Our "SMART" route is not an algo that changes exchanges. I'd prefer to describe the way I expect these work over the phone or in a direct email.
I have not traded over phone or email, but I get that there is someone in the broker who routes the order when the order is placed. I'm also comparing the differences in fees between retail and professional, and it looks like professionals pay much more exchange fees. I wonder how much MMs pay: do they pay these additional exchange fees but no broker commissions? Or is there discount exchange fees for MMs but not other professionals?
He is not asking you to "trade" over phone or e-mail. He is asking you to communicate with him through the phone or e-mails. I would suggest you call Morse on the telephone. Human-to-human voice may be a benefit to you. (The REAL irony would be if you both had ham radios, and communicated on CW. But I digress)
You should get reset each quarter: https://ibkr.info/article/1242 IB Smart does look to re-route if it can get a fill on another exchange which of course is a big difference compared to how others route orders. The algo does take into account the 360 rule as stated in the KB link above.
I had this tag some time ago (not in an IB account though) and it is definitely something you don't want. They will look at monthly averages, but the penalty is quarterly. So if I average over 390 option orders per day in January, I would be considered a professional in the second quarter (Apr, May, June). I would need to stay under that threshold each month in the second quarter for the status to reset for the third quarter. For me it is counted as every option order I enter. So a four leg spread is one order. If my smart router splits my order (again this is a non IB account) among 3 exchanges, its one order. If I send a sell order to the CBOE, but a bid is on the PHLX and the CBOE sends the order there to be filled, it is still one order. Our smart router doesn't cancel and resubmit orders to other exchanges on their own. Any modification of an order increases the count, such as price or quantity change. They downside of this tag is you will pay extra exchange fees, which can be substantial. Your fill quality will also suffer. You probably won't see any difference in a product such as SPY, but may in other less liquid products. I trade a lot in less liquid spreads and noticed that orders would not be filled (MM's can see this order tag) vs friends who did not have this tag and entered orders at the same price.
You have gotten most of the info here already but I will add the following: IBKR will send you an email to warn you - hopefully prior to you going over the threshold. I worked with someone who designed the warning in the following way. If there are 20 trading days in a month (Like Jan). Then your limit would be 7800 orders for the month. Once you reach the 75% threshold (5850 orders), IBKR will send you an initial warning via email. They will then also send you a second warning when you hit the 90% threshold (7020). The only issue is that the warning will come on the business day following the day you go over around 8 PM EST. So, if you go over on a Wednesday, then you will get the notification on Thursday night. Not perfect but should be okay for most. Also, I'd rather not get into this here - but counting orders is not as easy as one may think. So - who knows - you may not be over. And you should be able to ask for your order count if you're really worried. the email will look like the following: (Dec 2021 had 22 trading days) Subject: FYI: Professional Customer Status Dear Client, This notice is intended to assist with monitoring your U.S. option orders for purposes of the Professional Customer designation. As background, the option exchanges require any retail customer who submits over 390 option orders contracts on an average daily basis for a given month to be designated as a Professional. Professionals are then treated the same as broker dealers for purposes of execution priority and transaction fees in the following quarter. Based upon a review of your activity in U***** and any related accounts for the month of Dec 2021, you’ve submitted orders totaling 6719 contracts, representing a daily average of 354 contracts through 28 Dec 2021. Based upon this data, we project that you will meet the Professional classification if your total orders for the remainder of this month exceed 1861. For additional information on this topic, please see KB1242 Priority of Professional Customer Orders.
Thank you for all the detailed info! So far I have not received such emails. I placed thousands of non-marketable limit combo orders earlier this month, and the total count should already exceeded 8000. Maybe the orders were held at IB and not submitted to the exchange. But I spot checked some combos and my limit price did appear in IB's combo quote.