IB Margin Changes

[JackR]

Quote from Options12:IBsoft, quick follow-up question on the above, are you saying that IB does not have any record of when TH has executed the opposite side of an IB customer trade (auto liq or otherwise)?

Options12:

From the IB statement:

6. IB accepts liquidity rebates from Alternative Trading Systems and exchanges for certain orders. IB receives payment for some option orders pursuant to exchange-mandated marketing fee programs or other arrangements. IB does not generally accept payment for order flow for security futures orders. To the extent permissible under exchange rules, IB may direct customer stock, option, futures, or security futures orders to its market making affiliate Timber Hill LLC, or to another affiliate, for execution. In such cases IB's affiliate may act as principal in the resulting transaction and may earn a profit or incur a loss in connection with the transaction. The source and nature of any compensation received by IB in connection with any transaction is available upon written request of the customer. For further information, check the IB website or email help@interactivebrokers.com.

7. For security futures trades, if not already indicated on this statement, information about the time of any transaction, the identity of the counterparty to the transaction, and whether IB is acting as agent or principal, as agent for the counterparty, as agent for both parties to the contract, or as principal, and if acting as principal, whether the transaction was a block transaction or an exchange for physicals transaction, will be available upon written request of the customer.

Similar disclosures have been on broker's statements since I have been trading.

Jack

 

[jayre]

Quote from SideShowBob:

If you don't like the way IB does liquidations, either go to another broker or stop using too much leverage! How is this IB's problem?

IB does not have a monopoly, go to another broker. I suggest you try MF Global, they won't auto-liquidate you....

I don't have a problem, because since I know the traps & conflict of interest at IB, I almost never use leverage at IB. (if I want to use margin I use another broker and I gladly pay 4%).

The problem is for the new IB clients that are getting atracted to IB, because they see an ad how they will get some free fed money for 1.3%. These people will wake up and get hit hard next time IB suddenly change the margin rules, or when there will be the next flash crash and they will see their options liquidated when there is a $10 spread.

Look, you and I may understand how dangerus margin on IB is (these guys at IB are even promoting portfolio margin, that's crazy), I would guarantee that there is tons of new IB clients that don't realize that risk, but IB dosent care since they are profiting of those clients..

 

[jayre]

Quote from jayre:

If an options is getting liquidated , and TH has a bid of 5.50 on the NYSE while GS has a bid for the same 5.50 on ARCA. Where will the order be routed to??

IB soft would respond to this simple question please?

 

[Options12]

Quote from JackR:



From the IB statement:

To the extent permissible under exchange rules, IB may direct customer stock, option, futures, or security futures orders to its market making affiliate Timber Hill LLC, or to another affiliate, for execution. In such cases IB's affiliate may act as principal in the resulting transaction and may earn a profit or incur a loss in connection with the transaction. The source and nature of any compensation received by IB in connection with any transaction is available upon written request of the customer. For further information, check the IB website or email help@interactivebrokers.com.

Jack, thanks for posting that statement.

The statement you cite is the reason I have asked IBsoft to clarify answer #3. It would seem that IB probably does "track" the orders (and any incurred profit or loss) in transactions that involve TH. This would include transactions resulting from auto liquidation events.

It would also seem that the details of these transactions would be available to customers upon request.

 

[jayre]

Quote from Options12:

Jack, thanks for posting that statement.

The statement you cite is the reason I have asked IBsoft to clarify answer #3. It would seem that IB probably does "track" the orders (and any incurred profit or loss) in transactions that involve TH. This would include transactions resulting from auto liquidation events.

It would also seem that the details of these transactions would be available to customers upon request.

It seems those IB spokespeople (Ids, Def, Ibsoft) are only here as long as they could give this half truth-misleading statments or to bully those who criticize IB, once you start asking some direct factual questions, these people are nowhere to be found....

 

[stock777]

I have an suggestion for you margin junkies, just borrow all that cash from you local Bank, and trade at IB with no margin.

Then when you blow up, you'll owe the bank the money and IB won't care.

 

[jayre]

Quote from stock777:

I have an suggestion for you margin junkies.

You are misguided, we are not margin junkies. To the contrary, what I'm saying that people should stay at ib , JUST STOP USE MARGIN AT IB, that way IB can be even safer.
Is that not a good idea?

 

[def]

Quote from jayre:

It seems those IB spokespeople (Ids, Def, Ibsoft) are only here as long as they could give this half truth-misleading statments or to bully those who criticize IB, once you start asking some direct factual questions, these people are nowhere to be found....

jayra, you've gone well beyond the facts and you and your alter ego are somewhere in la la land with your conspiracy theories.

There have been no mis-leading statements and we've gone well beyond the call of duty to explain things when there is a hell of a lot more going on to keep us occupied. I'm sorry, but to me you are the little boy who cried wolf. We all have better thing to do with our time. Ciao

 

[Options12]

DEF I was hoping they sent you to Macau to chill out for a few days. But anyway, this post is for IBsoft.

Quote from IBsoft:

1) Yes, the auto-liq software has the capability to use combinations/strategies.

But to reduce margin in (for example) a customer portfolio margin account, where positions are margined based on class groups, the auto liquidation software would have to execute legs simultaneously.

And to be fair to the customer, the software would have to allow the customer to retain the ability to execute both sides of each class group when a margin call is in effect, rather than being blocked from trading due to the fact that the only way to reduce margin would be to execute both sides simultaneously.

Are you saying that the IB auto liquidation software auto liquidates (and allows the customer to liquidate) in an orderly class-group by class-group manner rather than rip through the positions the way you might auto liquidate a standard Reg T portfolio

Can you comment a little more on this issue?



2) We have various circuit-breakers that monitor (i) portfolio value and margin value jumps on the individual accounts level and system-wide level, as well as (ii) number of recent auto-liquidation trades, attempts, account deficits and similar. These breakers can suspend the auto-liquidation process. When that occurs, human review takes place.



Do the breakers ever preempt an auto liquidation or do they only suspend an auto liquidation that is underway?

How much time does the IB auto-trading software give the circuit-breakers to review the data described in (i) and (ii) and then give an "all-clear" before the auto liquidation trigger is pulled? Is it one-tenth of a second, 10 minutes, or something in between?

Quote from IBsoft:


3) We do not track the instances when TH takes the opposite side of a liquidated order. We do not know whether they amount to a profit, or a loss. The auto-liquidation trades represent a tiny fraction of the total number of trades IB executes a day.

IBsoft, quick follow-up question on the above, are you saying that IB does not have any record of when TH has executed the opposite side of an IB customer trade (auto liq or otherwise)?

Or just that such info is not available for disclosure to the IB customer?

 

[jayre]

Quote from def:

jayra, you've gone well beyond the facts and you and your alter ego are somewhere in la la land with your conspiracy theories.

There have been no mis-leading statements and we've gone well beyond the call of duty to explain things when there is a hell of a lot more going on to keep us occupied. I'm sorry, but to me you are the little boy who cried wolf. We all have better thing to do with our time. Ciao

Def, look I have never atacked you personally, even on your firm IB I repeatatly said that they offer a great product as long you are not using margin. Its not nice for you to post some cheap personal attacks, let's keep this conversation professional.

So let me repeat my simple question..
Would you go on the recard stating the Timbar Hill has not been PROFITING from buying options/futures from IB accounts that got liquidated on the bid price or distrased price (however you want to call it) and then selling it back in the marketplace?
Its a simple question yes or no, you answering this question straight forward, would be much more productive then to atack me personally.