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IB changes margin rules abruptly without informing
- Thread starter gmst
- Start date
Quote from sprstpd:
The fact that you are depending on using their margin calculations to auto-cancel your orders is a recipe for trouble. That is my point.
After today's experience, I agree with what you are saying. But this is such a fundamental behavior to expect. I mean this is serious.
If IB can fail this check, what it means is that IB is allowing its customers to buy ES with less than initial margin. How much less is the question? Can a person buy 1 ES contract for 100$ in his margin, or maybe for 1$ in margin, or maybe for 1 cent in margin? Its obviously a coding error which needs to be corrected ASAP.
Taking the example of 1 cent, someone can buy 100,000 contracts with 1000$ in their account which will be sufficient to cause flash cras/flash spike!
Quote from gmst:
After today's experience, I agree with what you are saying. But this is such a fundamental behavior to expect. I mean this is serious.
If IB can fail this check, what it means is that IB is allowing its customers to buy ES with less than initial margin. How much less is the question? Can a person buy 1 ES contract for 100$ in his margin, or maybe for 1$ in margin, or maybe for 1 cent in margin? Its obviously a coding error which needs to be corrected ASAP.
Taking the example of 1 cent, someone can buy 100,000 contracts with 1000$ in their account which will be sufficient to cause flash cras/flash spike!
I am pretty sure that there would be "fat finger" limits on an account that would prevent the more extreme cases you state here. I am pretty sure that with Global Futures you are limited to 20 contracts per order. I'm not trading 20, so I don't know, but they do have a disclaimer stating that accounts are subject to the "fat finger" limit and that 20 is it.
That's common with IB and it gets alot worse. On some spreads they calculate their margin req based on a liquidity algo that no customer service rep was able to provide to me despite doing huge volume. So the margin can double or triple on you without notice. How the f are your supposed to trade like this. I paid IB 800k in commish last year and i couldnt even get anyone higher up to tell me how to calculate the margin on those spreads. Needless to say, they lost half of my business but i am sure they couldnt care less.
/rant
/rant
Quote from rallymode:
That's common with IB and it gets alot worse. On some spreads they calculate their margin req based on a liquidity algo that no customer service rep was able to provide to me despite doing huge volume. So the margin can double or triple on you without notice. How the f are your supposed to trade like this. I paid IB 800k in commish last year and i couldnt even get anyone higher up to tell me how to calculate the margin on those spreads. Needless to say, they lost half of my business but i am sure they couldnt care less.
/rant
Thanks for sharing your experience! So, others have experienced variants of this problem. Over the last 3 yrs, I probably paid 10k in commissions to IB, so I am a piker-squared compare to you as far as my importance to IB business is concerned. I have decided I won't go and fight with them for 50$, primarily because I consider the probability of them paying me back to be less than 1%. It will just leave bad taste in my stomach (at least now it is only in my mouth).
Quote from gmst:
I have decided I won't go and fight with them for 50$, primarily because I consider the probability of them paying me back to be less than 1%.
Actually my experience has been that IB will compensate for wrongdoing if it is their fault. Plus if you pursue this it might give a valid explanation of why everything happened like it did.
Which broker did you found comparable to IB, and if they are good why do you still keep 50% with IB? In general I agree that IB is the worst possible broker when it comes to margin requirements/changes/issues etc.
Quote from rallymode:
That's common with IB and it gets alot worse. On some spreads they calculate their margin req based on a liquidity algo that no customer service rep was able to provide to me despite doing huge volume. So the margin can double or triple on you without notice. How the f are your supposed to trade like this. I paid IB 800k in commish last year and i couldnt even get anyone higher up to tell me how to calculate the margin on those spreads. Needless to say, they lost half of my business but i am sure they couldnt care less.
/rant
Quote from gmst:
1) Earlier, TWS didn't use to execute an order if after execution, it will result into a margin call.
Orders that are live on the exchange, green, cant always be checked just before execution by IB.
IB seems to have some periodic program that checks your open orders against margin, how often this runs i dont know. But in between checks you could go slightly over margin and be bought back in line with a liquidation if you did go over.
I think there should be some flexibility in allowing multiple resting orders that could occasionally take an account over margin.
This is different from trying to buy 100,000 contracts which is way over margin and will get rejected at the initial order submit time and not get anywhere near the exchange.
Quote from macintash:
Which broker did you found comparable to IB, and if they are good why do you still keep 50% with IB? In general I agree that IB is the worst possible broker when it comes to margin requirements/changes/issues etc.
I clear alot of volume through Advantage. Better rates if you do volume and better margin but they are small. I am not comfortable being a large percentage of their excess net capital.