Interactive Brokers and automatic liquidation

[newwurldmn]

Hi,

I am thinking of moving my assets as well as some other friends' and family assets to IB. I am a little scared because of the stories about their liquidation policy. A lot of these stories contain incomplete information like what exactly they had done and account balances and other postiions in the account before the liquidation.

So I ask this question: if you had a sizable retail account (where minimum values would not be an issue) what would trigger a liquidation?

Thanks.

 

[Businessman]

The vast majority of the stories seem to be options related.. are you going to be trading options?

 

[Rehoboth]

Quote from newwurldmn:

Hi,

I am thinking of moving my assets as well as some other friends' and family assets to IB. I am a little scared because of the stories about their liquidation policy. A lot of these stories contain incomplete information like what exactly they had done and account balances and other postiions in the account before the liquidation.

So I ask this question: if you had a sizable retail account (where minimum values would not be an issue) what would trigger a liquidation?

Thanks.

If you have thin assets on margin and the B/A goes wide, you might have a problem.

 

[newwurldmn]

i plan on being long biased with options on margin. This is currently being done in a Reg T account with no problem.

They advertise 5x margin. Is this real? Or do their risk paramers make the margin tighter? Also, is their portfolio margin tighter than Reg T in any circumstance?

I am a little afraid of moving these assets after some of the stories here. Moving assets around is a pain and relatively difficult.

Thanks.

 

[rmorse]

Quote from newwurldmn:

i plan on being long biased with options on margin. This is currently being done in a Reg T account with no problem.

They advertise 5x margin. Is this real? Or do their risk paramers make the margin tighter? Also, is their portfolio margin tighter than Reg T in any circumstance?

I am a little afraid of moving these assets after some of the stories here. Moving assets around is a pain and relatively difficult.

Thanks.

5x margin is not accurate. They will use the same PM calculator as other firms offering PM, but some firms are stricter during times of high volatility. For the most part, PM offer more leverage than Reg-T, unless your buying very cheap options. Reg-T might have a small edge.

 

[Rehoboth]

Quote from newwurldmn:

i plan on being long biased with options on margin. This is currently being done in a Reg T account with no problem.

They advertise 5x margin. Is this real? Or do their risk paramers make the margin tighter? Also, is their portfolio margin tighter than Reg T in any circumstance?

I am a little afraid of moving these assets after some of the stories here. Moving assets around is a pain and relatively difficult.

Thanks.

Has there ever been a time when the market has gone wide that covering all your positions at market would make your account neg? If so, you may have some concern.

 

[blackjack007]

Quote from rmorse:

5x margin is not accurate. They will use the same PM calculator as other firms offering PM, but some firms are stricter during times of high volatility. For the most part, PM offer more leverage than Reg-T, unless your buying very cheap options. Reg-T might have a small edge.

IB does not use the same PM formula as other brokers.

IB's calculation offers less leverage, but it's also less volatile (the margin changes less as the market moves)

 

[ddaytrader]

This isn't option related but it is Interactive Brokers related: on August 1st I had a sell stop (a stop market, not a stop limit)to go short the EURUSD at Interactive Brokers. Price traded at and below that level for about twenty minutes before the market broke lower. For twenty minutes, the market was offered at my stop level or lower. IB's own Time & Sales data confrims that many transactions took place at and below my stop level during that time.

However, Interactive Brokers did not fill my order for nearly 30 minutes, and when they did fill it, it was after the market broke lower. I was filled at a price more than 50 pips lower than my stop order. This was a stop market order. IB's customer service acknowledges that the order should have been filled about 55 pips higher than it was. However, my request for compensation has, nearly a month later, gone unanswered. When I inquire, I am simply told that "senior management is aware of the issue."

So, if you have qualms about trading at IB, perhaps you should listen to your gut. I will say that while this is not first time I had a problem with an FX trade at IB, it is the largest error in their favor, and it is the first time that they have not done the right thing in a timely manner.

In fact, it would seem that after a month, Interactive Brokers has no intention of doing the right thing, and is simply hoping that it goes away without me or anyone else affected filing a comp-laint with the CFTC's reparations program.

I am still trading with Interactive Brokers, but my trust level is destroyed, and I am very nervous about whether my stop orders, especially stop loss orders, will be honored.

I am never margined heavily, but if I were to trade a strategy that used high margin I would be very hesitant to employ that strategy at Interactive Brokers, because should an autoliquidation take place at a price unjustifiably unfavorable to you, you might find it very difficult to get Interactive Brokers to act rightly.

I am hoping Interactive Brokers does the right thing, but after more than 30 days, I would have to say that Interactive Brokers has been, in this particular case, untrustworthy.

 

[EdgeHunter]

Quote from ddaytrader:

This isn't option related but it is Interactive Brokers related: on August 1st I had a sell stop (a stop market, not a stop limit)to go short the EURUSD at Interactive Brokers. Price traded at and below that level for about twenty minutes before the market broke lower. For twenty minutes, the market was offered at my stop level or lower. IB's own Time & Sales data confrims that many transactions took place at and below my stop level during that time.

However, Interactive Brokers did not fill my order for nearly 30 minutes, and when they did fill it, it was after the market broke lower. I was filled at a price more than 50 pips lower than my stop order. This was a stop market order. IB's customer service acknowledges that the order should have been filled about 55 pips higher than it was. However, my request for compensation has, nearly a month later, gone unanswered. When I inquire, I am simply told that "senior management is aware of the issue."

So, if you have qualms about trading at IB, perhaps you should listen to your gut. I will say that while this is not first time I had a problem with an FX trade at IB, it is the largest error in their favor, and it is the first time that they have not done the right thing in a timely manner.

In fact, it would seem that after a month, Interactive Brokers has no intention of doing the right thing, and is simply hoping that it goes away without me or anyone else affected filing a comp-laint with the CFTC's reparations program.

I am still trading with Interactive Brokers, but my trust level is destroyed, and I am very nervous about whether my stop orders, especially stop loss orders, will be honored.

I am never margined heavily, but if I were to trade a strategy that used high margin I would be very hesitant to employ that strategy at Interactive Brokers, because should an autoliquidation take place at a price unjustifiably unfavorable to you, you might find it very difficult to get Interactive Brokers to act rightly.

I am hoping Interactive Brokers does the right thing, but after more than 30 days, I would have to say that Interactive Brokers has been, in this particular case, untrustworthy.

Wow... that is ugly... on their part...

What is the Arbitration Agreement... What legal steps can you take that are part of the agreed IB Account Terms... Take Them and MAKE waves... Bitch, Moan, Call up Board of Directors, or email them... and make someone feel guilty for what has happened... If you can legally send out a press release (your lawyer says ok) then do so... Make some noise... make somebodies world that has admin power unHappy and unpleasant...

If the facts are on your side with Time and Sales... then they are just playing the delay game.. God that is ugly of them..

good luck... edge...

 

[ddaytrader]

Quote from EdgeHunter:

Wow... that is ugly... on their part...

Yes, it is very ugly on Interactive Brokers part, and it has made it very difficult for me to place orders if I am not going to be able to watch the screen like a hawk.

The facts are on my side, and I have the screen captures to back my case up.

I would hope that Interactive Brokers fixes this cheat without the need for extraordinary actions, either legal or by appealing to a regulatory body or arbitration.

I have to say that I was shocked when this was not corrected within a day or two. Like I said, my experience in the past with one or two screwy forex trades with Interactive Brokers had always been corrected quickly. This is the first time an issue like this has been allowed to fester for over a month.