One of the nice features of IB is that they allow you to short OTCBB penny stocks. Obviously, when trading these stocks, the spread is typically about 10% wide, so you would never want to cross it unless desperate or chasing a move. Place your limit orders and wait to get filled. Worked fine for at least 10 years.
Now (within the last couple weeks) they claim they are "forced" to make users adhere to the min. quotation order sizes for all orders as outlined here: http://finra.complinet.com/en/display/display_main.html?rbid=2403&record_id=14724.
I.e., no non-marketable orders allowed smaller than these min sizes. This is total BS, as these rules are strictly for registered market-makers, not for inidivdual traders. Anyway, it wouldn't be a deal-breaker if there were exceptions made for partial fills and for closing out positions. But there aren't any. If you put 2,500 shares (min. size) of a $0.40 stock on the offer and get filled on only 2,000 of it, you are now screwed. You can either lift the offer for 2,000 shares (if that size even exists) and take a huge loss, or you can place an order to short no fewer than 2,500 more shares and then, if filled, place an order to buy back the whole 4,500 shares on the bid, hoping again that you do not get a partial fill and are forced to lift the offer with the remainder.
What a joke. They say that Citadel kept complaining to them about small limit orders, and they gave in. With the risk of partial fills, they essentially have made all OTCBB penny stocks untradeable -- long or short. I've defended IB several times in this forum, but this is one of the most client-unfriendly policies I have seen.
Does anyone think there is a chance they will reverse this decision? Also, what other brokers are good for shorting penny stocks ($0.10-$1.00)? This is not my core strategy, btw, but it is part of what I do.
Now (within the last couple weeks) they claim they are "forced" to make users adhere to the min. quotation order sizes for all orders as outlined here: http://finra.complinet.com/en/display/display_main.html?rbid=2403&record_id=14724.
I.e., no non-marketable orders allowed smaller than these min sizes. This is total BS, as these rules are strictly for registered market-makers, not for inidivdual traders. Anyway, it wouldn't be a deal-breaker if there were exceptions made for partial fills and for closing out positions. But there aren't any. If you put 2,500 shares (min. size) of a $0.40 stock on the offer and get filled on only 2,000 of it, you are now screwed. You can either lift the offer for 2,000 shares (if that size even exists) and take a huge loss, or you can place an order to short no fewer than 2,500 more shares and then, if filled, place an order to buy back the whole 4,500 shares on the bid, hoping again that you do not get a partial fill and are forced to lift the offer with the remainder.
What a joke. They say that Citadel kept complaining to them about small limit orders, and they gave in. With the risk of partial fills, they essentially have made all OTCBB penny stocks untradeable -- long or short. I've defended IB several times in this forum, but this is one of the most client-unfriendly policies I have seen.
Does anyone think there is a chance they will reverse this decision? Also, what other brokers are good for shorting penny stocks ($0.10-$1.00)? This is not my core strategy, btw, but it is part of what I do.
