Interactive Brokers UK, Ltd.: Top 5 Venue Annual Report for Year 2017

Annual Report on the Execution Quality Obtained on all the Execution Venues Used by Interactive Brokers (U.K.) Limited and the Top Five Venue and Entities for each Instrument Class

To enable our clients and the public to evaluate the quality of Interactive Brokers (U.K.) Limited (IBUK)’s execution quality and to identify the top five execution venues in terms of trading volumes where IBUK executed client orders in the preceding year, IBUK publishes information in relation to trading venues, market makers or other liquidity providers or any entity that performs a similar function outside the European Economic Area (EEA). The annual report is made available on our website on 30 April.

Summary on the Execution Quality Obtained on all the Execution Venues Used by Interactive Brokers (U.K.) Limited

IBUK provides to its clients self-directed execution-only electronic brokerage services. The orders clients submit to IBUK through the Interactive Brokers Group’s (“IB Group”) trading platforms are executed by IBUK on their behalf by electronically routing them to markets or dealers using IB Group’s proprietary order routing technology ("SmartRouting").

Relative Importance of Execution Factors

SmartRouting takes into account the relative importance of each of the execution factors as depends on:

• the characteristics and nature of the order, including any specific instructions a client might have given;
• the characteristics of the financial instruments that are the subject of an order; and
• the characteristics of the execution venues (if there is more than one) to which the order can be directed.

IBUK's order execution arrangements do not differ according to client categorization. The execution factors are applied on a trade-by-trade basis taking into account whether the order is marketable or not. A marketable order is a buy order with a price at or above the lowest offer in the market or a sell order with a price at or below the highest bid in the market.

For marketable orders, the primary execution factor is either total consideration or price depending on the client’s instruction. The total consideration represents the price of the financial instrument and the costs related to execution, which include all expenses incurred by the client which are directly related to the execution of the order, including execution fees, clearing and settlement fees and other fees paid to third parties involved in the execution of the order. For non-marketable orders, the primary execution factor is typically likelihood of execution followed by cost.

Close links

Our arrangements for best execution are designed to ensure that IBUK acts in its clients’ best interests regardless of any other interests.

Where IBUK routes a client order and relies on a third party to access a venue, this is usually carried out through an IBUK affiliate. Any IBUK affiliate receiving a client order does not levy any additional charge on the client. IBUK’s standard charges apply as disclosed without any additional markup imposed by IBUK. For certain execution venues, IBUK may rely on a broker outside of the IB Group. For the purposes of execution with respect to the client accounts carried by IBLLC, it is IBLLC which decides the order routing and directs the orders to IBUK, Timber Hill Europe (“THE”) or another external broker that is a member of an exchange.

IBUK and its affiliate, THE, have been the liquidity providers for forex contracts for difference (CFDs) and stock CFDs respectively. Our clients’ forex CFD orders are filled at the spot forex rates IBUK obtained on the market and; similarly for the stock CFD orders, our clients’ CFD orders are filled at price of the hedge order in the underlying stock. For Over-the-Counter products (“OTC”) products, our clients may utilize the client interface to check the price of the underlying financial instrument. The CFD price shown to our client is the current market price for the underlying (i.e. market data for CFDs and stocks are identical) and CFD and stock orders are executed exactly the same way.

Venue Selection

IBUK places significant reliance on automated venues where our SmartRouting can constantly review the bids and offers at each of the available venues, and execute at the greatest speed and with the highest level of accuracy and certainty of completion.

In the year 2017, IBUK added Budapest Stock Exchange and Warsaw Stock Exchange to the list of venues. The expansion into the Central European trading venues extends IBUK’s vision of a seamless multinational, multi-currency, multi-asset class investment experience that lets even retail investors enjoy the same financial tools normally available only to professional investors. In offering venues of a wider international scope, IBUK provides opportunities to its clients to efficiently and cost effectively access smaller markets.

In the same view, IBUK also brought about the expansion into the Baltic markets in offering the Nasdaq Baltic venues, Tallinn Stock Exchange, Riga Stock Exchange and Vilnius Stock Exchange, to its clients from March 2018.

Assessment Summary

Top Five Venues and Entities for each Instrument Class in 2017

Equities - Shares & Depositary Receipts

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients

Interest Rates Derivatives: Futures and Options Admitted to Trading on a Trading Venue

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients

Equity Derivatives: Options and Futures Admitted to Trading on a Trading Venue

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients

Equity Derivatives: Swaps and Other Equity Derivatives

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Professional Clients

Securitized Derivatives: Warrants and Certificate Derivatives

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Professional Clients

Commodities Derivatives and Emission Allowances Derivatives: Other Commodities Derivatives and Emission Allowances Derivatives

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Professional Clients

Contracts for Difference: Stock Underlying

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

Contracts for Difference: Index Underlying

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

Contracts for Difference: Cash Underlying

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Retail Clients

IBUK-Executed Orders, Professional Clients

Exchange Traded Products (Exchange Traded Funds, Exchange Traded Notes and Exchange Traded Commodities)

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Professional Clients

Other Instruments

The Top Five Execution Venues to which Client Orders were Routed

IBUK-Executed Orders, Professional Clients

The Top Five Entities to which Client Orders were Routed

IBUK-Transmitted Orders, Retail Clients

IBUK-Transmitted Orders, Professional Clients