Action Required: Internalization Trading Execution (Interactive Brokers)

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Action Required: Internalization Trading Execution (Interactive Brokers)

Post by funnyinterestingcool » Tue May 09, 2023 12:04 am

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.


If you have any questions regarding the internalization process, please contact Client Services .



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IBKR now internalizes certain customer orders (or portions of those orders) to buy or sell stocks. "Internalization" is when a broker or its affiliate acts as the counterparty to a customer's order.

IBKR has implemented internalization to improve execution quality (i.e., increase price improvement) and/or reduce customer execution costs without reducing execution quality.

When a broker internalizes an order it remains obligated to provide best execution for the order. IBKR's SmartRouterTM will route an order for internalization only if it determines that internalization offers the best available execution for the customer.

If you do not want your orders to be eligible to be executed via IBKR's internalization processes, you may opt out here. 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.
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