IB auto liquidation
- Thread starter bestfriend
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well...i warn you people about it for very long time... unfortunately i got caught on IB auto liquidation today, after i sold some shares to a moron, who bid 100000 per share on DCEL,CHAP after market close. And it is not a first time they walk away with it. Same shit happens last Friday. Iâm amazed, how they can possibly done this twice.
How broker can allow placing such bid? What kind of retard create ATS,where placing such a bid is possible? And what a f** is wrong with those people to step in same sh**t over and over again?
and why they can wak away from it and i have waste my time, trying to get out clean from following situation?
Here is the info from nasdaq-
7/2007 17:19:16 ET Pursuant to rule 11890(b), NASDAQ, on its own motion, will cancel all trades more than 10% away from today's closing price for the stocks listed below executed from 4:04 to 4:16 p.m. ET. This decision cannot be appealed. MarketWatch has coordinated this decision with other UTP Exchanges. NASDAQ will be canceling trades on the participantâs behalf. The stocks affected are as follows: ZTR at or below $4.32,ACG at or below $7.33,NVD at or above $0.74,IMR at or above $0.46 ,PYX at or above $19.97,CHAP at or above $94.26 & DCEL at or above $13.89. All trades in BKT & TSI were filed in error and no ruling will be made.
09/07/2007 16:40:08 ET NASDAQ MarketWatch is investigating potentially erroneous transactions involving the following securities executed between 16:04:00 and 16:14:00 ET "DCEL,CHAP,TSI,PYX,IMR,NVD,ACG,BKT & ZTR". MarketWatch will advise with details as soon as available. Participants should review their trading activity for potentially erroneous trades and request adjudication through the Clearly Erroneous process within the applicable timeframe for filing pursuant to the rule.
Anyway-itâ not a my problemâ¦.my problem tonight is IB, with following email-
Margin Call for Interactive Brokers Account XXXX0X1
Dear IB Customer:
This NOTICE constitutes a MARGIN CALL to you. As of the close of trading today, your Interactive Brokers securities trading account is in margin deficiency in the amount of USD 445237.36. In order to return the account to normal trading status, the account must be brought back up to required margin levels. Please note that the margin deficit of USD 445237.36 may increase or decrease based on changes in the market prices for the positions in your account.
Pursuant to the terms of the Interactive Brokers Customer Agreement, at or near the open of the next trading session in the instruments in your portfolio, we may attempt to liquidate positions in your account in order to resolve the margin deficiency. Alternatively, you may reduce positions in your account to decrease the margin requirement. You may also wire funds to your account pursuant to the wire transfer procedures specified on the Interactive Brokers website (www.interactivebrokers.com), but if these funds are not received and credited by the open of the next trading session, we may liquidate positions in your account as specified above.
If there are any questions, please contact Interactive Brokers Customer Service and ask for the Trade Desk team.
Interactive Brokers
Nowâ¦the trades been busted of course. But even if they didnât, how to h** I can face a margin call, if I have a few millions in unrealized profits? and if they did remove trades-how IB valuate my account to come up with margin call? there is absolutely nothing wrong wit acc. cash level is positive @ 19:59 PM EST, there is no short positions of any kind(if it make any sense)
I got trades busted in about a hour after fill. I got this email @ 19:45 PM EST and no one pick the line at trading desk @ IB..
All Iâm trying to say here that IB auto liquidation system is very far from perfect. What is wrong to call me to clarify the situation?
Likely, first thing in Monday morning, I have to contact European office and ask them not to liquidate my holdings and pray from thereâ¦..
Apparently , shorting this size triggered margin. You can't short an infinite amount of stock, you realize that of course.
I would ASSUME that since the trade was busted there would be no call.
lol, I didnt see these trade real time but sure as shit, there were tons of them
100,000 for 2000 size no less.
What a joke.
I would ASSUME that since the trade was busted there would be no call.
lol, I didnt see these trade real time but sure as shit, there were tons of them
100,000 for 2000 size no less.
What a joke.
You didn't get caught in IB's auto liquidation. That email was an automatic warning sent out by IB's margin software. It does not mean you are going to be liquidated. As you said, there is no reason your account should be liquidated. Don't worry, it won't be.
Auto liquidation would mean they actually sold you out of some of your positions. IB doesn't do this in afterhours trading. And they won't on Monday because those trades were cancelled. You have nothing to worry about.
And you must admit that the situation you were in was rather bizarre, selling to a bid of $100,000. I am not surprised that IB's software automatically tagged this.
On a similar note, suppose you do short 100 shares of a stock at $100,000, when it should be trading at $10. What kind of margin requirements are involved in this trade? Because instantaneously you have made about $10,000,000. So it seems like there should be no margin requirements in this scenario. However, it can't be that simple, can it? Anyone care to explain?
Yes, but then why would IB allow the trade in the first place? IB always displays a dialog box saying "trade rejected because of margin" when you try to place a trade which requires too much margin. It seems like this trade was allowed initially because it did not violate margin limits. Only when the trade was busted did IB send out the auto margin call. It is just odd.
i was puzzled with same question. how they come up with margin call 2 hours after bust? hope someone from IB will clarify this to us tomorrow. I also interested to hear, how process of auto liquidation will work in case, where there is no bid and ask is presented on position, that was about of being liquidated? corp. bonds for example. i have them on this account. is IB going to place order at some price on market? or they just going to buy bonds to themselves?
Auto liquidation only happens during normal market hours. I am not sure about your corporate bonds - hopefully IB's auto-liquidator would liquidate positions in order of liquidity available. But this is just theoretical anyway, since you won't get auto-liquidated tomorrow.
If your account were trully going to be liquidated (which it is not), I suspect IB would not mess around and would take any bid or ask it could get on illiquid positions.
My theory on why you got the margin call email is because IB probably cancelled your short trade by booking the opposite trade - i.e., buying 100 shares at $100,000. This buy trade would require $10,000,000 and so it must have triggered the margin call e-mail. However, you do not actually have a margin call.