Quote from rationalmind:
@comintel: I had asked them in why they based their calculation on the mid-point of this crazy bid-and-ask spread rather than the extremely liquid Hong Kong forward market, and all I got back was this:
"Your concerns regarding our methodology are appreciated. However, it is not feasible to second-guess every piece of market data that is reported, in order to determine if periods of illiquidity are rational based on recent price action. If illiquidity, as reflected in correct market pricing, is real, then the mark prices should and will reflect that, and the resulting risk valuation will be deemed accurate."
Quote from Rodney King:
IB offers cut-rate execution. If you want quality execution -- and <i>speaking with the client before liquidating</i> is a critical component (maybe <i>the</i> most critical component) of quality execution -- then you have to pay a bit more. That's how life works. Quality goods cost more than shoddy goods. You don't go into Per Se or Le Bernardin and complain they don't offer a dollar menu like McDonalds.
Quote from newguy05:
Once again you guys dont seem to get the problem with IB's liquidation engine. It's not so much how margin is calculated but the manner which it liquidates your account. Once excess liq below 0 is hit(for whatever reason), it will just auto close at MARKET price at ANY time of the day as long as it can trade, instead of having a human to take a look or wait until normal trading hours etc.. And there is absolutely no customer support.
I understand the reason - it protects itself no matter how badly it fucks up the customer's account, and the pros applaud it as it keeps their account safe. It's not a big problem once you are familiar with this robot process, but for new users who are used to a normal brokerage like optionsxpress' customer service, you will be in for a total shock, whole account can be wiped if not careful because of this liquidation engine.
See my post below on my first encounter with IB's liquidation engine. It wiped out my entire es mini options position using MARKET orders in AFTERHOURS when there is 30pt bid/ask spread.
Luckily it wasnt a huge position, i lost 20k and chalked up as a lesson learned. But trust me you DONT want to be in a position where you are auto liquidated at market price on some illiquid asset as you sit there hopelessly watching your entire account goes to 0 while getting locked out (due to excess liq below 0) with noone to call or help.
If you are new to IB, be very careful about its liquidation engine.
http://www.elitetrader.com/vb/showthread.php?s=&postid=2832052&highlight=liquidate#post2832052
Quote from christianhgross:
let me say that I will politely disagree with you. First the ib margin calculations do not liquidate willy nilly. They liquidate to get you more margin. I have seen how ib will liquidate short option positions while leaving the long option position intact.
To get the real benefit to ib you need to activate portfolio margin. Then you need to calculate the var of your portfolio. If you stick to that you will not have problems.
And here is a question for you how do you know the yuan valuation was not right? Only when looking forward do you see that.
Quote from Eight:
Venturing into illiquid markets is just silly. The ability to rig is just too obvious and in some markets the rules practically invite it.. It could be friends of IB on the other side of your trade, forget that shit...
Quote from comintel:
Ok so they just admitted that the *mark* (ie. settlement) prices are the best way to judge risk. Is that what they did? According to your prior account, no. So you already have them contradicting themselves.
That is the kind of thing that you would need for a claim against them.
Have you asked them to open a *formal* dispute? Until you do that, you are just chatting with them.
Quote from comintel:
Please name one or two firms that in your opinion provide higher quality execution than IB.
Quote from rationalmind:
....... I've filed a formal complaint ticket today; in the next step I'll complain to the FSA ombudsman (that's some additional possibility for me as I live in the U.K. and am therefore with IB UK). Then I can still go into arbitration.
Quote from ids:
We reserve our rights to liquidate after hours but we do not do it under normal conditions.
Quote from ids:
We never auto-liquidate instantaneously. You always have 10 minutes to deal with a problem.
Don't expect an answer from these IB people, they never give a clear answer re margin/autoliquidations, of the last 10 pages there was 2 disingenius responses from 2 IB people, when pressed for more answers these people disappeared.Quote from Options12:
IDS you should take greater care in making statements regarding IB policy.
You also stated the following:
Please take a moment to correct any statements that might provide an investor with a false sense of security with respect to your unique auto liquidation software.