IB auto liquidation

[bestfriend]

Can someone please explain how this works if a trade occurs pre or post market that would reduce your equity below zero?

Say, a single 100 lot goes off outside the market, will an auto-liquidation occur?Waht about a series of trades that occur pre- or post? Do they wait for the core session or when there is more volume?

 

[gkishot]

Quote from bestfriend:

Can someone please explain how this works if a trade occurs pre or post market that would reduce your equity below zero?

Say, a single 100 lot goes off outside the market, will an auto-liquidation occur?Waht about a series of trades that occur pre- or post? Do they wait for the core session or when there is more volume?

Maintenance Margin Calculations

ON A REAL-TIME BASIS excess liquidity is checked to ensure that it's >=0. If it is negative, the account is subject to liquidation on a real-time basis. The following calculations are used to determine excess liquidity:
Securities excess liquidity = Securities equity with loan value - Securities maintenance margin requirements

Commodities excess liquidity = Commodities net liquidation value - Commodities maintenance margin requirements

In addition, any account that has negative cash on a trade date or settlement date basis will be liquidated. It should be noted whereas futures cash settle each night, options are generally treated on a premium style basis and will not cash settle until the options are sold or expire. Therefore, for certain combination futures and options positions there may be a mismatch in cash flows which could cause cash to go negative even though Net Liquidation Value is positive. In addition, there are a handful of options where local custom is to cash settle the option each night at the clearing house (e.g. HKFE HSI Options), but due to system constraints we margin these options on a premium style basis.
Reg T End of Day Margin Calculations (Securities Cash and Reg T accounts only)

AT THE END OF EACH US TRADING DAY (15:50-16:00 ET), a Special Memorandum Account (SMA) is checked to ensure that it's > =0. If it is negative, the account is subject to liquidation. In addition, no cash withdrawal will be allowed that causes SMA to go negative on a real-time basis.

http://www.interactivebrokers.com/en/trading/marginRequirements/fundamentals.php

 

[bestfriend]

So are you saying a single trade of 100 shares away from the market pre or post could force an autoliquidation event? Or do you know? Or, would they wait for the core session?

 

[gkishot]

Off the regular market hours trade can cause auto-liquidation if excess liquidity drops below 0. The volume of trading has no affect on auto-liquidation event being triggered. Only your money is at risk all the time and never of the broker.

 

[Bob111]

http://www.elitetrader.com/vb/showthread.php?s=&postid=1570788#post1570788

all my orders are rejected today with following message-
Not allowed to open new positions at the moment because account valuation MAY BE incorrect.

there is plenty of cash on account at that time, no stocks positions at all, and at least 5K on cash balance and few corp. bonds.
where is the end of it?
how is this possible, that IB cannot value account ? that's mean to me, that there is possibility, in which IB may liquidate some of your positions, if they value them incorrectly.

 

[Bob111]

here is one of my favored...Ib Pnl of the day-

 

[stock777]

Interesting question.

There are frequently bad/fake/bs trades that take place pre/post market.

Less lately then there used to be , but they are there.

Now, if you are long a stock and it trades at 1 cent, will you be liquidated?

Or if you are short, and it trades at $9999, will you be liquidated?

I've never heard of it, and IB is not that dumb.

But, it would be nice to find out what they do to prevent bad liquidations.

 

[gkishot]

Quote from stock777:

Interesting question.

There are frequently bad/fake/bs trades that take place pre/post market.

Less lately then there used to be , but they are there.

Now, if you are long a stock and it trades at 1 cent, will you be liquidated?

Or if you are short, and it trades at $9999, will you be liquidated?

I've never heard of it, and IB is not that dumb.

But, it would be nice to find out what they do to prevent bad liquidations.

The stock is priced at $9999 when the market is closed for this stock. You'll never see stock was actually traded at this price.

 

[SethArb]

an "erroneous trade"

whether it be stocks futures options etc

needs to be reported
ASAP to your broker so they can
argue on your behalf with the
exchange or ECN that the trade
is erroneous and should be "busted or adjusted"

 

[ids]

Liquidations are limited by certain time brackets. For example, all US products except some very liquid futures could be liquidated only between 9:40 and 16:00 EST.