Brokers Clearing House- Does it matter execution wise???

[Rsagi]

Hi All,


I was wondering if there is an importance to a brokers clearing house and if it can be proved. I am referring to better fills/ slippage.

I am thinking about using TradeStation as my broker as was told by them that they direct orders directly to the market with out any specialists/market makers as the middle man and do not "play against you" - any thoughts on that? is this mostly marketing hype? Did any1 on the forum ever compare execution speeds and slippage using a few broker accounts?

I narrowed down the list to three brokers: TradeStation, IB and MBtrading.

Any insight would be appreciated.

Best,
Steve

 

[NetTecture]

Hm, not likely.

Basically, depending what you trade. If you trade electronic instruments (not pit) there is no human element involved. THe exchange gets orders, executes them. Nothing the broker can change here. If you trade pit, the quality of the pit broker CAN make a difference.

THe rest is performance - the only element tweakable. SOme providers (Zen-Fire, or anyone based RIthmic) are extremely fast in processing the order once they get it.... which MAY shave off a microsecond or two. NORMALLY that should not make a difference.

Anything visible... should be a crappy broker. Seriously. To be visible you should get delays in the area of 10ms or more.... 1/100 of a second (and even then this is not really "visible" for the human eye) and if the broker is that slow processing an order... he has serious problems.

Brokers are not allowed - for futures - to get into the game on the other side. You pay for exchange execution.... including paying exchange fees for that. So, the broker THEORETICALLY (it is forbidden) COULD take the opposite side by entering an opposing order into the exchange, but he is not allowed to cross out the execution on his own system - would be many bad things including fraud (as he would still bill you exchange fees).

Stocks may be different. Again, it basically is a question of instrument. Computer exchange - no. Human people in.... yeah CAN make a difference.

 

[ketchup]

http://seekingalpha.com/article/150397-flash-trading-goldman-sachs-front-running-everyone-else

 

[NetTecture]

Ketchup - bad post. Makes no relevance.

First, it is stocks only, so... well... depends waht the OP wnated.

Second, it is totally irrelevant. It is about flash orders - which apply to EVERYONE. Basically, GS was not front-running it's own customers, but it was using (or is using) flash orders in which the clearing system (ECN) sends them the incoming orders before execution. ALL incoming orders, so, again, the broker makes no difference.

The OP especially asked whether his broker makes a difference - in this case it makes not.

 

[kim_cannontrading]

Hello Rsagi,

I actually work for Cannon Trading Company. To tell you the truth if you're looking for better fills and slippage it really might just be the platform you are using. If you're looking for better fills you might want to try TransAct AT. You can try the demo here if you'd like : http://www.cannontrading.com/ilanAT.php. It's a free two week demo if you want to try the platform