If there was an error on IB's part that affected not only your trade, but many other people's trades that same day, you can't expect them to be able to resolve the situation quickly. Many many years ago there was an outage on Istinet that caused the status of many orders to be unknown for about half the trading day. I called IB and was informed that I was flat and that my orders were not active. But fills started coming in later during the afternoon on orders that I had entered in the pre-market session. If I had been told my orders were still good by IB, I would have taken action earlier in the morning to flatten the positions. I lost a significant sum of money that day and complained to IB about it. It took them more than a month (probably because many customers were affected), but I was eventually made whole. Good luck.
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Interactive Brokers and automatic liquidation
- Thread starter newwurldmn
- Start date
If there was an error on IB's part that affected not only your trade, but many other people's trades that same day, you can't expect them to be able to resolve the situation quickly. Many many years ago there was an outage on Istinet that caused the status of many orders to be unknown for about half the trading day. I called IB and was informed that I was flat and that my orders were not active. But fills started coming in later during the afternoon on orders that I had entered in the pre-market session. If I had been told my orders were still good by IB, I would have taken action earlier in the morning to flatten the positions. I lost a significant sum of money that day and complained to IB about it. It took them more than a month (probably because many customers were affected), but I was eventually made whole. Good luck.
Note: 2 active threads that queried IB policies have been closed and have been redirected here. The offending threads that are now closed are listed here:
http://www.elitetrader.com/vb/showthread.php?s=&postid=3360826#post3360826
Both threads contain a number of questions that were left unanswered by IB employees who post on ET. Both threads also contain a lot of useful trading info.
I hope that IB employees will continue this discussion and will reply to the unanswered questions here.
Here's one question not answered by IB specifically regarding auto liquidation:
Does IB have a daily "start time" for auto liquidations?
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Posted by Options12 on 11-07-11 11:09 PM:
Interactive Brokers Auto Liquidation
Newurldmn, let's wait for IB to confirm that they wait until 9:40 to start auto liquidation as stated by rtg in this thread.
There's apparently lots of confusion out there on the auto liquidation policy. On 5/7/10, the day after the flash crash, an apparent IB employee in programming proclaimed,
Many vigorously challenged this statement although I do not know whether it was ever retracted by IB within the ET forums.
http://www.elitetrader.com/vb/showthread.php?s=&postid=3360826#post3360826
Both threads contain a number of questions that were left unanswered by IB employees who post on ET. Both threads also contain a lot of useful trading info.
I hope that IB employees will continue this discussion and will reply to the unanswered questions here.
Here's one question not answered by IB specifically regarding auto liquidation:
Does IB have a daily "start time" for auto liquidations?
---------------------------------------------------------------------------------
Posted by Options12 on 11-07-11 11:09 PM:
Interactive Brokers Auto Liquidation
Quote from newwurldmn:
9:40 seems to be generous to me on IB's part. There's no worse time to put a margin call order than at 9:30. Especially in options. So if IB were trying to fuk you on a auto liquidation, they could take a lot more money out of you if they did it at 9:30.
Newurldmn, let's wait for IB to confirm that they wait until 9:40 to start auto liquidation as stated by rtg in this thread.
There's apparently lots of confusion out there on the auto liquidation policy. On 5/7/10, the day after the flash crash, an apparent IB employee in programming proclaimed,
Quote from ids:
We never auto-liquidate instantaneously. You always have 10 minutes to deal with a problem.
Many vigorously challenged this statement although I do not know whether it was ever retracted by IB within the ET forums.
Unanswered question from the now-defunct thread:
Should you close your IB accounts now?
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11-10-11 12:09 AM
Does anyone know if IB ever commented on this statement which suggests different liquidation rules for portfolio margin accounts?
Should you close your IB accounts now?
------------------------------------------------------------------------------------
11-10-11 12:09 AM
Quote from gkishot:
In the reference to the original post I don't think IB ever accepts long stocks as a margin for short ES, only cash. In case of portfolio margining when the risk is calculated on the entire portfolio I doubt the positions would have been liquidated.
In all fairness to IB.
Does anyone know if IB ever commented on this statement which suggests different liquidation rules for portfolio margin accounts?
GordonTheGekko
Guest
A few weeks ago, IB tightened up margin requirements. One of them was raising the min market cap past $250m per company (if I recall the number accurately).
During volatile times, restrictions are raised, but this isn't such a problem because you're generally going to make way more money anyways.
During volatile times, restrictions are raised, but this isn't such a problem because you're generally going to make way more money anyways.
In the old thread, "IB Margin Changes", IB employee IBsoft was clarifying a few points regarding IB's automatic liquidation software.
But the thread was closed before the discussion ended.
IBsoft, will you continue this discussion here? Sorry for the inconvenience.
------------------------------------------------------------------------------
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?
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?
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?
But the thread was closed before the discussion ended.
IBsoft, will you continue this discussion here? Sorry for the inconvenience.
------------------------------------------------------------------------------
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?
Quote from IBsoft:
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?
This question from "IB Margin Changes" was never answered.
IBsoft alluded to the potential for Price Improvement on behalf of customers' auto liquidation transactions. But it's unclear whether and how IB positions auto liquidation orders to benefit from Price Improvement Auctions.
---------------------------------------------------------------------------
11-04-11 10:01 PM
IB Soft, during an auto liquidation who initiates a price improvement auction?
Are all auto liquidation orders executed in such a manner that they may potentially benefit from a price improvement auction?
Thanks. Your participation here is very valuable to all of us trying to better understand auto liquidation.
IBsoft alluded to the potential for Price Improvement on behalf of customers' auto liquidation transactions. But it's unclear whether and how IB positions auto liquidation orders to benefit from Price Improvement Auctions.
---------------------------------------------------------------------------
11-04-11 10:01 PM
Quote from IBsoft:
The mechanics of improving the NBBO are such that a price-improvement auction is started. All market-makers can participate in the auction; the one with the best price gets to trade the broker's order.
IB Soft, during an auto liquidation who initiates a price improvement auction?
Are all auto liquidation orders executed in such a manner that they may potentially benefit from a price improvement auction?
Thanks. Your participation here is very valuable to all of us trying to better understand auto liquidation.
The comment below was posted by Interactive Brokers on the thread: "IB Margin Changes." The thread closed before I was able to reply.
------------------------------
def
Interactive Brokers
Registered: Dec 1999
Posts: 4193
11-03-11 07:52 AM
Thanks jackr for further spelling out the obvious.
Anyone think jayra = options12 ?
__________________
My reply was to be,
Def. Do not make another false statement about me.
Also, please try not to make any false statements on this forum and try to correct all false statements made by others that pertain to IB.
------------------------------
def
Interactive Brokers
Registered: Dec 1999
Posts: 4193
11-03-11 07:52 AM
Thanks jackr for further spelling out the obvious.
Anyone think jayra = options12 ?
__________________
My reply was to be,
Def. Do not make another false statement about me.
Also, please try not to make any false statements on this forum and try to correct all false statements made by others that pertain to IB.
Quote from GordonTheGekko:
A few weeks ago, IB tightened up margin requirements. One of them was raising the min market cap past $250m per company (if I recall the number accurately).
During volatile times, restrictions are raised, but this isn't such a problem because you're generally going to make way more money anyways.
Do You mean Timber hill making more money?
WARNING to Interactive Brokers FX Clients: Stops Triggering
I just suffered a loss from IB Stop-hunting behaviour.
I attribute this (based on my experience as a market maker for many years in FX products) to TimberHill's (IB's proprietary trading arm) FX trading practices. FX is not on-exchange, they don't need exchange verifiable prices to have traded in order to trigger your stops.
Issue: Stop/limit order left to buy AUDUSD at 1.0473
AUDUSD spiked up after RBA meeting today (3rd April2012), Simultaneously TWS logged itself off. We followed the FX pricing on Reuters D2 and Bloomberg, highest price was 1.0469 and 1.0470, so we knew that it was fine and we were not triggered.
After we are able to log back on (5 minutes later) we see that we have been triggered.. and AUDUSD is at 1.0417...
we immediately close the position at a loss of 0.0056 USD/AUD
We dispute that we should ever have been in this trade.
Note that as the Risk position is closed it is not a matter of cancelling the trade. If IB cancels the trade, they need to cancel also the trade that closed out the position, otherwise there is an open position that we dont know about.
Two issues that compound each other and underlie our dispute: The first issue is the legally important one.
1. The level 1.0473 never traded and was never bid in the true Interbank market. According to the IB Time and sales chart there was an offer at 1.0474, with a bid at 1.0453 .. that does not trigger at 1.0473 stop limit buy order..
There is also one bid showing at 1.0473, in 38k with no offer. I dispute this is a real THIRD PARTY bid as the highest prices in the interbank market (we have access and see them) in Reuters D2 were 1.0470 or in Bloomberg aggregated pricing, 1.0472.
And at the same time the only real offers shown in IB were 1.0470, timestamped just before and just after this 1.0473 "bid".
The bid shown on the Time & Sales chart of 38k at 1.0473 therefore looks like a fake bid. it was in tiny size, was never filled.
I don't know how this bid came about, but it is common amongst the lower end of market makers to show false bids to trigger stops/barriers etc. BUT this bid was never seen by any of the professional Interbank market-makers.
Please note I have run FX-Option trading businesses in banks and have seen this problem many times (I have been the bank, not the client, so from IB point of view) with barrier options. In this case its very clear that this level was not really triggered. In my experience of working at quality investment banks we would NEVER claim that this order had triggered. In fact we did ask ex-colleagues if a 1.0473 barrier would have triggered on this move today and were told that no way. If we were the bank, we would expect to lose the client immediately if we tried to dispute it on the basis of this evidence.
2. Separately (and in fact this is irrelevant to the triggering problem, but means the loss size was bigger) We were not able to see the trade trigger and were unable to get out of this trade at the time it happened (we were watching closely as we knew there was a RBA meeting) because the system logged us off.
The Log-off happened because our account has been moved to the US server after we changed Master Accounts last week (we are a Fund). We were not aware that moving master accounts would move us back to the US server.. Some time ago (12months maybe) I requested we move to HK server as we trade Asian time and that is what we have been on ever since. So this was a bit of a surprise!
So: I requested that IB make good our account to the amount of the loss.
Their initial response on the phone was no, and that i needed to make a formal complaint.
I have done so, and am awaiting a response. But in the meantime you should all take care on this: My reading is that IB are using their own proprietary FX market making prices to trigger stops before the level trades in the interbank market. This is very unprofessional.
I will update this post with any resolution.
I just suffered a loss from IB Stop-hunting behaviour.
I attribute this (based on my experience as a market maker for many years in FX products) to TimberHill's (IB's proprietary trading arm) FX trading practices. FX is not on-exchange, they don't need exchange verifiable prices to have traded in order to trigger your stops.
Issue: Stop/limit order left to buy AUDUSD at 1.0473
AUDUSD spiked up after RBA meeting today (3rd April2012), Simultaneously TWS logged itself off. We followed the FX pricing on Reuters D2 and Bloomberg, highest price was 1.0469 and 1.0470, so we knew that it was fine and we were not triggered.
After we are able to log back on (5 minutes later) we see that we have been triggered.. and AUDUSD is at 1.0417...
we immediately close the position at a loss of 0.0056 USD/AUD
We dispute that we should ever have been in this trade.
Note that as the Risk position is closed it is not a matter of cancelling the trade. If IB cancels the trade, they need to cancel also the trade that closed out the position, otherwise there is an open position that we dont know about.
Two issues that compound each other and underlie our dispute: The first issue is the legally important one.
1. The level 1.0473 never traded and was never bid in the true Interbank market. According to the IB Time and sales chart there was an offer at 1.0474, with a bid at 1.0453 .. that does not trigger at 1.0473 stop limit buy order..
There is also one bid showing at 1.0473, in 38k with no offer. I dispute this is a real THIRD PARTY bid as the highest prices in the interbank market (we have access and see them) in Reuters D2 were 1.0470 or in Bloomberg aggregated pricing, 1.0472.
And at the same time the only real offers shown in IB were 1.0470, timestamped just before and just after this 1.0473 "bid".
The bid shown on the Time & Sales chart of 38k at 1.0473 therefore looks like a fake bid. it was in tiny size, was never filled.
I don't know how this bid came about, but it is common amongst the lower end of market makers to show false bids to trigger stops/barriers etc. BUT this bid was never seen by any of the professional Interbank market-makers.
Please note I have run FX-Option trading businesses in banks and have seen this problem many times (I have been the bank, not the client, so from IB point of view) with barrier options. In this case its very clear that this level was not really triggered. In my experience of working at quality investment banks we would NEVER claim that this order had triggered. In fact we did ask ex-colleagues if a 1.0473 barrier would have triggered on this move today and were told that no way. If we were the bank, we would expect to lose the client immediately if we tried to dispute it on the basis of this evidence.
2. Separately (and in fact this is irrelevant to the triggering problem, but means the loss size was bigger) We were not able to see the trade trigger and were unable to get out of this trade at the time it happened (we were watching closely as we knew there was a RBA meeting) because the system logged us off.
The Log-off happened because our account has been moved to the US server after we changed Master Accounts last week (we are a Fund). We were not aware that moving master accounts would move us back to the US server.. Some time ago (12months maybe) I requested we move to HK server as we trade Asian time and that is what we have been on ever since. So this was a bit of a surprise!
So: I requested that IB make good our account to the amount of the loss.
Their initial response on the phone was no, and that i needed to make a formal complaint.
I have done so, and am awaiting a response. But in the meantime you should all take care on this: My reading is that IB are using their own proprietary FX market making prices to trigger stops before the level trades in the interbank market. This is very unprofessional.
I will update this post with any resolution.
As I understand the IB forex system, IB has a small standalone network set up on which some banks and all customers may enter offers to buy and sell. It is not, to the best of my knowledge, tied to the interbank forex system, but is tied to some banks that deal in the inter-bank forex market. So I doubt that your the trade would appear on Bloomberg or Reuters.
Could the small 38K offer have been from another IB customer? Do the participating banks simultaneously set prices on the IB network and the inter-bank network?
I don't know the rules for forex, if there are any, but in the equities market you can request the name of the counter-party to your trade. Do you really think it was Timber Hill? You should be able to find that out even if IB says they owe you nothing.
Jack
Could the small 38K offer have been from another IB customer? Do the participating banks simultaneously set prices on the IB network and the inter-bank network?
I don't know the rules for forex, if there are any, but in the equities market you can request the name of the counter-party to your trade. Do you really think it was Timber Hill? You should be able to find that out even if IB says they owe you nothing.
Jack