I'm anxious to see how this plays out.
I've been with IB for many years and I see both sides of this issue. They have to protect their own interests and the concept of auto liquidation seems like a solid one, but in practice there are horror stories. As the lawyers mentioned, I've had positions liquidated (during the 2008 crash) at prices that were very very far away from any kind of fair value. If the computer simply drops it out there as a market order, there may not be a bid/ask and the execution may be atrocious. Then the net liquidating takes a huge hit and the death spiral begins.
I have a far more conservative structure in play these days, so I didn't have any issues in the past week, but like a lot of IB customers - I'm always nervous about it - especially in a fast market. There are times through the day where the net liquidating number can be far awry based on current market quotes - or lack thereof. If the computer "thinks" that you've suddenly dropped under margin requirements, then auto liquidation may begin immediately.
I know in the old days you may get three days for a margin call. Depending on your positions and the way this market moves, in three days you may be in the hole a significant amount of $. For those of you that say you would never use IB, how does your broker handle margin calls in a fast market?
