Registered: Jul 2011
Posts: 3696

I have been a long time IB customer and I trade fairly actively.

I have observed that IB changes its margin policy from time to time, and without any communication to its clients. Maybe the algos change with new TWS release, whatever it is, the way TWS behaves regarding checking margin changes from time to time. I will write my experience of today:

1) Earlier, TWS didn't use to execute an order if after execution, it will result into a margin call. Today I was fully margined, I was long NQ fully margined, and had a limit order to execute long ES which would have clealy resulted into margin liquidation upon execution. As soon as ES price moved to my limit price, my order executed instead of being cancelled and shortly afterwards IB auto-liquidated it. It resulted into a loss, I had not cared to cancel my standing long ES limit order since I believed it would have been rejected by IB. How can IB change its policy without informing clients?

Has anyone else experienced this? This would be a big problem if you are trading hundreds of stocks simultaneously. You will keep getting hit and then auto-liquidated.

Registered: Feb 2008
Posts: 1765

From my experience, when margin rules changed, IB had always given at least a few hours notice via notification in TWS and in account management and E-mail suggesting to log in and check the message.

However, note that IB has different "day" and "overnight" margins for most futures. "Day" margin changes automatically to "overninght" every day in the afternoon at a certain time and changes back to "day" next morning.

What you probably experienced is the following. Your desired position size had sufficient margin according to "day" rules but didn't have enough margin according to "overnight" rules. So, the order was executed just before the margin changed from "day" to "overnight" and as soon the margin changed you position didn't have enough margin and got liquidated.

Registered: Jul 2011
Posts: 3696

Thanks for the explanation. But in this case, IB really screwed up. Infact, they screwed me, a long time customer of theirs

So, these are the timestamps.

bought ES using limit order when it should have been rejected @ 15:19:37
Auto-Liquidated by IB NQ @ 15:20:37

Overnight margin changes happen for index futures at 15:50:00. All times in EST. So, your theory is incorrect and there is obviously something wrong with IB margin rules.

Edit: This issue would affect all the stock traders who throw in hundreds of orders every day. Its a very serious issue.

Registered: Sep 2007
Posts: 3554

No such thing as a free lunch.

Registered: Jul 2011
Posts: 3696

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Quote from KINGOFSHORTS:

No such thing as a free lunch.

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Registered: Feb 2008
Posts: 1765

gmst, I think you should contact IB support and ask why you position was liquidated. IT is likely that there is difference in you and them reading the rules... there is also a possibility it was genuine mistake on IB side. If you patient enough you will get directed to someone who can comprehensively explain.

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