The IBKR ATS Pegged-to-Best order type is useful for investors to direct non-markable or liquidity providing orders to the IBKR ATS that compete with the near side National Best Bid and Offer, more commonly known as the NBBO, as well as other same side liquidity adding resting orders on the IBKR ATS.
The Pegged-to-Best order type floats so that it will always be one penny more aggressive than the better of the near side NBBO and the best priced same side resting liquidity-adding order in the IBKR ATS, up to the NBBO midpoint minus (for a buy) or plus (for a sell) a user-defined number of increments, providing a high probability of trading with IBKR client SMART routed orders on the opposite side.
To access the IBKR ATS from Mosaic, the investor should enter a symbol in the Order Entry panel, select Buy or Sell, and the quantity they want to trade. Next, the investor should bring up the Advanced Panel by clicking on the plus sign next to Advanced.
In the top left-hand corner of the panel, click on the arrow next to the Destination drop-down box, scroll down to Directed, expand the choices by clicking on the plus sign, and choose IBKRATS. Click on the order type drop down box directly above in the Order Entry panel and select Pegged-to-Best.
In the Advanced panel, five boxes appear below the Destination:
- Mid Offset at Whole or a Primary offset – which must be in whole cent increments, that is applied to the spread when it is an even number of cents wide. This is only used when the Compete against best bid offset is set to UpToMid,
- Mid Offset at Half or a Secondary offset – which must be in half-penny increments, that is automatically applied when the spread is an odd number of cents wide resulting in a whole penny price after it is added or subtracted from the midpoint price. Like the primary offset this is only activated when the Compete against best bid offset is set to UpToMid,
- Reroute to SMART after – this is the number of minutes the order will stay in the IBKR ATS before being routed to other destinations, the investor may choose between 0 – 120 minutes. Certain order types may not work in destinations outside the IBKR ATS
- Minimum Competing Size – which is the minimum order size required for the investor’s Pegged-to-Best order to compete against other orders in the IBKR ATS.
- Compete Against Best Bid Offset – this offset denotes how aggressively relative to the combined NBBO, to compete with other orders. Offsets can be specified in pennies or set to UpToMid. The Pegged-to-Best order type allows the investor to add offsets to compete for liquidity.
For this example, the investor will set the Compete Against Best Bid Offset to .02, set Minimum Competing Size offset to 50 and exit out of the Advanced Panel by clicking on the red X in the upper right-hand corner and adjust the limit price to the desired amount. The investor then clicks Submit and reviews the Order Confirmation screen before clicking on Transmit to send the order.
In the Activity panel, the order will show IBKRATS in the Destination column, Pegged-to-Best in the Order Type column, and 0.02 in the Compete Against Best Bid or Offer Offset column.
For more information on the IBKR ATS Pegged-to-Best order type, please visit our website or user guide.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Disclosure: Order Types / TWS
The order types available through Interactive Brokers LLC’s Trader Workstation are designed to help you limit your loss and/or lock in a profit. Market conditions and other factors may affect execution. In general, orders guarantee a fill or guarantee a price, but not both. In extreme market conditions, an order may either be executed at a different price than anticipated or may not be filled in the marketplace.
Disclosure: IBKR ATS
For additional details about IBKR Alternative Trading System (ATS) please visit: https://www.interactivebrokers.com/en/index.php?f=48654