Form ATS-N/MA INTERACTIVE BROKERS LLC

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January 24, 2022 9:43 AM EST

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0000902664-21-005323

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013-00114

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IBKR ATS
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Part III Items 7 and 11 are being amended to allow subscribers to express Competing Tick Offset instructions on PegBest orders as an offset from the midpoint of the prevailing NBBO, specified in the form of Midpoint Offsets, and to describe such order instructions' manner of operation.
Only Brokerage Customers, as defined herein, may utilize PegBest orders (including PegBest orders using Competing Tick Offset instructions expressed in terms of a Midpoint Offset). Except for directed orders submitted to the ATS by Brokerage Customers, as a matter of policy IBKR does not utilize PegBest orders.

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INTERACTIVE BROKERS LLC

008-47257
000036418
The Financial Industry Regulatory Authority, Inc. ("FINRA")
01/06/1995
IATS
www.ibkr.com

Equinix NY5 Data Center
800 Secaucus Road
Secaucus
07094
US-NJ

NYSE Data Center
1700 MacArthur Blvd
Mahwah
07430
US-NJ

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false

Interactive Brokers LLC ("IBKR") operates a customer brokerage business (the "Customer Business") whereby brokerage customers of IBKR ("Brokerage Customers") may electronically submit trading interest to IBKR's smart order router ("SOR") for further routing. For clarity, the term "Brokerage Customer," as used herein, includes broker-dealer clients of IBKR when submitting orders to the SOR for further routing, whether on an agency or principal basis, and may include broker-dealers and other entities that submit directed orders to the ATS through IBKR's SOR and make no other use of IBKR's services. Additionally, and as separately noted herein (see, e.g., Part III Items 7, 9 and 11), entities acting as Liquidity Providers may separately act as Brokerage Customers of IBKR. Specifically, an entity that is otherwise approved to act as a Liquidity Provider may also separately connect to IBKR as a brokerage customer in order to represent customer agency orders in the ATS and/or to utilize IBKR's other order routing services (a "Dual Role Subscriber"). Where such a Dual Role Subscriber submits an order to the SOR for further routing, the ATS treats such orders as being submitted by a "Brokerage Customer." Where, instead, such Dual Role Subscriber submits an order to the ATS via a direct FIX connection to the ATS (such that its order does not pass through the SOR), the ATS treats such order as being submitted by a "Liquidity Provider." Accordingly, where IBKR has approved a subscriber to access the ATS as a Liquidity Provider, the subscriber's manner of accessing the ATS on a given order dictates whether the ATS treats the order as being submitted by a "Brokerage Customer" or, alternatively, a "Liquidity Provider."

Non-directed orders submitted to the SOR may be routed to the ATS in accordance with the SOR's routing logic. Brokerage Customers may also direct orders to the ATS via the SOR (i.e., submit a "directed order" to the SOR for routing to the ATS). Orders routed via the SOR utilize the "IBKR" MPID.

While the vast majority of IBKR customers submit orders electronically (e.g., via order management systems offered by IBKR), IBKR maintains a customer support team (the "Order Desk") that may, upon customer request, submit customer trading interest to the SOR for further routing. Generally, the Order Desk is used by Brokerage Customers experiencing technical difficulties (e.g, an inability to submit trading interest via an IBKR order management system) and urgently wanting to close a position. The Order Desk acts as agent. Orders routed by the Order Desk use the "IBKR" MPID.

IBKR also maintains a block order desk (the "Block Desk"). The Block Desk handles larger-sized orders (generally 10,000 shares or larger) on behalf of Brokerage Customers. The Block Desk acts as agent. All orders routed by the Block Desk are submitted to the SOR for further routing. Orders routed by the Block Desk use the "IBKR" MPID.

Additionally, IBKR's risk department maintains desks (the "Risk Desks") that facilitate, as agent, the liquidation of customer positions in connection with margin calls and similar situations. Orders routed by the Risk Desks use the "IBKR" MPID. IBKR does not otherwise maintain an agency trading desk (i.e., other than the Risk, Block and Order Desks).

The following IBKR business units (the "Principal Accounts") may submit principal order interest to the ATS:

i. Error Account (used to close-out IBKR positions related to IBKR errors);

ii. Customer accommodation (used to take over legs of customer multi-leg orders where one or more legs did not fill in the specified ratios; and also on occasion to accommodate customer errors);

iii. Buy-in/Close-out (used to close-out fails to deliver and related positions); and

iv. Liquidation of positions taken over in foreclosure.

The MPID for each Principal Account is "IBKR." No other business units of IBKR may submit principal order interest to the ATS.

Note that the Risk, Block and Order Desks and the Principal Accounts do not send directed orders to the ATS; rather, non-directed orders submitted by the Risk, Block and Order Desks and the Principal Accounts may be routed to the ATS by the SOR.

Brokerage Customers, including the IBKR Affiliates identified at Part II Item 2(a), and IBKR's business units, including the Risk, Block and Order Desks and the Principal Accounts, access the ATS via the SOR. Only subscribers acting as Liquidity Providers do not access the ATS via the SOR.

As further discussed herein, only orders that access the ATS via the SOR may remove liquidity from the ATS. Subscribers that bypass the SOR and access the ATS via direct FIX connection (i.e., the Liquidity Providers) may not remove liquidity from the ATS, although such subscribers may utilize order instructions not available to other subscribers. Please see Part III Items 5 and 7 for additional discussion of the means of order entry and available order instructions.

The following Affiliates may submit trading interest to the ATS:

i. IBKR Financial Services AG (f/k/a Timber Hill Europe AG) (broker-dealer registered in Switzerland, no MPID, may submit orders as principal);

ii. Timber Hill LLC (U.S. registered broker-dealer, MPID=TMBR, may submit orders as principal);

iii. Interactive Brokers Canada Inc. (broker-dealer registered in Canada, no MPID, may submit orders as principal or agent);

iv. Interactive Brokers (UK) Ltd. (broker-dealer registered in the United Kingdom, no MPID, may submit orders as agent);

v. Interactive Brokers Hong Kong Ltd. (broker-dealer and futures firm registered in Hong Kong, no MPID, may submit orders as principal or agent);

vi. Interactive Brokers Australia Pty Ltd. (broker-dealer registered in Australia, no MPID, may submit orders as principal or agent);

vii. Covestor Ltd (d/b/a Interactive Brokers Asset Management) (SEC Registered Investment Adviser, no MPID, may submit orders as principal or agent);

viii. IB Exchange Corp. (unregistered holding company, no MPID, may submit orders as principal); and

ix. IBG LLC (unregistered holding company, no MPID, may submit orders as principal).

No other Affiliates of IBKR are subscribers to the ATS.

IBKR's Affiliates access the ATS via the SOR. As further discussed herein, only orders that access the ATS via the SOR may remove liquidity from the ATS. Subscribers that bypass the SOR and access the ATS via direct FIX connection (i.e., the Liquidity Providers) may not remove liquidity from the ATS, although such subscribers may utilize order instructions not available to other subscribers. Please see Part III Items 5 and 7 for additional discussion of the means of order entry and available order instructions.

Orders submitted by IBKR's affiliate, Covestor Ltd, are configured to only interact with trading interest of Liquidity Providers (as that term is defined in Part III Item 12 hereunder). Such counter-party permissioning functionality is not available to other subscribers. Please see Part III Item 14 for additional information regarding the ATS' counter-party permissioning functionality.

Orders submitted by IBKR's affiliate, Covestor Ltd, are configured to only interact with trading interest of Liquidity Providers. Such counter-party permissioning functionality is not available to other subscribers.

IBKR, as part of its Customer Business, offers a number of trading products that allow Brokerage Customers to submit trading interest to the ATS via the SOR. Trading products offered by IBKR include certain trading algorithms (the "IBKR Algorithms") that serve various benchmarks and certain order management systems (the "IBKR OMSs," together with the IBKR Algorithms, the "Trading Products") that allow Brokerage Customers to submit trading interest to the SOR. Except for IBKR's smartphone application and web-based order entry tools, the IBKR OMSs allow Brokerage Customers to submit both directed and non-directed trading interest to the SOR (IBKR's smartphone application and web-based order entry tools only allow users to submit non-directed trading interest to the SOR). The IBKR Algorithms are only available through the following IBKR OMSs: (i) the Desktop Trader Workstation (TWS) and (ii) the IBKR API.

All orders submitted through a Trading Product, whether such orders are directed or non-directed, pass-through the SOR. Except where a Brokerage Customer has directed an order to a particular market center, the SOR determines the destination market center for each order. See Part III Items 5 and 7 for a discussion of available instructions for orders submitted to the ATS via the SOR.

Only Brokerage Customers may use the Trading Products (i.e., Liquidity Providers that are not separately Brokerage Customers may not utilize a Trading Product). However, the Trading Products are available for use by all Brokerage Customers, including the IBKR Affiliates.

The Trading Products are available for use by all Brokerage Customers, including the IBKR Affiliates. However, only Brokerage Customers may use a Trading Product (e.g., Liquidity Providers that are not separately Brokerage Customers may not utilize a Trading Product).

Programming, system administration and technology personnel involved in operating IBKR's systems, including operation of IBKR's order management systems, SOR, matching engines and order gateways have live audit trail access and, as such, may be able to view an order that has been routed to the ATS. Programming and technology personnel are employed by IBKR's affiliates, IBG LLC and Interactive Brokers Hungary Informatikai Kft. System administration personnel are employed by IBG LLC. These personnel support the development and maintenance of the ATS' FIX engine, matching engine software, market data and various other technologies utilized in the ATS and provide similar services (e.g., technology development and maintenance) to IBKR's brokerage affiliates, including Affiliates that may submit trading interest to the ATS. Such personnel are subject to the IBG Information Barrier Policy.

IBG risk department personnel also have live audit trail access. IBG risk department personnel are employed by IBG LLC. IBG risk department personnel provide risk management support to IBKR and its affiliates, including through credit and related risk assessments of Brokerage Customers and Liquidity Providers.

Personnel responsible for IBKR's clearing operations, stock borrow operations, OATS reporting and the generation of account statements, as well as members of IBKR's compliance department, have access to post-trade information which may include information relating to transactions effected in the ATS. Such personnel are involved in the clearance and settlement of transactions effected in the ATS and the ATS' compliance with applicable rules. Such personnel may provide related support (e.g., clearance, settlement or compliance) to IBKR's Customer Business, as well as to IBKR's affiliates.

IBKR's affiliates, IBG LLC and Interactive Brokers Hungary Informatikai Kft, support the development and maintenance of the ATS' FIX engine, matching engine software, market data and various other technologies utilized in the ATS.

The ATS servers are located at the Equinix NY5 data center. Equinix, as host of the datacenter, services the location at which subscribers connect to the ATS. Please see Part III Item 5 for additional information.

IBG LLC is the parent entity of both IBKR and the IBKR Affiliates. The IBKR Affiliates' use of the ATS is detailed in response to Part II, Item 2 above.

IBKR Affiliates may access the ATS via IBKR's SOR. As further discussed herein, only orders that access the ATS via the SOR may remove liquidity from the ATS. However, subscribers that access the ATS via direct FIX connection (and bypass the SOR) are able to utilize different order types and instructions than subscribers that access the ATS via the SOR.

DATA PROTECTION:

Client data protection (including the protection of subscriber confidential trading information) is governed by formally instituted policies. Records containing clients' data stored in IBKR's databases, as well as on tape backups, are encrypted. Encryption algorithms, ciphers, and key parameters are consistent with the industry best practices. In addition to technical data protection measures, IBKR administers mandatory security awareness training to all its employees emphasizing data protection best practices.

INFORMATION BARRIERS:

Interactive Brokers Group ("IBG") has in place barriers designed to help ensure that information relating to subscriber trading interest in the ATS is maintained on systems that are separate from, and inaccessible by, IBKR's affiliates. IBKR compliance personnel review various daily, monthly and quarterly reports intended to help identify potential instances of IBKR customer information (including ATS confidential trading information which, for the avoidance of doubt, includes confidential trading information of Liquidity Providers) being impermissibly accessed by employees of IBKR affiliates. IBKR compliance personnel also review a sample of communications between IBKR personnel and personnel of its affiliates to assess whether subscriber confidential trading information is being impermissibly accessed or shared.

All new IBKR employees must review the IBG Information Barrier Policy, which is included in the IBG employee manual, and must acknowledge receipt of the current version of the IBG Information Barrier Policy annually. The IBG Information Barrier Policy states that employees of IBG and its affiliates (including IBKR employees) shall treat customer trading information (including subscriber trading information) as confidential and shall only share such information to the extent reasonably necessary to provide the relevant services and otherwise service the relevant account. As applied to ATS confidential trading information, the IBG Information Barrier Policy limits the sharing of such information within IBG to the extent reasonably necessary for the operation of the ATS and related systems (that is, IBKR's market data, clearing, stock borrow and audit trail systems), and to ensure the ATS' compliance with applicable law. In addition, IBG provides training regarding the confidentiality of customer orders and information.

ACCESS TO SUBSCRIBER CONFIDENTIAL TRADING INFORMATION:

Access to IBKR trading systems, including those that maintain ATS confidential trading information, is limited to authorized individuals. Prior to granting any employee, shared employee, or third-party service provider access (each an "Accessing Party") to ATS data, IBKR reviews the level of access requested, the roles and responsibilities of the prospective Accessing Party, and the proposed uses of the data to which the prospective Accessing Party would have access. As a threshold matter, access to ATS confidential trading information is limited to individuals responsible for either the operation of the ATS and related systems (that is, IBKR's market data, clearing, stock borrow and audit trail systems), or the ATS' compliance with applicable law. As noted above, the IBG Information Barrier Policy provides that Accessing Parties may only use ATS confidential trading information to the extent necessary to fulfill their responsibilities regarding the operation of the ATS and related systems (that is, IBKR's market data, clearing, stock borrow and audit trail systems), or the ATS' compliance with applicable law; Accessing Parties are expressly prohibited from sharing ATS confidential trading information with Brokerage Customers and other clients of IBKR (e.g., Liquidity Providers and introducing brokers), except where such confidential trading information belongs to the relevant Brokerage Customer or client (e.g., information regarding a Brokerage Customer's own trading interest or transactions).

Access to internal systems and applications is provisioned on the least-privilege basis and controlled using passwords or, in some instance, multi-factor authentication (MFA). In particular, MFA is used for all remote access and also for onsite access to particularly sensitive systems. Password length and complexity requirements are established and enforced.

Periodically, as prescribed by IBKR's policies and procedures, all employees, shared employees, and third party service providers are reviewed to determine whether their level of access to ATS data is appropriate. This includes assessing whether the Accessing Party continues to have responsibilities in connection with the operation of the ATS or the ATS' compliance with applicable rules.

Access to IBKR office and data center spaces is strictly controlled and limited to authorized personnel. Electronic door entry systems are in use and configured to allow personnel access only to the areas required to fulfill their job functions. Additionally, video recording/surveillance systems are employed in data centers and select office locations. Activity logs, including records of permitted and denied entry attempts captured by the access control and footage of the video surveillance system, are maintained.

EMPLOYEE TRADING:

The IBKR Employee Trading Policy prohibits IBKR employees from trading securities or commodity futures between the hours of 8:30 a.m. and 6:00 p.m. in their time zone. One of the intended purposes of this policy is to prohibit IBKR employees from trading on the basis of open customer trading interest (including Liquidity Provider trading interest and whether such trading interest has been submitted to the ATS or to another market center).

All IBKR employees, at onboarding and annually thereafter, are reminded of their obligation to identify all brokerage accounts in which the employee or any related person (as noted at FINRA rule 3210/.02) maintains an interest, including any brokerage accounts subsequently opened. IBKR obtains copies of such employee's account statements and trade confirmations from the relevant brokerage firm. IBKR prohibits an employee from opening or otherwise maintaining an account with a brokerage firm that will not provide IBKR with duplicate account statements and trade confirmations. IBKR compliance and supervisory personnel review employee account statements and trade confirmations on a monthly basis. As part of these reviews, IBKR compliance and supervisory personnel assess whether an employee has violated IBKR's Employee Trading Policy, including any indication of misuse of subscriber confidential trading information (in particular, the IBKR Employee Trading Policy, among other things, prohibits employees from trading on the basis of material non-public information). Employee trading conduct specifically reviewed for includes particularly active accounts and trading in any restricted securities outside of the "open window" period (presently limited to securities issued by Interactive Brokers Group, Inc.).
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Programming and technology personnel involved in operating IBKR's systems, including operation of IBKR's order management systems, SOR, matching engines and order gateways have live audit trail access and, as such, may be able to view an order that has been routed to the ATS. System administration and IB risk departments also have live audit trail access. Additionally, as further discussed at Part III Item 15, the ATS disseminates indications of interest to the SOR identifying the symbol, size, side and ranking price of certain orders resting in the ATS; the SOR may utilize this information in its order-routing processes.

Personnel responsible for IBKR's clearing operations, stock borrow operations, audit trail reporting and the generation of account statements, as well as members of IBKR's compliance department, have access to post-trade information which may include information relating to transactions effected in the ATS.

Investment Companies
Retail Investors
Issuers
Brokers
Asset Managers
Principal Trading Firms
Hedge Funds
Market Makers
Banks
Dealers
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Generally, IBKR accepts the following types of subscribers to the ATS: (i) Liquidity Providers; (ii) "full-service" customers of IBKR that utilize IBKR's non-ATS service offerings (including introducing brokers trading on behalf of their customers and advisors trading on behalf of their customers, and including, for clarity, other broker-dealers that submit directed orders to the ATS through IBKR's SOR, even if such broker-dealers make no other use of IBKR's services) and (iii) Affiliates of IBKR. The conditions that must be satisfied before such persons may access the ATS services are noted below.

LIQUIDITY PROVIDERS: Only market-makers and other principal trading firms willing to offer opportunities for price improvement to IBKR's customers on their marketable orders may, subject to the approval of IBKR management, access the ATS as Liquidity Providers. Management approval is subject to a number of factors, including: (i) anticipated quoting activity (e.g., anticipated price improvement, order size and number of symbols traded); (ii) financial data (e.g., net capital levels); (iii) operating history (e.g., how long has the entity been a market maker or otherwise acted as a liquidity provider); and (iv) execution quality being provided by current Liquidity Providers (that is, due to systems limitations IBKR may elect not to onboard a prospective Liquidity Provider if anticipated quoting activity is merely comparable to quoting activity of current Liquidity Providers). Liquidity Providers must agree to restrict their ATS orders to liquidity-adding orders. Liquidity Providers, in their capacities as Liquidity Providers, are not required to enter into a written agreement to use the ATS services. IBKR business units and IBKR Affiliates may not act as Liquidity Providers. Liquidity Providers may separately apply to be brokerage customers of IBKR.

BROKERAGE CUSTOMERS (INCLUDING INTRODUCING BROKERS AND ADVISORS): Retail and institutional customers of IBKR complete applications for an IBKR brokerage account and complete various IBKR customer documentation steps, including signing an IBKR customer agreement. Access to an IBKR brokerage account is open to the public and subject to various "know your customer," anti-money laundering and anti-fraud steps. Advisors whose customers' transactions are cleared and carried by IBKR will complete the required onboarding documentation. Introducing brokers whose customers' transactions are cleared and carried by IBKR will complete the required onboarding documentation and clearing agreement, which are required under FINRA Carrying Broker rules and are subject to FINRA approval.

AFFILIATES: The ability of an Affiliate to access IBKR's brokerage services is subject to approval by IBKR management. To the extent IBKR Affiliates submit orders in U.S. stocks, including NMS stocks, those orders will be routed through IBKR's SOR and may ultimately access the ATS.

IBKR may perform additional background checks (e.g., in addition to the reviews noted above) on prospective subscribers. These background checks may include an assessment of the prospective subscriber's regulatory history and any other news items and information relating to the prospective subscriber. Based on the results of such background checks, IBKR may decide to reject a prospective ATS subscriber.

IBKR, in its sole discretion, retains the right to refuse any prospective subscriber (including, for example, when assessing the qualifications of any prospective Liquidity Provider).

Onboarding of Brokerage Customers is largely automated. Any prospective Brokerage Customer that meets IBKR's account minimum, provides the required documentation (including agreeing to IBKR's terms and conditions of use) and does not generate any CIP/AML "alerts" will be onboarded. However, when an account application is flagged (e.g., due to potential negative news), IBKR, subject to applicable law, will exercise its discretion in determining whether to onboard the prospective customer. Additionally, IBKR exercises discretion in determining whether to accept a prospective customer's proposed revisions to IBKR's account agreement and/or fee schedule.

Subscribers may be excluded from the ATS, or from utilizing any ATS functionality, at any time and for any reason subject to IBKR's sole discretion. Subscribers that have entered into an execution, licensing, account or clearing agreement with IBKR may be terminated as clients or correspondents (and, as such, will no longer be ATS subscribers) for breach of their agreement(s) with IBKR.

IBKR may exclude a specific subscriber from accessing the ATS for the following non-exhaustive reasons:

(1) Failure to make timely and proper settlement of transactions;

(2) Failure to deliver funds or securities as required;

(3) Violation of the terms and conditions of the limited license granted to the subscriber for the use of any IBKR product (e.g., an IBKR OMS or algorithm);

(4) Credit or other risk; and

(5) Negative news events relating to the subscriber (including regulatory actions, government sanctions or prohibitions).

Only subscribers that access the ATS by submitting non-directed orders to the SOR may remove liquidity from the ATS. Orders directed to the ATS, whether by a Liquidity Provider or other subscriber, may only add liquidity.

Liquidity Providers are not subject to any objective quoting requirements. However, IBKR periodically reviews the activity of each Liquidity Provider in the ATS, including average fill size and price improvement provided, and may request that a Liquidity Provider alter its activity (e.g., submit larger orders or provide increased price improvement levels). Liquidity Providers that fail to act in a manner that IBKR, in its discretion, deems satisfactory may be terminated as Liquidity Providers or otherwise lose access to ATS services.

IBKR may exercise its discretion in determining whether to exclude a subscriber from accessing the ATS, or from accessing any ATS functionality. For instance, IBKR may terminate a customer relationship due to the customer's breach of its account agreement with IBKR while allowing another customer continued access to the ATS despite the existence of a similar breach. Additionally, IBKR exercises its discretion when assessing each Liquidity Provider's quoting activity in the ATS.

The ATS accepts orders from 8:30 AM ET until 4:00 PM ET. The ATS may effect transactions from 9:30 AM ET until 4:00 PM ET. The ATS observes the New York Stock Exchange's holiday and early close schedule.
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Liquidity Providers may directly access the ATS via FIX protocol. The ATS is compliant with version 4.2 of the FIX Protocol. Liquidity Providers can connect via cross connects within Equinix NY5 or through dedicated FIX connections. In the event a Liquidity Provider cross-connects with the ATS, the hardware used for connection is provided, installed, and maintained by the Liquidity Provider and/or datacenter operator. IBKR does not charge a fee for cross-connects.

Only Liquidity Providers may access the ATS via direct FIX connection. All other subscribers access the ATS via the SOR.

Subscribers access the ATS via direct FIX connection or via the SOR.

All Brokerage Customers' orders access the ATS via the SOR. Brokerage Customers may submit orders to the SOR via a Trading Product, third-party order management system or FIX connection (i.e., FIX connection to the SOR, as distinct from the Liquidity Providers' direct FIX connections to the ATS). Only persons onboarded as Brokerage Customers may access the ATS via the SOR; there are no other conditions that must be satisfied to access the ATS via the SOR.

Orders submitted by Liquidity Providers (in their capacity as Liquidity Providers) access the ATS via direct FIX connections and do not pass through the SOR. Only entities onboarded as Liquidity Providers may access the ATS via direct FIX connection; there are no other conditions that must be satisfied to access the ATS via direct FIX connection.

Only orders routed to the ATS via the SOR may remove liquidity from the ATS. Additionally, certain order instructions are only available to subscribers that access the ATS via direct FIX connection. See Part III Item 7 for a discussion of available attributes for orders submitted to the ATS via the SOR and direct FIX connection.

Only Liquidity Providers may directly access the ATS (i.e., bypassing the SOR). Only principal trading firms permissioned by IBKR management may act as Liquidity Providers.

Only subscribers that access the ATS via the SOR (e.g., IBKR brokerage customers and IBKR Affiliates) may remove liquidity from the ATS. As a general matter, all IBKR customers may direct liquidity-adding orders to the ATS. However, certain brokerage products offered by IBKR (e.g., IBKR's smartphone mobile app and web-based order entry tools) do not permit subscribers to direct orders to the ATS.

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Order Types The ATS accepts limit and pegged orders. The ATS does not accept market orders. Pegged orders may include the following reference prices: (i) primary (i.e., NBB for buy orders, NBO for sell orders); (ii) market (i.e., NBO for buy orders, NBB for sell orders); and (iii) midpoint of the NBBO. The ATS also accepts "PegBest" orders, which, as further discussed below, are pegged to the Combined NBBO (defined below) with +$0.01 offset. Only PegBest orders may be pegged to the Combined NBBO. Pegged orders may include an ultimate limit price. PegBest orders and orders pegged to the midpoint of the NBBO must include an ultimate limit price. Primary pegged orders may include dollar offset instructions expressed in penny increments (e.g., pegged primary plus $0.01). Market pegged orders may include dollar offset instructions expressed in penny increments (e.g., pegged market minus $0.01). Orders pegged to the midpoint of the NBBO may include dollar offset instructions ("Midpoint Offsets"), further discussed below. When used herein, a "positive" (+) offset refers to a more aggressive price, while a "negative" (-) offset refers to a less aggressive price. For instance, where the NBBO is $20.00 x $20.05, a primary pegged buy order with a positive (+) $0.01 offset will have an effective limit price of $20.01, while a primary pegged sell order with a positive (+) $0.01 offset will have an effective limit price of $20.04). Pegged orders are ranked based on their effective limit price. At no time will a peg instruction, including any offset instruction, violate an order's ultimate limit price.

Midpoint Offset instructions must include two values, one value that will be applied when the NBBO spread is an even value (e.g., where the NBBO is $20.00 x $20.10) (the "Even Spread Offset") and a second value that will be applied when the NBBO spread is an odd value (e.g., where the NBBO is $20.00 x $20.05) (the "Odd Spread Offset"). Even Spread Offsets must be expressed in full penny increments. Odd Spread Offsets must be expressed in a half penny increment, not a whole penny increment (that is, $0.005, $0.015, $0.025, etc.). Midpoint Offset instructions may be expressed as positive or negative offsets. An order's Even and Odd Spread Offset instructions must be sequential (that is, an order with an Even Spread Offset of +$0.01 must include Odd Spread Offset instructions of either +$0.005 or +$0.015; no other Odd Spread Offset instructions will be accepted). Midpoint Offset instructions will not cause an order's effective limit price to be marketable relative to the prevailing NBBO. Where a Midpoint Offset instruction would cause an order to be marketable relative to the prevailing NBBO (e.g., for buy orders, equal to or greater than the NBO), the ATS will treat the order's effective limit price as one penny below the NBO (for buy orders) or one penny above the NBB (for sell orders). The ATS will disregard any positive Midpoint Offset instruction when the NBBO is one penny wide. The above adjustments operate on a dynamic basis. For instance, assume a buy order pegged to the midpoint is submitted with an Even Spread Offset instruction of +$0.01 and an Odd Spread Offset instruction of +$0.015. If, upon order receipt, the prevailing NBBO is $20.00 x $20.10, the order's effective limit price would be $20.06 (that is, $20.05, the midpoint of the NBBO, plus a $0.01 Even Spread Offset). If, prior to the order being executed or cancelled, the NBBO updates to $20.00 x $20.03, the order's effective limit price would then be $20.02. If the NBBO further narrows to $20.00 x $20.01, the order's effective limit price would then be $20.005 (that is, the ATS will disregard the order's Midpoint Offset instruction). If the NBBO subsequently widens to $20.00 x $20.05, the order's effective limit price would then be $20.04 (that is, $20.025 plus the $0.015 Odd Spread Offset).

As noted above, "PegBest orders" are orders that are pegged to the Combined NBBO with a +$0.01 offset. The "Combined NBBO" is the more aggressive (higher for buys, lower for sells) of (i) the prevailing NBB (for buy orders) or NBO (for sell orders) and (ii) the highest price (for buy orders) or lowest price (for sell orders) at which aggregate same-side interest, including better-price interest, equals or exceeds the PegBest order's Minimum Compete Size instruction (as defined below). For instance, where the prevailing NBBO is $20.00 x $20.09, and there is a resting non-PegBest buy order for 100-shares in the ATS with a limit price of $20.01, a buy PegBest order with a Minimum Compete Size instruction of 100-shares will have an effective limit price of $20.02 (Combined NBBO of $20.01 + $0.01 offset). Where the prevailing NBBO is $20.00 x $20.09, and the competing non-PegBest buy orders resting in the ATS are (i) an order for 50-shares with a limit price of $20.03, (ii) an order for 75-shares with a limit price of $20.02 and (iii) an order for 100-shares with a limit price of $20.01, a buy PegBest order with a Minimum Compete Size instruction of 100-shares will have an effective limit price of $20.03 (that is, the Combined NBBO would equal $20.02 as $20.02 is the highest price at which aggregate same-side interest, including better-price interest, equals or exceeds the PegBest order's Minimum Compete Size instruction, and the PegBest order's effective limit price would therefore equal $20.02 + $0.01 offset). The effective price of a PegBest order will never exceed the midpoint of the prevailing NBBO. For instance, where the prevailing NBBO is $20.00 x $20.09, and there is a resting 100-share non-PegBest buy order in the ATS with a limit price of $20.06, a buy PegBest order with a Minimum Compete Size instruction of 100 shares would be treated as pegged to the midpoint of the NBBO (effective limit price of $20.045).

PegBest orders must include a "Minimum Compete Size" instruction, expressed as a share quantity. The ATS appends a default Minimum Compete Size of 100 shares, although subscribers may select Minimum Compete Sizes that are smaller or larger than the default quantity (including a Minimum Compete Size of zero (0) shares). Minimum Compete Size instructions, which are used in determining the Combined NBBO for any given order, designate the minimum competing order size required before the PegBest order will attempt to better the price. As noted above, in determining whether an order's Minimum Compete Size instruction has been met the ATS will effectively walk down the order book (including, for clarity, both resting Brokerage Customer orders and resting Liquidity Provider orders), aggregating competing interest at each price level. Accordingly, where a PegBest buy order has a Minimum Compete Size instruction of 200-shares, the NBBO is $20.00 x $20.09 and the best-priced non-PegBest competing orders resting in the ATS are (i) a 100-share order with a limit price of $20.05, (ii) a 75-share order with a limit price of $20.04, (iii) a 100-share order with a limit price of $20.02 and (iv) a 100-share order with a limit price of $20.00, the PegBest order's Minimum Compete Size instruction would be satisfied at $20.02 (its Combined NBBO) and its effective limit price would be $20.03 (Combined NBBO + $0.01).

PegBest orders must also include a "Competing Tick Offset" instruction. By default, PegBest orders include a Competing Tick Offset instruction of +$0.02. Competing Tick Offset instructions are activated where there are competing PegBest orders in the ATS, and designate the amount by which a PegBest order's effective limit may exceed its Combined NBBO. A PegBest order will compete against another PegBest order even where the competing PegBest order doesn't satisfy its Minimum Compete Size instruction. Except as noted below, Competing Tick Offset instructions will not allow a PegBest order's effective limit price to exceed the midpoint of the prevailing NBBO. Subscribers may designate their orders as free to "compete" to the midpoint of the NBBO, regardless of the amount by which the midpoint of the prevailing NBBO exceeds the Combined NBBO (e.g., providing for "unconstrained" Competing Tick Offset instructions). Alternatively, subscribers may express Competing Tick Offset instructions as an offset from the midpoint of the prevailing NBBO, specified in the form of Midpoint Offsets as discussed above. Subscribers may otherwise express Competing Tick Offset instructions in penny increments, whereby the instruction identifies the amount by which the order's effective limit price may exceed its Combined NBBO when competing with another PegBest order. Competing Tick Offset instructions must be for +$0.01 or higher when expressed as an offset from the Combined NBBO. Competing Tick Offset instructions expressed as an offset from the midpoint of the prevailing NBBO may be expressed as negative or positive (or zero) Midpoint Offsets. For clarity, subscribers may not include both Midpoint Offset restrictions and Competing Tick Offset instructions expressed in penny increments on the same order. Notwithstanding any order's Competing Tick Offset instruction, the effective limit price of a PegBest order will never exceed the order's ultimate limit price. For PegBest orders with Competing Tick Offset instructions expressed in penny increments, the order's effective limit price will never exceed the midpoint of the prevailing NBBO. For PegBest orders with Competing Tick Offset instructions expressed as a Midpoint Offset, the order's effective limit price may exceed the midpoint of the prevailing NBBO (in the event of a positive Midpoint Offset), subject to the terms of such Midpoint Offset instruction and any ultimate limit price associated with the order.

Assume that the prevailing NBBO is $20.00 x $20.15, and the Combined NBBO for each of PegBest Orders A and B (defined below) is $20.01. Further assume a PegBest buy order ("PegBest Order A") has been submitted to the ATS with a Competing Tick Offset of $0.02 and there are no competing PegBest buy orders in the ATS. PegBest Order A will have an effective limit price of $20.02 (one tick above its Combined NBBO) and its Competing Tick Offset will not be activated. Assume a competing PegBest buy order is subsequently submitted ("PegBest Order B"), with a Competing Tick Offset instruction of $0.04. PegBest Order A's effective limit price would increase to $20.03 (Combined NBBO + $0.02), while PegBest Order B's effective limit price would be $20.04 (Combined NBBO + $0.03). For clarity, PegBest Order B's effective limit price would not be $20.05 (Combined NBBO + $0.04) as Competing Tick Offset instructions are only activated to the extent necessary to contend with a competing PegBest order.

Assume instead that the prevailing NBBO is $20.00 x $20.15, and the Combined NBBO for PegBest Order A is $20.01 and the Combined NBBO for PegBest Order B is $20.04. Assume that PegBest Order A again has a Competing Tick Offset of $0.02 and that PegBest Order B again has a Competing Tick Offset instruction of $0.04. PegBest Order A's effective limit price would still be $20.03 (its Combined NBBO + $0.02), while PegBest Order B's effective limit price would be $20.05 (its Combined NBBO of $20.04 plus a + $0.01 offset; its Competing Tick Offset would effectively not be triggered).

Assume again that the prevailing NBBO is $20.00 x $20.15, the Combined NBBO for PegBest Order A is $20.01 and the Combined NBBO for PegBest Order B is $20.04. Assume that PegBest Order A now has a Competing Tick Offset expressed as Midpoint Offsets of $-.0005 (Odd Spread Offset) and $-.01 (Even Spread Offset), while PegBest Order B again has a Competing Tick Offset instruction of $0.04. Here, PegBest Order A's effective limit price would be $20.07 (midpoint of the NBBO ($20.075) minus $.0005 (Odd Spread Offset)), while PegBest Order B's effective limit price would be $20.075 (that is, PegBest Order B would be treated as pegged to the midpoint of the NBBO as its Combined NBBO of $20.04 plus a + $0.04 offset would exceed the midpoint of the NBBO).

Directed orders submitted to the ATS by Brokerage Customers may include minimum quantity instructions. A minimum quantity instruction specifies the minimum execution size a subscriber will accept and does not allow for the aggregation of contra-side orders (i.e., the minimum quantity instruction must be satisfied by a single contra-side order). When an order that includes a minimum quantity instruction receives an execution it will continues to rest in the ATS until its leaves quantity falls below its minimum quantity instruction, at which points the ATS will cancel back the order. Liquidity Providers may not include minimum quantity instructions with their orders.

Only Brokerage Customers (including Liquidity Providers in their capacities as Brokerage Customers) may (i) submit PegBest orders and (ii) utilize minimum quantity instructions. All other order instructions are available to both Liquidity Providers and Brokerage Customers. However, except for directed orders submitted to the ATS by Brokerage Customers, as a matter of policy IBKR does not rest non-marketable orders in the ATS, utilize peg instructions or utilize minimum quantity instructions.

Directed orders submitted to the ATS by a Brokerage Customer or Liquidity Provider will never remove liquidity from the ATS. Where, upon receipt, a directed order submitted to the ATS by a Brokerage Customer or Liquidity Provider is marketable against trading interest on the ATS, the ATS will accept the order for further processing as a post-only order (i.e., the order will not be crossed against the existing contra-side interest). Where a directed order submitted to the ATS by a Brokerage Customer or Liquidity Provider would be marketable relative to the NBBO (including, for clarity, any market pegged order and, where applicable, midpoint and primary pegged orders with positive dollar offset instructions), the ATS will treat the order as a market pegged order with a -$0.01 offset (that is, an effective limit price of $0.01 below the NBO for buy orders or $0.01 above the NBB for sell orders). Notwithstanding the foregoing, where an order contains Midpoint Offset instructions and the NBBO is one penny wide, the ATS will disregard the Midpoint Offset instructions and treat the order as pegged to the midpoint of the NBBO (with no offset).

Time-in-Force

The ATS accepts orders with the following time-in-force ("TIF") instructions: (i) "day", (ii) immediate or cancel ("IOC") and (iii) good-til-time ("GTT").

Non-directed orders routed to the ATS by the IBKR SOR (i.e., where the subscriber has not directed the order to the ATS) are submitted as either IOC orders or as GTT orders with a 1-second GTT instruction.

Directed orders submitted to the ATS, whether by a Liquidity Provider or other subscriber, may include a TIF instruction of day, IOC or GTT. Orders submitted with TIF instructions of longer than day (e.g., GTD or GTT with an expiration time of post after trading hours) are treated as day orders by the ATS and cancelled back at the end of the trading day.

Priority

Orders resting in the ATS are ranked based on the following factors in the following order: (i) price; (ii) size; and (iii) time. Pegged orders are ranked based on their effective limit price and not on any ultimate limit price associated with the order. Where an order is pegged to the midpoint of the NBBO, the ATS will rank the order and any related IOI at the order's effective limit price (i.e., the pegged price), even where the effective limit price is not in a $0.01 increment (e.g., where the NBBO is $20.00 by $20.05, a buy order pegged to the midpoint of the NBBO will have a ranking price of $20.025 and, accordingly, will have priority over buy orders with limit prices of $20.02). For clarity, orders pegged to the midpoint of the NBBO that include Midpoint Offset instructions are ranked at their effective limit prices (which, except where the order's Midpoint Offset instructions are disregarded, are always priced in full-penny increments).

For purposes of establishing time priority the ATS treats pegged orders, other than PegBest orders, as received at the time of original order receipt, rather than as received at each subsequent price change. For purposes of establishing time priority, the ATS treats PegBest orders as being resubmitted at the time of any increase in the PegBest order's offset relative to the Combined NBBO (e.g., where a PegBest order's offset increases from +$0.01 to +$0.02 due to the introduction of a competing PegBest order). Reductions in a PegBest order's offset (e.g., where a PegBest order's offset to the Combined NBBO is reduced from +$0.02 to +$0.01) do not impact time of receipt for priority purposes. For clarity, changes in the Combined NBBO or midpoint of the NBBO, without more, do not impact a PegBest order's time of receipt for time priority purposes. Where a subscriber modifies the price or size instruction associated with an order (e.g., changing an order's limit price or increasing or decreasing the size of any order), the ATS treats the order as received at the time of modification.

Order Routing

The ATS does not route-out. All orders not executed in the ATS are cancelled back to the subscriber or the SOR, as applicable.

Liquidity Providers may only add liquidity on the ATS. Additionally, any order directed to the ATS by a subscriber who is not a Liquidity Provider may only add liquidity on the ATS.

Only non-directed orders submitted to the ATS via IBKR's SOR may remove liquidity from the ATS.

There are no special odd-lot order requirements or related handling procedures. Odd-lot orders are treated in the same manner as round lot orders and matched according to the ATS' standard matching logic.
Y

There are no special mixed-lot order requirements or related handling procedures. Mixed-lot orders are treated in the same manner as round lot orders and matched according to the ATS' standard matching logic.
Y

The ATS, on a security-by-security basis, disseminates indications of interests ("IOIs") to the IBKR SOR identifying the symbol, size, side and ranking price of (i) the best-priced resting order of each Liquidity Provider and (ii) the best-priced resting order amongst all other subscribers (i.e., among all Brokerage Customers).

The ATS, on a security-by-security basis, may also disseminate to the IBKR SOR information regarding the smallest minimum quantity instruction (which may be zero) among resting Brokerage Customer orders priced at or inside the NBBO. This may include information sufficient for the IBKR SOR to determine whether the order associated with such minimum quantity instruction has an effective limit price that equals or betters (x) the effective limit price of competing Liquidity Providers' orders and/or (y) the NBBO.

The SOR utilizes the information contained in these IOIs (including information regarding minimum quantity instructions) in determining whether to route orders to the ATS. For instance, if an IOI indicates an eligible order(s) resting in the ATS is priced at or inside the NBBO, the SOR may route contraside interest to the ATS. Where the SOR routes an order to the ATS in response to an IOI "generated" by a Liquidity Provider's order, the order will only be eligible to interact with orders submitted by the applicable Liquidity Provider. Where, however, the SOR routes an order to the ATS in response to an IOI "generated" by the directed order of a Brokerage Customer, the order will be eligible to interact with any order directed to the ATS by a Brokerage Customer (but will be ineligible to interact with orders of Liquidity Providers, except, for clarity, in their capacities as Brokerage Customers). Where the ranking price of an IOI "generated" by a Liquidity Provider's order equals the ranking price of an IOI "generated" by an eligible order of a Brokerage Customer, the SOR will preference the IOI "generated" by the Brokerage Customer and any order routed to the ATS by the SOR in response thereto will only be eligible to interact with orders submitted by Brokerage Customers.

The IOIs discussed above are disseminated via proprietary binary protocol between the ATS and the SOR. The IOIs are not transmitted to any other person or functionality. The ATS does not otherwise transmit IOIs. The ATS does not receive IOIs.

Y
The ATS does not perform any opening or reopening cross. The ATS begins matching orders at 9:30 ET.
Y
Orders resting in the ATS prior to the start of regular trading hours (i.e., before 9:30 ET) become eligible for execution at 9:30 ET. Time of receipt for orders received prior to the start of regular trading hours (i.e., between 8:30 AM and 9:30 AM ET) is the order's actual time of receipt by the ATS. While Liquidity Providers and other subscribers may direct orders to the ATS prior to 9:30 ET, the SOR does not route non-directed orders to the ATS prior to 9:30 ET (and, accordingly, trading will not occur in the ATS prior to 9:30 ET).

Resting orders are not cancelled during a trading halt or other suspension of trading. Order receipt time for orders received prior to or during a suspension in trading is the order's actual time of receipt by the ATS (that is, order receipt time is not adjusted to the start of trading hours or resumption of trading).
Y
N
The ATS operates as a limit order crossing book and allows customers of IBKR to interact with orders submitted by market makers and other principal trading firms (i.e., the Liquidity Providers) at prices at or inside the NBBO. Additionally, the ATS allows customers of IBKR to direct liquidity adding orders to the ATS for interaction with orders submitted by IBKR customers at prices at or inside the NBBO. The ATS supports trading in all NMS stocks (subject to the restrictions discussed in Part III Item 20).

Brokerage Customers' orders access the ATS via the SOR. Brokerage Customers may submit directed orders to the ATS; such orders may only add liquidity to the ATS. Where a Brokerage Customer submits a non-directed order to the SOR, the SOR may route the order to the ATS; such orders will always be deemed to remove liquidity from the ATS when interacting with a directed order submitted to the ATS (whether such directed-order was submitted by a Liquidity Provider or other Brokerage Customer). In the limited circumstances where the SOR routes two non-directed Brokerage Customer orders to the ATS with overlapping effective limit prices, the order that was marketable relative to the NBBO when routed to the ATS by the SOR will always be deemed to remove liquidity (the SOR will only route non-directed Brokerage Customer orders with overlapping effective limit prices to the ATS where one order, but not the other, is marketable relative to the NBBO at the time of routing).

Certain market-makers and other principal trading firms willing to offer opportunities for price improvement to IBKR's customers act as liquidity providers in the ATS (i.e., the Liquidity Providers). Liquidity Providers' orders may only interact with Brokerage Customers' non-directed orders. Liquidity Providers may only add liquidity to the ATS.

The SOR utilizes the information contained in these IOIs IOIs (including information regarding minimum quantity instructions) in determining whether to route orders to the ATS. For instance, if an IOI indicates an eligible order(s) resting in the ATS is priced at or inside the NBBO, the SOR may route contraside interest to the ATS. Where the SOR routes an order to the ATS in response to an IOI "generated" by a Liquidity Provider's order, the order will only be eligible to interact with orders submitted by the applicable Liquidity Provider. Where, however, the SOR routes an order to the ATS in response to an IOI "generated" by the directed order of a Brokerage Customer, the order will be eligible to interact with any order directed to the ATS by a Brokerage Customer (but will be ineligible to interact with orders of Liquidity Providers, except, for clarity, in their capacities as Brokerage Customers). Where the ranking price of an IOI "generated" by a Liquidity Provider's order equals the ranking price of an IOI "generated" by an eligible order of a Brokerage Customer, the SOR will preference the IOI "generated" by the Brokerage Customer and any order routed to the ATS by the SOR in response thereto will only be eligible to interact with orders submitted by Brokerage Customers.

The IOIs discussed above are not transmitted to any other person or functionality. The ATS does not otherwise transmit IOIs. The ATS does not receive IOIs.

All orders submitted by Brokerage Customers pass through the SOR. Orders submitted by Liquidity Providers do not pass through the SOR.

Directed orders submitted to the ATS, whether by a Liquidity Provider or other subscriber, may only add liquidity. Further, Liquidity Providers may only add liquidity on the ATS. Only non-directed orders submitted by Brokerage Customers may remove liquidity.

Directed orders submitted to the ATS by non-Liquidity Providers may not interact with orders submitted to the ATS by Liquidity Providers. Non-directed orders submitted to the ATS by the IBKR SOR may, subject to the terms of the orders, interact with any other order in the ATS.

Priority: Orders resting in the ATS are ranked based on the following factors in the following order: (i) price; (ii) size; and (iii) time. Pegged orders are ranked based on their effective limit price and not on any ultimate limit price associated with the order. Where an order is pegged to the midpoint of the NBBO, the ATS will rank the order and any related IOI at the order's effective limit price (i.e., the pegged price), even where the effective limit price is not in a $0.01 increment (e.g., where the NBBO is $20.00 by $20.05, a buy order pegged to the midpoint of the NBBO will have a ranking price of $20.025 and, accordingly, will have priority over buy orders with limit prices of $20.02). For clarity, orders pegged to the midpoint of the NBBO that include Midpoint Offset instructions are ranked at their effective limit prices (which, except where the order's Midpoint Offset instructions are disregarded, are always priced in full-penny increments). See Part III Item 7 for further discussion of Midpoint Offset instructions' manner of operation.

For purposes of establishing time priority the ATS treats pegged orders, other than PegBest orders, as received at the time of original order receipt, rather than as received at each subsequent price change. For purposes of establishing time priority, the ATS treats PegBest orders as received at the time of any increase in the PegBest order's offset relative to the Combined NBBO (e.g., where a PegBest order's offset increases from +$0.01 to +$0.02 due to the introduction of a competing PegBest order). Reductions in a PegBest order's offset (e.g., where a PegBest order's offset is reduced from +$0.02 to +$0.01) do not impact time of receipt for priority purposes. For clarity, changes in the Combined NBBO or midpoint of the NBBO, without more, do not impact a PegBest order's time of receipt of time priority purposes. Where a subscriber modifies the price or size instruction associated with an order (e.g., changing an order's limit price or increasing or decreasing the size of any order), the ATS treats the order as received at the time of modification.

The ATS, on a security-by-security basis, disseminates IOIs to the IBKR SOR identifying the symbol, size, side and ranking price of (i) the best-priced resting order of each Liquidity Provider and (ii) the best-priced resting order amongst all other subscribers. Additionally, and as further discussed at Part III Item 9 above, the ATS may also disseminate to the IBKR SOR information regarding the smallest minimum quantity instruction (which may be zero) among resting Brokerage Customer orders priced at or inside the NBBO. Where the SOR routes an order to the ATS in response to an IOI, the order is only eligible to interact with the Liquidity Provider whose order was identified as top-of-book in the most recent IOI received by the SOR (where the IOI identifies a non-Liquidity Provider's order as top-of-book, orders of non-Liquidity Providers, as a group, are eligible to interact with any non-directed order routed to the ATS by the SOR, while orders of Liquidity Providers are not). Where the ranking price of an IOI "generated" by a Liquidity Provider's order equals the ranking price of an IOI "generated" by a non-Liquidity Provider's order, the SOR will preference the IOI "generated" by the non-Liquidity Provider and any order routed to the ATS by the SOR in response thereto will only be eligible to interact with orders submitted by non-Liquidity Providers.

Price Improvement: In the event of a match, the order deemed to be removing liquidity receives all available price improvement. Generally, for two given orders to a match, the order received first by the ATS is deemed to be adding liquidity. Where a directed order matches with a non-directed order, the directed order is always deemed to be adding liquidity. Where two non-directed orders are routed to the ATS by the SOR, and one such order is marketable relative to the NBBO at the time of the SOR route, while the other is not, the ATS treats the marketable order as removing liquidity, regardless as to whether the order was actually received first.

Compliance with Applicable Law: To the extent that any ATS order may not, by law, rule, regulation or the terms of the order, be crossed with another order, or may not be crossed at a particular price, then such orders will be ineligible for matching. The ATS will apply the priorities detailed above with respect to eligible orders and prices only. In certain circumstances, orders may be ineligible to interact with certain other orders.

The ATS is programmed not to execute transactions outside the NBBO. The ATS will not effect a transaction involving a short sale order at the NBB when a Regulation SHO circuit breaker is in effect for the given security. Similarly, the ATS is programmed not to execute transactions during locked or crossed markets or at prices outside the Limit Up-Limit Down price bands.

Trading Errors: Trading errors resulting from executions in the ATS are recorded in IBKR's error accounts. IBKR views trading errors as transactions in the wrong security or side of the market, executions outside an order's limit price, executions based on latent market data and executions at clearly erroneous prices. IBKR handles executions at clearly erroneous prices consistent with the applicable rules of the self-regulatory organizations. Potential trading errors can be raised by Brokerage Customers, Liquidity Providers or IBKR personnel. After evaluating the activity to confirm a bona fide error, the Order Desk can correct the error in a manner that attempts to place the subscriber in the same position had the error not occurred.
Y

Certain market makers and other liquidity providers have entered into arrangements with IBKR pursuant to which they may direct liquidity-adding orders to the ATS (such subscribers, the "Liquidity Providers"). While IBKR does not restrict parties from requesting to act as Liquidity Providers, any prospective Liquidity Provider must be approved by management. In determining whether to onboard a prospective Liquidity Provider, IBKR management assesses, amongst other things, the anticipated levels of price improvement and liquidity enhancement to be provided by the prospective Liquidity Provider.

While IBKR management will, as noted above, assess anticipated ATS activity of a prospective Liquidity Provider prior to onboarding, Liquidity Providers are not subject to any objective quoting requirements. IBKR does, however, periodically review the activity of each Liquidity Provider in the ATS, including average fill size and price improvement provided, and may request that Liquidity Providers alter their activity (e.g., submit larger orders or provide increased price improvement levels). Liquidity Providers that fail to act in a manner that IBKR, in its discretion, deems satisfactory may be terminated as Liquidity Providers or otherwise lose access to ATS services.

Trading interest on the ATS is segmented based on whether the subscriber is acting as a Liquidity Provider and, amongst non-Liquidity Providers, whether the subscriber directed the order to the ATS.

Certain order instructions are only available to Liquidity Providers. However, only non-directed orders submitted by subscribers other than Liquidity Providers may remove liquidity from the ATS.

Orders submitted by Liquidity Providers may only interact with non-directed orders entered by non-Liquidity Providers. Similarly, orders directed to the ATS by non-Liquidity Providers may only interact with non-directed orders entered by non-Liquidity Providers.
Y

Liquidity Providers are informed of their status as Liquidity Providers as part of their onboarding process.
Y

Orders submitted by IBKR's affiliate, Covestor Ltd, are configured to interact only with trading interest of Liquidity Providers. Such counter-party permissioning functionality is not available to other subscribers.

Orders submitted by a Liquidity Provider may not interact with other orders submitted by that Liquidity Provider. Orders submitted by a Liquidity Provider may not interact with orders submitted by other Liquidity Providers, nor may such orders interact with orders directed to the ATS by subscribers that are not acting as Liquidity Providers. Notwithstanding the foregoing, where a Liquidity Provider is separately a Brokerage Customer of IBKR, the ATS treats orders submitted to the ATS by the Liquidity Provider in its capacity as a Brokerage Customer in the same manner that the ATS treats orders received from other Brokerage Customers (including subject to the below counterparty restrictions); such orders may interact with orders submitted by the subscriber in its capacity as a Liquidity Provider.

Directed orders submitted to the ATS by non-Liquidity Providers (including Liquidity Providers acting as Brokerage Customers) may not interact with orders submitted by Liquidity Providers (in their capacities as Liquidity Providers), nor may they interact with directed orders submitted by non-Liquidity Providers (including directed orders submitted by Liquidity Providers acting as Brokerage Customers). Non-directed orders submitted to the ATS by the IBKR SOR may, subject to the terms of the orders, interact with any other order in the ATS.

The ATS, on a security-by-security basis, disseminates IOIs to the IBKR SOR identifying the symbol, size, side and ranking price of (i) the best-priced resting order of each Liquidity Provider and (ii) the best-priced resting order amongst all other subscribers (i.e., of all Brokerage Customers). For Liquidity Providers, the IOI identifies the best-priced order based on its distance from the NBBO (e.g., NBB + $0.01). Accordingly, for Liquidity Providers, changes to the top-of-book relative to the NBB or NBO (as applicable), will generate a new IOI, as will increases in the size of an order at top of book; however, changes in an order's effective limit price due to changes in the NBBO will not, without more, generate a new IOI. For Brokerage Customers (as a group), IOIs identify the group's best-priced resting buy and sell orders (e.g., if the best-priced buy order has an effective limit price of $20.00, and the best-priced sell order has an effective limit price of $20.05, the relevant IOI will identify the best priced buy and sell order among Brokerage Customers as being $20.00 and $20.05, respectively, rather than such orders' respective distances from the NBBO). The IOIs may also include information regarding the smallest minimum quantity instruction (which may be zero) among resting Brokerage Customer orders priced at or inside the NBBO, including information sufficient for the IBKR SOR to determine whether the order associated with such minimum quantity instruction has an effective limit price that equals or betters (x) the effective limit price of competing Liquidity Providers' orders and/or (y) the NBBO.

Accordingly, any changes to the price or size of the top of book for resting Brokerage Customers orders, including changes resulting from changes in the NBBO, or to the smallest minimum quantity instruction among resting Brokerage Customer orders priced at or inside the NBBO, will generate a new IOI.

The SOR utilizes the information contained in the above IOIs in determining whether to route orders to the ATS. All trading interest submitted to the ATS, other than orders directly submitted by Liquidity Providers via FIX connection, passes through the IBKR SOR.

The ATS begins transmitting the above IOIs to the SOR at 9:30 ET; the ATS does not transmit the IOIs to any other person or functionality. The ATS does not otherwise transmit IOIs. The ATS does not receive IOIs.

To the extent an IBKR customer submits an order through an IBKR service or functionality, including any order management system, algorithmic trading product or order router operated by IBKR, such service or functionality will have information relating to the order route and any resulting execution or cancellation and persons involved in the operation of these systems will have access to information about orders submitted to or passing through such systems.
Y

N
N
Y
N
Brokerage Customers are charged commissions for all executions effected through IBKR, including executions in the ATS. Such subscribers may select between a cost-plus ("Unbundled") commission model (which involves a base commission plus the pass-through of any venue fee or rebate (e.g., any "maker/taker" fee or rebate)) and a fixed-rate ("Bundled") commission model. Customers are free to elect the Bundled or Unbundled commission model at their discretion, and may switch (i.e., change from Bundled to Unbundled or vice versa) that election at any time.

With the exception of IBKR's Affiliate IBKR Financial Services, AG (which pays no commission for fills in the ATS), IBKR Affiliates and other Unbundled customers pay a base commission rate (distinct from the venue fee or rebate) ranging from $0.0005 to $0.005/share. IBKR's standard commission rates for Unbundled customers vary based on customer volume.

In the Bundled model, IBKR charges customers a fixed rate commission that covers the majority of exchange and regulatory fees, although certain fees are passed-through to the customers. Bundled customers pay commission rates ranging from $0.0013 to $0.01/share for fills in the ATS.

Brokerage Customers may negotiate Bundled and Unbundled commission rates with IBKR. IBKR typically takes into account anticipated volume and totality of the business relationship (e.g., whether a customer anticipates engaging in margin trading or stock loan activities) in such negotiations.

IBKR and its Affiliates do not charge Liquidity Providers any fees in connection with their use of the ATS (e.g., no commissions or connectivity fees). Liquidity Providers are responsible for any connectivity fees or other costs associated with their use of the ATS (i.e., fees not charged by IBKR and its Affiliates).
In both the Bundled and Unbundled commission models, IBKR charges a per share fee that covers the bundled use of IBKR's order routing and execution services, including, but not limited to, the Trading Products and the ATS. Except as described in Item 19(c) below, the per share fee IBKR charges a given Brokerage Customer is the same for executions resulting on any trading center (although, for Unbundled customers, the venue fee or rebate "passed-through" varies by trading center).

Brokerage Customers may negotiate Bundled and Unbundled commission rates. IBKR typically takes into account anticipated volume and totality of the business relationship (e.g., whether a customer anticipates engaging in margin trading or stock loan activities) in such negotiations.
Except as noted below, IBKR does not charge Brokerage Customers a venue fee or pay Brokerage Customers a venue rebate for fills in the ATS (whether such Brokerage Customer has elected Bundled or Unbundled pricing).

In certain instances, the IBKR SOR will re-route a non-marketable customer limit order resting on another market center to the ATS. Where that customer order receives an execution in the ATS, the customer will, to the extent it has elected Unbundled pricing, receive the rebate the customer would have received had its order been executed at the relevant national securities exchange. In the event the liquidity-taking contra-side order is associated with a customer that has elected Unbundled pricing, that customer will be charged the venue fee it would have paid had its order been executed on the national securities exchange on which the liquidity-making contra-side order had been resting (prior to being routed into the ATS).
IBKR may suspend trading in the ATS due to a regulatory halt or technology issue impacting the ATS (e.g., data feed issues). Where technology issues impact the ATS, IBKR personnel will review the severity of the technology issue (e.g., systems impacted, whether backup systems may be used, etc.), including the relevant securities impacted (e.g., all NMS stocks, an individual NMS stock, other) in determining whether to suspend trading in the ATS (including whether to suspend trading for all or only a subset of NMS stocks). Resting orders are not cancelled during a suspension of trading. Order receipt time for orders received prior to or during a suspension in trading is the order's actual time of receipt by the ATS (that is, order receipt time is not adjusted to the start of trading hours or resumption of trading).

IBKR may also suspend trading in certain symbols in order to avoid triggering the "Fair Access" requirements of Regulation ATS and the requirements applicable to SCI ATSs under Regulation SCI.
Y
IBKR reports all trades in the ATS to either the NASDAQ TRF Carteret and the NASDAQ TRF Chicago in either case using the IATS MPID. IBKR's systems utilize load-balancing programming (e.g., network traffic optimization) in determining whether to report a particular transaction to the Chicago or Carteret NASDAQ TRF. Liquidity Providers are required to sign a FINRA Transparency Service Uniform Executing Broker Agreement allowing IBKR to report transactions on their behalf.
Y
IBKR is a member of the National Securities Clearing Corporation ("NSCC") and The Depository Trust Company ("DTC"). As a general matter, IBKR becomes a counterparty to each side of any transaction executed on the ATS and, unless the subscriber's account is custodied by IBKR, submits IBKR's side of the transaction to the NSCC or DTC for clearance and settlement, with the legal obligation for settlement of the transaction transferring from IBKR to NSCC once NSCC has validated the submitted transaction.

Where a subscriber's account is custodied by IBKR, IBKR will clear and settle transactions on the subscriber's behalf by debiting and crediting internal records. Institutional (non-broker-dealer) subscribers custodied at another broker-dealer (i.e., not at IBKR) may settle transactions via DVP accounts. Where a broker-dealer subscriber self-clears or clears through another clearing member (i.e., not through IBKR), IBKR will submit the trade to NSCC for clearance and settlement in accordance with an authorized and bilaterally agreed-to NSCC process.

See the response to subpart 22(a) above.

IBKR's systems utilize direct market data feeds received from each national securities exchange to create a consolidated view of the national best bid and offer (the "NBBO"). By default, the NBBO, as determined based on these direct market data feeds, is used in determining eligible execution prices within the ATS (e.g., compliance with Regulation NMS and Regulation SHO) and to determine the effective limit price of pegged orders.

Additionally, IBKR's systems contain a module (the "BestTickerSpeedComp" program) designed to evaluate the accuracy of the direct market data feeds utilized by IBKR relative to the SIP (e.g., to confirm that direct market data feeds provide the most current view of the NBBO). Where the BestTickerSpeedComp's logic determines that the SIP provides a more accurate view of current market prices relative to the direct data feeds, the ATS will use the NBBO as identified by the SIP in determining eligible execution prices within the ATS (for the avoidance of doubt, when the ATS switches to the SIP the ATS ceases using direct market data feeds completely).
Y
N
N
N



  ATS-N/MA
  N
  0000902664-21-005323
  
    0000922792
    XXXXXXXX
  
  013-00114
  IBKR ATS
  Part III Items 7 and 11 are being amended to allow subscribers to express Competing Tick Offset instructions on PegBest orders as an offset from the midpoint of the prevailing NBBO, specified in the form of Midpoint Offsets, and to describe such order instructions' manner of operation.  
Only Brokerage Customers, as defined herein, may utilize PegBest orders (including PegBest orders using Competing Tick Offset instructions expressed in terms of a Midpoint Offset).  Except for directed orders submitted to the ATS by Brokerage Customers, as a matter of policy IBKR does not utilize PegBest orders.
  LIVE
  
    false
    false

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