I'll describe a situation I ran into today and then ask the questions:
Early last week I called my full-service futures broker and placed a long position trade ... the trade was confirmed on the phone. At the time, due to some changes to my account and the snail pace of admin at my broker, I wasn't getting statements for about 1 week. On Thursday I sold an offsetting position and went into the weekend believing I was flat in that market. I finally got that week's statements on Friday. On Sunday I reviewed the statements and discovered that the original long trade was never credited to my account and I was net short. Well, I was fairly confident my broker had made the error but I had been busy that week and in fact could have gotten confused myself. Nevertheless, I was happy w/ the error because it was a few pips in my favor.
Anyway, on Monday a.m. I still wanted to be long this market so I began by buying 1 contract to bring my position to flat (with the intent of scaling in as time passed.) While on the phone with the clerk I mentioned that I thought a trade had been overlooked last week and she said she would look into it.
She called back a short time later and said they had inadvertently placed the trade from last week in another account. She asked to scratch the trade I made that morning (market hadn't moved) at free round-turn commission and place the original trade in my account. I agreed, although the net-net was I became worse off by a few pips.
It strikes me that if I hadn't said anything over the phone my broker might never have identified the original trade as mine. Or perhaps they only would have identified it as mine once it had shown a significant loss?? The thought is kind of scary ...
Questions:
I know the right answer is to review my statements religiously and be responsible for my trades. Nevertheless, in the situation above, when a trade has not been credited to an account for several days and the client hasn't spoken up, typically what sort of leeway does a broker have to close the position, hold it in an error trade account, or credit it to the trader's account? Who is actually freeriding in such a scenario?? The client or the broker? Even now I don't understand how my broker could have been holding the position for a week without realizing the error. I would have thought that if the broker couldn't identify the account in which to deposit the trade, that the broker would close out the position in a relatively short timeframe.
So, in such a scenario what are the rights and responsibilities of broker and trader? (Yes, I know this is probably all spelled out clearly in my account agreement, but I'd rather read it here, perhaps peppered with some first-hand experience, than in the legalese of a contract.)
Early last week I called my full-service futures broker and placed a long position trade ... the trade was confirmed on the phone. At the time, due to some changes to my account and the snail pace of admin at my broker, I wasn't getting statements for about 1 week. On Thursday I sold an offsetting position and went into the weekend believing I was flat in that market. I finally got that week's statements on Friday. On Sunday I reviewed the statements and discovered that the original long trade was never credited to my account and I was net short. Well, I was fairly confident my broker had made the error but I had been busy that week and in fact could have gotten confused myself. Nevertheless, I was happy w/ the error because it was a few pips in my favor.
Anyway, on Monday a.m. I still wanted to be long this market so I began by buying 1 contract to bring my position to flat (with the intent of scaling in as time passed.) While on the phone with the clerk I mentioned that I thought a trade had been overlooked last week and she said she would look into it.
She called back a short time later and said they had inadvertently placed the trade from last week in another account. She asked to scratch the trade I made that morning (market hadn't moved) at free round-turn commission and place the original trade in my account. I agreed, although the net-net was I became worse off by a few pips.
It strikes me that if I hadn't said anything over the phone my broker might never have identified the original trade as mine. Or perhaps they only would have identified it as mine once it had shown a significant loss?? The thought is kind of scary ...
Questions:
I know the right answer is to review my statements religiously and be responsible for my trades. Nevertheless, in the situation above, when a trade has not been credited to an account for several days and the client hasn't spoken up, typically what sort of leeway does a broker have to close the position, hold it in an error trade account, or credit it to the trader's account? Who is actually freeriding in such a scenario?? The client or the broker? Even now I don't understand how my broker could have been holding the position for a week without realizing the error. I would have thought that if the broker couldn't identify the account in which to deposit the trade, that the broker would close out the position in a relatively short timeframe.
So, in such a scenario what are the rights and responsibilities of broker and trader? (Yes, I know this is probably all spelled out clearly in my account agreement, but I'd rather read it here, perhaps peppered with some first-hand experience, than in the legalese of a contract.)