IB customers lose $88m trading WTI crude

329200-There are comments here I feel are important to correct. Futures do not use Portfolio Margin, they use exchange SPAN margin which is much different. SPAN margin adapts to current risk while OCC PM does not change often and relies on house rules of the clearing member to adapt to current risk. As an example, ES future now requires $13,200 while not long ago that requirement was well under $9000. The % of notional value jumped from under 5% to over 9%. The OCC requirement for shocking equities is still 15% and SPX is still -8%/+6%. The requirements you speak of are house rules to manage risk by the clearing brokers. They can be more restrictive at the whim of the risk/credit department. SPAN margin for futures do not often change intraday as they are used for EOD calculations.
 
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Robert Morse said:
329200-There are comments here I feel are important to correct. Futures do not use Portfolio Margin, they use exchange SPAN margin which is much different. SPAN margin adapts to current risk while OCC PM does not change often and relies on house rules of the clearing member to adapt to current risk. As an example, ES future now requires $13,200 while not long ago that requirement was well under $9000. The % of notional value jumped from under 5% to over 9%. The OCC requirement for shocking equities is still 15% and SPX is still -8%/+6%. The requirements you speak of are house rules to manage risk by the clearing brokers. They can be more restrictive at the whim of the risk/credit department. SPAN margin for futures do not often change intraday as they are used for EOD calculations.
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Hi Robert thanks for the clarification, what I had referred to is mentioned in the link below:
https://www.cmegroup.com/notices/clearing/2020/04/Chadv20-160.html#pageNumber=1
At TD Ameritrade the risk model used was the old SPAN as it did not account for negative pricing. Was it updated at Lightspeed?
 
I was aware of the change to allow negative prices but our clients were held to the same margin requirement as the SPAN file loaded that day. "New Release” SPAN files and settlement price files already reflect such prices." BTW, the margin is set for us by Wedbush futures and Lightspeed/Lime and Wedbush Futures monitor risk.

329200 said:
Hi Robert thanks for the clarification, what I had referred to is mentioned in the link below:
https://www.cmegroup.com/notices/clearing/2020/04/Chadv20-160.html#pageNumber=1
At TD Ameritrade the risk model used was the old SPAN as it did not account for negative pricing. Was it updated at Lightspeed?
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Interactive Brokers foresees refunding $18,815 for the Nymex ones and $37,630 for ICE’s, according to a spokesman.

Now will all the other FCM's that had a similar occurrence with failed trading systems step up and do the same?
 
redart88 said:
Interactive Brokers foresees refunding $18,815 for the Nymex ones and $37,630 for ICE’s, according to a spokesman.

Now will all the other FCM's that had a similar occurrence with failed trading systems step up and do the same?
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IBKR messed up big time, but they acknowledge their mistakes. Hats off for that.
By this they avoid long legal battle with ongoing negative publicity and they also keep us traders who got caught in this due to their negligence as customers with decent volume and commissions.
In my case they will make that compensation back within 2-3 years as commission, given that my trading volume remains around the level i did before.
And furthermore even if they didn't compensate, they wouldn't be able to recover most of it (think of that guy with - 9M...).

I hope other FCMs whose systems were flawed and not able to handle negative prices or miscalculating margin will follow IBKR and do the same.

One question, that hasn't been answered but seems very important to me:
"Who was on the other side of those trades?"
My impression is that this slide in CL was orchestrated to manipulate into the crazy low settlement.... I hope the CTFC will look into this.
I would not be surprised if someone had a lot of Wti and QM short and did sell down CL into settlement only to cover CL shortly after...
 
nwk3 said:
I bought a QM contract at a price of 0.15 and could not close at a negative price in IB. And they did not cover me on margin call. Lost all the money, my account is below zero.
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@nwk3 You only lost $75 on this caper. Did you get money credited to your IB account yet?
 
Tps said:
IBKR messed up big time, but they acknowledge their mistakes. Hats off for that.
By this they avoid long legal battle with ongoing negative publicity and they also keep us traders who got caught in this due to their negligence as customers with decent volume and commissions.
In my case they will make that compensation back within 2-3 years as commission, given that my trading volume remains around the level i did before.
And furthermore even if they didn't compensate, they wouldn't be able to recover most of it (think of that guy with - 9M...).

I hope other FCMs whose systems were flawed and not able to handle negative prices or miscalculating margin will follow IBKR and do the same.

One question, that hasn't been answered but seems very important to me:
"Who was on the other side of those trades?"
My impression is that this slide in CL was orchestrated to manipulate into the crazy low settlement.... I hope the CTFC will look into this.
I would not be surprised if someone had a lot of Wti and QM short and did sell down CL into settlement only to cover CL shortly after...
More...

Cushing was only 70% full according to the BP ceo on Bloomberg so someone with an account at one of the big clearers that accept delivery must have made a fortune.
 
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