Broker responsible for margin violations?

Discussion in 'Retail Brokers' started by Loki45, Apr 11, 2010.

  1. Loki45


    I am having a dispute with my broker because his trading platform let me accidentally open a position that was about 10 times larger than my margin allowance. Aren't brokers required by regulations to ensure their software restricts retail traders from violating margin limitations? And who is liable for damages occuring by something like that?
  2. you are. every broker has language in the application papers that absolve them from software glitches.
  3. When you say "his trading platform let me" are you saying your took a position and then realized the dollar value and margin violation or the broker executed a trade that you did not execute and it was in violation of your margin.

    I have had trades executed with IB that I did not initiate, many times and they allow you too go far in excess of what they say is their margin requirements and built in safety whatever where if you violate they will liquidate. This in my case happened mostly during the Asian and over night trading sessions.

    My brother was trading with TD in Canada on their demo. After 30 days some now his demo account ended up being a live account where he had 100 thousand dollar balance. He traded it for about 2 months which just happened to be the Banks here in Canada's year end. He called because the account went down, when he called he was transferred to the wire department as they thought he wanted to wire funds out. It took about 10-15 minutes and several transfer to people before they realized somehow the account was made live from a demo. He had generated over 240 thousand dollars of profit trading the Nasdaq Futures only. The interesting fact, the trading profits were actually real. He was told that the demo account was for only 30 days and the fact there was an error did not give him any rights to the funds and that the funds would be place in a suspension account until they could decide what to do with it.

    I only wonder what would of happened if he had losses. This would not even of come up except for the fact it was the Banks year end.

    We are always the escape goat or guinea pigs for the software.
  4. nkhoi

    nkhoi Moderator

    I can see the bank managers are going to have a very nice year end bonus.
  5. Some one is. My brother was trying all types of ideas as the platfrom allows you to be long and short in the same account at the same time. I did not believe it so I spoke to an account officer and how it works is every few deviations it is like a second account so he could play actually 3 positions at the same time. This was setup so they allow you too hedge yourself.

    He was carrying in some cases large contracts. I was speaking with him and reminded he he would not be so relaxed if it was real. There were times he thousands in the whole when he carried over night. I am actually looking at the system for its flexibility.

    anyways, you are right, someone gets a bonus and someone gets a slap.