Again, this is an issue of firm not going after the clients' best interest. The order should have be directed, even if by manual override, to the best market, not just the market that the firm is a member of and therefore has lower trans costs...ie..we are members of Amex for options but dont have seats on Chicago or Philly, so it is always more affordable TO US to do trades on AMEX if stock trades amex AND something else, lets say philly.
Lets say an option is 1 x 1 1/4 on amex and 1/8 bid on Philly. Two things could happen, 1) firms will route to amex if they have seat there and hope that amex is 'competitive' with 1/8 bid on philly.
the firm should route it to Philly and pay the few bucks extra in floor brokerage. figure 1, 1.25 per contract to do it on someoneelse's exchange...but you always want to do the best for the client, make your money when you can, but not to the disadvantage of the client.
Everybody does busienss differently...all I can say is how we do it, and not how others do.
Regards,
Steve@yamner.com
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