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Bulletin from IB: charge of 2000 USD for "intensive messaging". Fraud?
- Thread starter Merkur
- Start date
If IB is charged a totally of 2000 USD per product and per day, and charges then each(!) individual(!) customer(!), who exceeds the benchmarks, with 2000 USD (and that implies the bulletin), and says then, that this 2000 USD (of each customer) is forwarded directly to the CME, then that is fraud in my eyes.
If I there is a misunderstanding anywhere, Ib should ANSWER here, and not just claim to change the thread-titel. THAT is ridiculous (and quite dubious).
Merkur
If I there is a misunderstanding anywhere, Ib should ANSWER here, and not just claim to change the thread-titel. THAT is ridiculous (and quite dubious).
Merkur
Quote from Merkur:
If IB is charged a totally of 2000 USD per product and per day, and charges then each(!) individual(!) customer(!), who exceeds the benchmarks, with 2000 USD (and that implies the bulletin), and says then, that this 2000 USD (of each customer) is forwarded directly to the CME, then that is fraud in my eyes.
If I there is a misunderstanding anywhere, Ib should ANSWER here, and not just claim to change the thread-titel. THAT is ridiculous (and quite dubious).
Merkur
Why would IB want to respond to your thread that has "fraud" in its title? Did you even try to contact them directly before publicly attacking them here?
Maybe you should tone down your aggressiveness and you will find that IB will provide a reasonable answer. If you continue to be a snot about it, then I hope you just get silence.
Quote from thecalip:
What is this anyway?
http://www.cme.com/files/CMEMessagingPolicy.pdf
Basically the CME has this policy to prevent market manipulation. You know, entering an order above or below the market then cancel/replace making it appear as if supply or demand is at another level.
So the CME will fine you if you play that game. For certain contracts, like the ES, you can fool around with the order up to five times before it's executed. If you fooled around with the price more than five times before the order was executed during RTH, you'll be fined.
There's more to it than that. That was a very basic explanation.
The thread starter is worried that if IB is fined for his activity, yet others are "guilty" of the same activity, will each be fined $2000 or will each trader be fined $2000/traders?
There's lots of ways IB could implement a policy concerning this. But I doubt that this issue would ever come up. But if it did, IB could:
1. Curb your messaging to max alloowable per CME product before a fee.
2. Pass along the fine to the traders who "broke the bank" in a prorated manner. Meaning, the one who violates more, shares more of the fine.
3. Simply divide the fine up by the number of traders who violated the messaging quota.
4. Fine them all $2000 since each one on their own would incur the fine individually if they were themselves Class A firms.
Last one may seem unfair, but then again, the offenders, given that their message rate is counterbalanced against the sum total of messages of all traders in a given product, must have really gone ballistic with their message rate that it tipped the scale.
Ex. assume IB has 4000 traders playing in the ES. Then say average message rate before execution is 3.5. That's under the 5 message limit for this product. But lets say 3 traders do such volume that not only does it skew the message rate to 5.2 (which will incur a fine), but their(3 traders) individual message ratios are 250-500 each. On their own, each would be fined $2k. But since they trade through a Class A firm, the class A firm only gets fined $2000. The point of the penalty is to curb this type of trading. IB could split the fine up evenly among the 3. It could prorate the fine (ie. guy with most messages pays the most.). OR IB could charge them all $2k in an effort to uphold the spirit of CME's policy.
1. Of course I talked with customer support. The person in chat did not negotiate what I wrote (every customer will be charged), but has not any further clue about that matter.
2. Ok, it seems that either some have another understanding of "right" or they have just intellectual problems, I don't know, but i am shocked.
3. Of course, IB can charge whatever they want, but they should not say, that these charges are totally charged by CME, then that's wrong.
One time more: CME charges a clearing-firm per product and day AND NOT(!) per custumer. But IB will charge the same amount per each custumer, so they would generate income(!) with that. If anyone can't understand the difference, they have my compassion.
Merkur
2. Ok, it seems that either some have another understanding of "right" or they have just intellectual problems, I don't know, but i am shocked.
3. Of course, IB can charge whatever they want, but they should not say, that these charges are totally charged by CME, then that's wrong.
One time more: CME charges a clearing-firm per product and day AND NOT(!) per custumer. But IB will charge the same amount per each custumer, so they would generate income(!) with that. If anyone can't understand the difference, they have my compassion.
Merkur
Quote from Merkur:
If IB is charged a totally of 2000 USD per product and per day, and charges then each(!) individual(!) customer(!), who exceeds the benchmarks, with 2000 USD (and that implies the bulletin), and says then, that this 2000 USD (of each customer) is forwarded directly to the CME, then that is fraud in my eyes.
What makes you think they would do this? Do you honestly think IB is interested in making (a relatively small amount of) money on such a thing, which could only piss people off and discourage trading? A normal, rational person would expect them to do "the right thing", allocating any fines fairly. Thus, the title is a jump to a ridiculous conclusion.
It is of some concern that, if I remember the CME policy correctly, exceeding the allocation benchmark by a single contract could result in a flat fine of $2K. If the policy were implemented that way, and there was only a single person who individually exceeded the benchmark, the whole fine could get allocated to them, which is why I imagine the bulletin to be worded the way it is. This, of course, points out how silly the policy is, and I doubt it will ever be implemented in its current form.
I imagine that IB will comment when/if the policy actually goes into effect. Meanwhile, they seem to be warning people early, which, IMO, is a good thing.
All just my opinion, of course - I have no knowledge of the situation other than what I've read in forums and at the CME site.
Edit: I thought CME had not yet implemented the fines, pending more data and input from member firms, but I can't find the memo about this. Anyone know the current status?
If IB is charged a totally of 2000 USD per product and per day, and charges then each(!) individual(!) customer(!), who exceeds the benchmarks, with 2000 USD (and that implies the bulletin), and says then, that this 2000 USD (of each customer) is forwarded directly to the CME, then that is fraud in my eyes.
What makes you think they would do this? Do you honestly think IB is interested in making (a relatively small amount of) money on such a thing, which could only piss people off and discourage trading? A normal, rational person would expect them to do "the right thing", allocating any fines fairly. Thus, the title is a jump to a ridiculous conclusion.
It is of some concern that, if I remember the CME policy correctly, exceeding the allocation benchmark by a single contract could result in a flat fine of $2K. If the policy were implemented that way, and there was only a single person who individually exceeded the benchmark, the whole fine could get allocated to them, which is why I imagine the bulletin to be worded the way it is. This, of course, points out how silly the policy is, and I doubt it will ever be implemented in its current form.
I imagine that IB will comment when/if the policy actually goes into effect. Meanwhile, they seem to be warning people early, which, IMO, is a good thing.
All just my opinion, of course - I have no knowledge of the situation other than what I've read in forums and at the CME site.
Edit: I thought CME had not yet implemented the fines, pending more data and input from member firms, but I can't find the memo about this. Anyone know the current status?
Quote from alanm:
What makes you think they would do this? Do you honestly think IB is interested in making (a relatively small amount of) money on such a thing, which could only piss people off and discourage trading? A normal, rational person would expect them to do "the right thing", allocating any fines fairly. Thus, the title is a jump to a ridiculous conclusion.
1. It's ridiculous that you write all in bold, Fine, Fine.
2. It's ridiculous, that you are not able to read and understand.
2a) I said, that customer service via chat confirmed that to me.
2b) I asked "IBSoft" that question here in that thread. No answer is an answer too.
Merkur