Bulletin from IB: charge of 2000 USD for "intensive messaging". Fraud?

M

Merkur

Short, have not much time, sorry for bad english,but please read carefully:

Just got the following Bulletin:
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Dear GLOBEX trader: Interactive Brokers has noticed a high level of activity in your account. Please note, according to policies set forth at www.cme.com/messagingpolicy, clients who repeatedly violate the message/volume ratio may incur a fine of $2000. In the event that your trading activity continues to violate this policy and IB is charged, the resulting fine will be passed on to your account. For trade date 20060530, you generated 46 messages in the ER2, E MINI RUSSELL 2000 (USD) contract, while only executing a combined 2 in volume. Your msg/volume ratio of 23:1 does not comply with the benchmark GLOBEX uses for the ER2, which is 15:1. Please ensure that you review the CME messaging policy and manage your trading accordingly.
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1. Yesterday holiday in US. Very intelligent imho, to relate to the ratio for that day.

2. Normally I perhaps have a ratio of max. 5:1. I am not using any autotrader.

3. Written on CME-Page:
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If a clearing member firm exceeds a benchmark, they will be issued two notices within a rolling thirty (30) business day period. Subsequently, a $2,000 surcharge, per product, per session, per clearing member firm will be billed when a benchmark is exceeded.
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So: IB will be charged a totally(!!!) of 2000 USD per day and product. NOT per customer!

So, if IB would charge EVERY TRADER who violates the benchmarks with 2000 USD, that would be FRAUD.

That 2000 USD has to be divided(!) to all the hundreds or thousands IB-Customer, who violates the benchmarks. I am rigth or wrong?

4. Who has got that bulletin to? Who has experience with that matter?

Thanks in advance and greetings
Merkur
 
IB are reacting to the changes imposed by the CME. They need to do something and notifying people that are exceeding the limits seems reasonable.

I would expect that if charged, they would split this penalty between all the people that were violating the limits. Perhaps someone from IB can comment on this?

It would also be a good idea for IB to apply some averaging and pick on the continuous high bandwidth abusers rather than people that very occasionally exceed the limit.
 
That 2000 USD has to be divided (!) to all the hundreds
or thousands IB-Customer, who violate the benchmarks.
More...
Yes, the resulting fine as mentioned by IB.
Maybe it´s only 2 customers and not thousands ?
 
No one else got that bulletin?! That can't be possible!

To repeat: In my case the ratio is every day a max of ca. 5:1. In this month my generated commissions will be 5-digit USD. So there a are plenty of orders executed, and i am not using any autotrader/quotemachine/api or whatever else. I just transmit orders manually and change them sometimes.

I can't believe that I shall be the only one?!?! There are hundreds outside using api with automated trading etc. and a lot of order changes etc...

Merkur
 
Quote from Merkur:
To repeat: In my case the ratio is every day a max of ca. 5:1.
More...
According to the bulletin you quoted only "clients who repeatedly violate the message/volume ratio may incur a fine of $2000".

Since you said this is a rare occurance for you then you will never be charged the fine. What's the problem?
 
Another option, albeit not the best -- if you realize you have a huge ratio, send a few market orders through (one to open, then one to close). That will generate the volume you need to avoid the ratio, and you might lose a tick or two (you also might make a tick or two). I'd rather take the $20 hit on 2 ticks (and the commissions) than a $2000 fine. Still, it seems kind of silly....
 
"IBSoft"

No clarification? Not interested?

Question is: Will every individual charged 2000 $ or will it be divided under them, who exceed the benchmarks?
 
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