is long 25,000 XYZ calls, may at the same time be long 25,000 XYZ puts. Rule 4.11 does not require the aggregation of long call and long put (or short call and short put) positions, since they are on opposite sides of the market.
  • Customer C, who is long 20,000 XYZ calls, may not at the same time be short more than 5,000 XYZ puts, since the 25,000 contract limit applies to the aggregate position of long calls and short puts in options covering the same underlying security. Similarly, if Customer C is also short 20,000 XYZ calls, he may not at the same time have a long position of more than 5,000 XYZ puts, since the 25,000 contract limit applies separately to the aggregation of short call and long put positions in options covering the same underlying security.
  Notifications and restrictions:   IB will send notifications to customers regarding the option position limits at the following times:
  • When a client exceeds 85% of the allowed limit IB will send a notification indicating this threshold has been exceeded
  • When a client exceeds 95% of the allowed limit IB will place the account in closing only. This state will be maintained until the account falls below 85% of the allowed limit. New orders placed that would increase the position will be rejected.
  Notes: Position limits are set on the long and short side of the market separately (and not netted out). Traders can use an underlying stock position as a "hedge" if they are over the limit on the long or short side (index options are reviewed on a case by case basis for purposes of determining which securities constitute a hedge). Position information is aggregated across related accounts and accounts under common control.   Definition of related accounts: IB considers related accounts to be any account in which an individual may be viewed as having influence over trading decisions. This includes, but is not limited to, aggregating an advisor sub-account with the advisor's account (and accounts under common control), joint accounts with individual accounts for the joint parties and organization accounts (where an individual is listed as an officer or trader) with other accounts for that individual.   Position limit exceptions: Regulations permit clients to exceed a position limit if the positions under common control are hedged positions as specified by the relevant exchange. In general the hedges permitted by the US regulators that are recognized in the IB system include outright stock position hedges, conversions, reverse conversions and box spreads. Currently collar and reverse collar strategies are not supported hedges in the IB system. For more detail about the permissible hedge exemptions refer to the rules of the self regulatory organization for the relevant product. OCC posts position limits defined by the option exchanges.   They can be found here. http://www.optionsclearing.com/webapps/position-limits

ADR pass-through fees

Account holders maintaining positions in American Depository Receipts (ADRs) should note that such securities are subject to periodic fees intended to compensate the agent bank providing custodial services on behalf of the ADR.  These services typically, include inventorying the foreign stocks underlying the ADR and managing all registration, compliance and record-keeping services. Historically, the agent banks were only able to collect the custody fees by subtracting them from the ADR dividend, however, as many ADRs do not regularly pay dividends, these banks have been unable to collect their fees.  As a result, in 2009, the Depository Trust Company (DTC) received SEC approval to begin collecting these custody fees on behalf of the banks for ADRs which do not pay periodic dividends.  DTC collects these fees from its participant brokers (such as IB) who hold the ADRs for their clients.  These fees are referred to as pass-through fees as they are designed to be then collected by the broker from its clients. If you hold a position in a dividend paying ADR, these fees will be deducted from the dividend as they have in the past.  If you hold a position in an ADR which does not pay a dividend, this pass-through fee will be reflected on the monthly statement of the record date in which it is assessed.  Similar to the treatment of cash dividends, IB will attempt to reflect upcoming ADR fee allocations within the Accruals section of the account statements as well. Once charged, the fee will be reflected in the Deposits & Withdrawals section of the statement with the description 'Adjustments - Other' along with the symbol of the particular ADR it is associated with. While the amount of this fee will generally range from $0.01 - $0.03 per share, the amounts may differ by ADR and it is recommended that you refer to your ADR prospectus for specific information.  An on-line search for the prospectus may be conducted through the SEC's EDGAR Company Search tool.
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