IB provided false market data, can I claim compensation?
- Thread starter Randalli
- Start date
How do you calc? Something isn't fitting, IMO.
How would a higher number trigger your stop loss early?
I don't think anyone is going to understand this unless you provide all the details of the trade.
But setting aside the details, for the sake of discussion, I'll assume that the following facts are true: that somehow IB provided inaccurate market data, and that the inaccuracy somehow triggered a contingent order that should not have been triggered, and that you somehow suffered economic harm as a direct result.
If you are paying for market data, as a separate product, i.e., it is not bundled into some sort of package where you cannot isolate the specific monthly cost of your access to market data...
Then you may have a claim. If you are paying for market data, then there is a written agreement somewhere that explains what you are paying for and how you may use it. And that written agreement will determine whether you have a claim for damages.
It probably has a clause that says they are not liable for incidental or consequential damages, and that their liability is limited to the amount you have paid for the data. But those kinds of disclaimers do not always hold up. Your case will be stronger if you can show that the provider was negligent. And even stronger still if you can show gross negligence.
But first you gotta study the agreement and figure out who the other party is. Is your agreement with IB or with some other party that is not a broker/dealer, but rather a data service provider?
I don't think anyone is going to understand this unless you provide all the details of the trade.
But setting aside the details, for the sake of discussion, I'll assume that the following facts are true: that somehow IB provided inaccurate market data, and that the inaccuracy somehow triggered a contingent order that should not have been triggered, and that you somehow suffered economic harm as a direct result.
If you are paying for market data, as a separate product, i.e., it is not bundled into some sort of package where you cannot isolate the specific monthly cost of your access to market data...
Then you may have a claim. If you are paying for market data, then there is a written agreement somewhere that explains what you are paying for and how you may use it. And that written agreement will determine whether you have a claim for damages.
It probably has a clause that says they are not liable for incidental or consequential damages, and that their liability is limited to the amount you have paid for the data. But those kinds of disclaimers do not always hold up. Your case will be stronger if you can show that the provider was negligent. And even stronger still if you can show gross negligence.
But first you gotta study the agreement and figure out who the other party is. Is your agreement with IB or with some other party that is not a broker/dealer, but rather a data service provider?
No, that's not what it means.
Maybe. But gross negligence alone is not enough to create liability. Any claim that the broker or data provider is liable is going to be a claim for breach of contract. And if you are not paying for the data, then there is no contract. You get what you pay for. If you're not paying for it, then the broker has not obligation or duty to provide the data at all, and that means that they may not be liable if it is inaccurate.
If it is bundled with something else, one can still argue that the data is provided to the customer as a part of a contract. But I think the claim is a lot weaker when you cannot point to a specific monthly fee. The broker is going to point to something in their TOS that says that market data is provided as is, with no guarantees of accuracy.
If the TOS explicitly states that the data is provided at no charge, then I think any claim for damages is extremely weak.
If I give you a wristwatch as a gift for your birthday, and it doesn't work right, and as a result of the malfunction, you are late for a train, and because you are late for a train, you miss out on a fantastic real estate deal and you lose a bazillion dollars, you can't sue me. I gave you a gift and it didn't work. I never promised you anything, and you didn't give me anything in return. Sorry about your luck.
But if I sold you the watch, that's a different state of affairs. You now have something that at least has the bare elements of a contract, and there is an implied warranty of suitability, i.e., that if I sell you a timepiece, it is reasonable for you to expect that it will display the correct time, and if it doesn't, then I might be liable.
I would be amazed to hear that IB hasn't covered their asses regarding to quality of the data, regardless if it's paid or not. That would effectively expose them to infinite liability because of some code bug. Only thing they are going to suffer is the loss in reputation (and indirectly loss in revenue) as a data provider if enough word gets around that their data isn't reliable.
you can check the market data for SPY on December 15th
My market data platform shows the low on 15/12 as 468.44.
However, I have noticed that their data is subject to revision. So I can check their prices immediately after the close and get a OHLC prices - but a few hours later some of these values will be revised. Obviously this usually means a different Close price but if the daily High or Low has also changed due to price action in the interim period, these can also be different. I assume this is because the company is under commercial pressure to issue data not much later than other competing providers, and they are willing to take the risk arising from their inital price data release being slightly different to the final release.
However, I have noticed that their data is subject to revision. So I can check their prices immediately after the close and get a OHLC prices - but a few hours later some of these values will be revised. Obviously this usually means a different Close price but if the daily High or Low has also changed due to price action in the interim period, these can also be different. I assume this is because the company is under commercial pressure to issue data not much later than other competing providers, and they are willing to take the risk arising from their inital price data release being slightly different to the final release.