Interactive Brokers Implements Price Caps
- Thread starter ajcrshr
- Start date
ids,
Where can we find the overnight margin for futures that applies to IRA accounts
Where can we find the overnight margin for futures that applies to IRA accounts
The caps most certainly still exist, they were in play during Brexit.
To those saying their orders are outright rejected, those are generally exchange rejections. In the case of IB's more draconian caps, they will modify your limit order to the capped price, usually 2% from last trade and display it to the market.
This opens IB customers to be front run by other traders and gamed by predatory algos. Take a $100 stock that suddenly gaps to $102 on news after hours, you bid $102.50 for 5000 shares (it's trading there), IB caps your order to $102. You're front run at $102.01 and can't do a damn thing about it. By the time the order is "uncapped" (usually minutes later), the stock is trading at $105. Who takes the $12,500 hit?
It also raises questions, namely can IB trade ahead of capped customer orders during a liquidation? And assuming multiple customer orders are uncapped simultaneously, are they released to the market in FIFO order?
Let me also reiterate I have no issue with capping a market with no safeguards in place, perhaps spot FX qualifies. I fully understand why IB is doing this, there are regulatory reasons.
But if an exchange already has volatility price banding in place, namely any major futures such as the CME/ECBOT/NYMEX and ICE/IPE complex, IB should not impose more restrictive price caps. At a minimum, offer customers an override option, that's all I ask.
But if an exchange already has volatility price banding in place, namely any major futures such as the CME/ECBOT/NYMEX and ICE/IPE complex, IB should not impose more restrictive price caps. At a minimum, offer customers an override option, that's all I ask.
Let me refresh your memory. I'll reiterate:
Probably the biggest fit of what has been termed 'temporary insanity' by any still-viable broker is when on Friday, March 6, 2015, Interactive Brokers deliberately disabled all futures trading in all IRA accounts for all clients with no warning or notice whatsoever. Traders only found out about it by repeatedly trying to trade and not having any idea why those trades wouldn't go through, then later by perusing the complaints on sites like this. If you called IB they would only say that that's what management decided, and that it was permanent. With no other rationale. It was literally like trying to reason with the schoolyard bully; it was just that stupid. And they repeatedly and consistently refused to turn trading back on, thus giving you zero notice to move your account. They finally succumbed to the ongoing ridicule and, seven days later, they gained some semblance of sanity and sent out their first statement about this, completely reversing their decision. But that was too late and too costly for some traders.
You can read more about it here:
http://www.elitetrader.com/et/index...trading-futures-in-ira-accounts-at-ib.290101/
Loses are not "unrecoverable for IRA accounts."
There are no "regulatory obstacles" to repaying your broker in this situation. If you read through all of the verbiage on this you’ll see that it is actually a nonissue. Without going into all the details, the bottom line is if you owe your broker any money you can pay that within or outside of an IRA. If you owe the broker money, and, due to the IRA restrictions, those moneys are unable to be paid through the IRA account you simply pay outside the IRA account.
There is nothing that lets you off the hook for a just debt just because it was incurred in a retirement account.
It's interesting that in a thread about the absurdity of IB's price caps the best the IB rep can do is take issue (incorrectly no less) with someone who brought up their equally absurd unannounced freeze in IRA futures trading. I don't understand what it is with this company, they pay someone to be a sponsor here where they could take lots of great, valid, detailed feedback provided free by active traders and use it to make their company better. Instead they ignore very real issues, insult everyone's intelligence by answering questions they want to answer when the question asked is inconvenient for them, and are defensive about everything else they've screwed up even when it was entirely their fault. What a squandered opportunity from a company that has so many cool products and features but seems determined to treat their customers like crap and drive them away.
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I'm not reading or posting much these days but I have been pointed to this thread. Exchanges are regulators around the world are increasingly putting the onus on brokers to maintain what they deem to be an orderly market place. Of course in general when someone submits a market order you want to be filled at market. But what if the bid/ask if a stock trading at say 10 cents becomes thin and a submission through the market drives the price to 15 cents? In nominal terms that is nothing. In percentage terms, that's 50%. some exchanges would consider allowing that order to go through a breach and hit you with substantial fines. That's just one extreme example but I use that as a way to try to explain what brokers have to deal with. It really is no fun preparing responses on why a certain order was filled at a various price levels. Some exchanges do have volatility or other price limit controls but those tend to be at the wider end of the spectrum and do not limit a firms liability or prevent regulatory scrutiny. The short of it, these controls are put in place for a host of reasons including the need to limit fat finger and other disruptive practices, regulatory requirements and also a desire to reduce regulatory issues/costs and finally bad fills. You might be complaining about the odd order you don't get filled but what you are not hearing about are the numerous out of range trades that the filters prevented.
I have listened to much that same message in IBKR's quarterly calls for at least 3 years.
IBKR is not arrogant, but rather trying to run a large business in a way that is consistent with regulation, fair execution and also risk control for the broker itself - all at very low cost to the trader. It is a very tough problem.