Interactive Broker negative account balance EUR/CHF customer group...

[loyek590]

Relying on a safety net which is advertised and stated in marketing material, as well as directly referred to on IB's website in the form of automatic and real time account monitoring for margin requirements, and automatic and real time liquidation of positions when excess liquidity turns negative, is not asking for a bail out. It's one of the reasons I chose IB. Buried within their terms and conditions states that it's a right, not an obligation, for IB to enforce this. IB not exercising their right to protect themselves and their clients is the basis of my argument.
It's unlikely anyone here is disputing loosing their accounts. It's the size of the negative balances, as a direct result of the failure of IB's advertised risk management algorithms that people have problems with.

I hear ya, there's nothing immoral about fighting for your money. Lord knows that's what ib would do. I think all of us expect that if our computer went down and something bad happened we would be auto liquidated when we dropped below margin. But this is a special case. In my opinion, ib did their job. The problem was there was nobody to sell eur.chf to when they auto liquidated. I haven't heard if they are going to treat this as a non precedent setting special case. I think for public relations they ought to share the negative balance with you 50/50. Wipeout? I don't know, they are business after all and they have bills to pay just like anybody else.

 

[luisHK]

Relying on a safety net which is advertised and stated in marketing material, as well as directly referred to on IB's website in the form of automatic and real time account monitoring for margin requirements, and automatic and real time liquidation of positions when excess liquidity turns negative, is not asking for a bail out. It's one of the reasons I chose IB. Buried within their terms and conditions states that it's a right, not an obligation, for IB to enforce this. IB not exercising their right to protect themselves and their clients is the basis of my argument.
It's unlikely anyone here is disputing loosing their accounts. It's the size of the negative balances, as a direct result of the failure of IB's advertised risk management algorithms that people have problems with.

Again the same reaction from IB can save accounts from going into large negative balance in a temporary crash. And what price would you expect to get under automatic liquidation during the eurchf crash if they had to liquidate lots of accounts with hardly anyone on the bid ? Possibly (probably) worse. At what price did you finally close your position ?
For the record I lost a significant amount that day, and possibly more than necessary because of IB safety features in a fast moving market, but forced liquidation on all margin deficient account short the CHF sounds like a disaster, no doubt many would have ended up with large negative balances as well.

 

[Snbmess]

IB has not done anything...except employing you

 

[EURCHF]

Follow up question:
Any IB clients willing to share what their stop level was, what fill they received and what the trading size was?
Most interested in FX EUR/CHF rather than futures, but both would help.
Thanks for sharing. If you want the info to stay private and anonymised within the user group then mail me
ib.snb.eurchf@gmail.com

 

[jamelliott]

There was plenty of time to force a liquidation upon maintenance margin violation. The move from 1.20 to 1.10 took roughly 5 minutes, during which time my, and many other accounts would have been negative. If the auto liquidate risk management algo works in real time and is indeed automatic, the worst possible outcome withing that first five minutes would have be a liquidation at the low around 1.0550. If accounts were liquidated within the first few minutes, the worst possible liquidation would have been around 1.10. I would expect any advertised real time and automatic risk management algorithm to act in real time, and automatically. The worst case scenario liquidation within the first five minutes after the move would have saved tens of thousands of dollars. IB liquidating all it's negative excess liquidity accounts would have had a nominal effect on the plunging EUR/CHF given global selling volumes at that time.

And no, Loyek590, you as a client of IB are not bailing out any clients with negative accounts. If you are actually a client of IB, then the $120M hit that IB took with it's exposure to negative client accounts (which represents less than 3% of IB's capital), would come out of corporate profits. However, I'm assuming that they will indeed recover a significant portion of this number. As someone who lost a sizable piece of their net worth, which I accept and risked upon the assumption of this risk, am not worried about a couple basis points of corporate profits for the sake of accepting some customer service rep's excuse that they decided not to be protecting themselves or their clients at that particular time.

 

[just21]

One of the options when you call IB is to speak to the margin department. They told me that auto liquidation takes place at 3.45pm EST. Initial margin requirement greater than net liq does not mean liquidation. It is excess liquidity that should be positive.

 

[luisHK]

Jamelliott, can you post a eurchf chart from IB, than as well other brokers if you feel they show slowlier crash ?
When I noticed the chf move eurchf was already around 1.05, I'm a bit surprised the move would have been that slow, and with liquidity.

There was plenty of time to force a liquidation upon maintenance margin violation. The move from 1.20 to 1.10 took roughly 5 minutes, during which time my, and many other accounts would have been negative. If the auto liquidate risk management algo works in real time and is indeed automatic, the worst possible outcome withing that first five minutes would have be a liquidation at the low around 1.0550. If accounts were liquidated within the first few minutes, the worst possible liquidation would have been around 1.10. I would expect any advertised real time and automatic risk management algorithm to act in real time, and automatically. The worst case scenario liquidation within the first five minutes after the move would have saved tens of thousands of dollars. IB liquidating all it's negative excess liquidity accounts would have had a nominal effect on the plunging EUR/CHF given global selling volumes at that time.

And no, Loyek590, you as a client of IB are not bailing out any clients with negative accounts. If you are actually a client of IB, then the $120M hit that IB took with it's exposure to negative client accounts (which represents less than 3% of IB's capital), would come out of corporate profits. However, I'm assuming that they will indeed recover a significant portion of this number. As someone who lost a sizable piece of their net worth, which I accept and risked upon the assumption of this risk, am not worried about a couple basis points of corporate profits for the sake of accepting some customer service rep's excuse that they decided not to be protecting themselves or their clients at that particular time.

 

[luisHK]

Not sure where but this chart is already on this website btw, maybe someone can post it or link it here

 

[loyek590]

There was plenty of time to force a liquidation upon maintenance margin violation. The move from 1.20 to 1.10 took roughly 5 minutes, during which time my, and many other accounts would have been negative. If the auto liquidate risk management algo works in real time and is indeed automatic, the worst possible outcome withing that first five minutes would have be a liquidation at the low around 1.0550. If accounts were liquidated within the first few minutes, the worst possible liquidation would have been around 1.10. I would expect any advertised real time and automatic risk management algorithm to act in real time, and automatically. The worst case scenario liquidation within the first five minutes after the move would have saved tens of thousands of dollars. IB liquidating all it's negative excess liquidity accounts would have had a nominal effect on the plunging EUR/CHF given global selling volumes at that time.

And no, Loyek590, you as a client of IB are not bailing out any clients with negative accounts. If you are actually a client of IB, then the $120M hit that IB took with it's exposure to negative client accounts (which represents less than 3% of IB's capital), would come out of corporate profits. However, I'm assuming that they will indeed recover a significant portion of this number. As someone who lost a sizable piece of their net worth, which I accept and risked upon the assumption of this risk, am not worried about a couple basis points of corporate profits for the sake of accepting some customer service rep's excuse that they decided not to be protecting themselves or their clients at that particular time.

that's like saying raising the min wage won't hurt the consumer, it will all just come out of corporate profits. And I am an ib consumer. I buy their service everyday. But that aside, exactly what wrong doing are you accusing ib of doing? Are you saying they saw your account going down and decided not to liquidate because they were betting it would come back?

 

[d08]

There was plenty of time to force a liquidation upon maintenance margin violation. The move from 1.20 to 1.10 took roughly 5 minutes, during which time my, and many other accounts would have been negative. If the auto liquidate risk management algo works in real time and is indeed automatic, the worst possible outcome withing that first five minutes would have be a liquidation at the low around 1.0550. If accounts were liquidated within the first few minutes, the worst possible liquidation would have been around 1.10. I would expect any advertised real time and automatic risk management algorithm to act in real time, and automatically. The worst case scenario liquidation within the first five minutes after the move would have saved tens of thousands of dollars. IB liquidating all it's negative excess liquidity accounts would have had a nominal effect on the plunging EUR/CHF given global selling volumes at that time.

And no, Loyek590, you as a client of IB are not bailing out any clients with negative accounts. If you are actually a client of IB, then the $120M hit that IB took with it's exposure to negative client accounts (which represents less than 3% of IB's capital), would come out of corporate profits. However, I'm assuming that they will indeed recover a significant portion of this number. As someone who lost a sizable piece of their net worth, which I accept and risked upon the assumption of this risk, am not worried about a couple basis points of corporate profits for the sake of accepting some customer service rep's excuse that they decided not to be protecting themselves or their clients at that particular time.

If you studied IB's liquidation procedures, you'd know that after reaching forced liquidation levels in your account, IB gives you 10 minutes to rectify the situation. I for one like and appreciate that they do this. Immediate liquidation would be a disaster for many accounts.
Traders have no-one to blame but themselves in this freak move.