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IBKR ATS Pegged-to-Midpoint

Lesson 3 of 3
Duration 3:51
Level Advanced
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The IBKR ATS Pegged-to-Midpoint order type is useful if the investor wishes to rest a nonmarketable order at the midpoint of the NBBO. It is also available for US stocks in the IBKR ATS.

Study Notes:

The IBKR ATS Pegged-to-Midpoint order type is useful if the investor wishes to rest a nonmarketable order at the midpoint of the National Best Bid and Offer, more commonly known as the NBBO. The IBKR ATS Pegged-to-Midpoint order type also allows the investor to compete for liquidity by adding optional offsets to the mid-price. In order to comply with the Sub-Penny Pricing rule of Regulation NMS, which requires orders over $1.00 to be submitted in increments no smaller than a cent, IBKR requires the investor to define 2 offsets:

  • 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 and
  • 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.

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 – click 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-Midpoint.

In the Advanced panel, two boxes appear below the Destination: Mid Offset at Whole and Mid Offset at Half. These are the two offsets previously mentioned. The investor can choose to enter offsets by clicking on each box and selecting the value they want. If they do not choose a secondary offset, it is set to $.005 by default. In this case, select 0.02 for the Mid Offset at Whole and 0.015 for the Mid offset at Half.

For orders where the midpoint falls on the penny, the primary or Mid Offset at Whole is added for sell orders and subtracted for buy orders. In other words, positive offsets make the order less aggressive and negative offsets make it more aggressive.

When the midpoint falls on the half-cent, the secondary or Mid Offset at Half is automatically applied using the same logic as above where a positive offset makes the order less aggressive, and a negative offset makes the order more aggressive.

When ready, exit out of the Advanced panel, set the limit price, click Submit, and the order confirmation window will appear showing the Mid Offset at Whole and Mid Offset at Half amounts. When satisfied the order is correct, click Transmit.

The order will populate the Activity Panel’s order tab showing Peg to Midpoint in the Order Type data column, IBKRATS in the Destination column, and click on the white arrow to see the offset amounts.

For more information on the IBKR ATS Pegged-to-Midpoint order type, please visit our website or user guide.

Additional Resources

IBKR ATS Pegged-to-Midpoint Orders

IBKR ATS Orders

User Guide: IBKR ATS Pegged-to-Midpoint

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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

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