That's luh3417. My partner, thx1138 is also waiting to hear from the whiners about the other brokers that 1. charge less 2. impose less margin requirements 3. are active on this forum. My point is that there probably are none. Which to me indicates that that is the reality of the market and that the trader is to blame. As ktm has noted, the one result of this thread has been that the one broker that comes closest, IB, has increased their margin requirements. Let's keep airing our laundry out here and maybe we can get them to stop participating in this forum and increase their fees...
Why would a trader would put themselves in the position where there is even a chance of your broker having to liquidate you. If you go that far out on a limb, you will likely fall and it is not up to anyone to make sure your landing is as soft as possible. You will be liquidated. Period. It is a basic rule of risk management. You broke it and now you are complaining that you do not like how the rules were carried out. Not only do you not understand the basic rules of risk management, and how to work constructively with a brokerage service or platform, you even seemed to believe that you were in some kind of "risk free" trade. On this absurd assumption you then broke all the rules and now it is someone else's fault. Rule 1. Understand what you are trading. Rule 2. Know the house rules. Rule 3. Do not blame others if you broke rule 1 and 2.
It takes a lot more time to not handle the issues, as it is with a lot of things in life. The points concern fellow Elite Traders, or there would not be over 6,000 views in just a few days. Answers were not yet provided in private or public forum. If IB can have the benefit of automating and protecting the customer, everyone will be happy. If someone else in IB can and does handle the suggestions and handle the complaint, great! If it deserves attention from your top corporate man, IB will do so because they felt it was a good business decision; when things are handled, the matter is closed.
Reply to ellokn, You are trying to intuite what occurred without spending the time to review what happened.
To Ellokn: ...If I may add, you were not the only one, who tried to join in the middle. Those who understand how it affects THEMSELVES, and those who understand the issues, have given support.
Why don't you or your "securities lawyer" cite the law, regulation or NASD provision that states that when a broker has a right to liquidate it mus tbe done in a manner to not harm the client unnecessarily. IB is not under any obligation to liquidate you in any specific manner unless you can cite something specific. Otherwise your "attorney" is just speaking his mind. If you have a legal precedent than share with us. Otherwise, the auto liquidate feature is valid and if it costs you some money, that is just a downside to using IB. Their goal is to protect themselves from people who go over the margin limit and I see no regulation statute or policy that say they have to liquidate in the way that causes you the least harm. Automatic liquidiation is not arbitrary or capricious because it is applied across the board to all accounts. Where is the legal support? I doubt your lawyer will find it. Also, "not harm the client unnecessarily" is a subjective term and auto liquidation at market is an unbiased, straightforward policy and you were harmed due to the spreads of the positions. If the options to close had spreads of $0.05 your loss would have been much much less. So a market order caused you the same harm we all face when we place market orders. I am not unsympathetic to your loss, but find no legal precedent to support the claim that IB's policy violates any law, SEC regulation or NASD policy, unless you can provide one. IB's policy is tough but it is applied equally to all clients and disclosed in their account information.
Options Trader, I have been reading this from the start. To keep the focus, let us go back to your own presentation: Sounds like the responsible and professional standard handling any dispute. Well, you have already made up your mind here to blame IB before a review. That is a new one in the world of Markets. There is neither a free lunch nor a risk free trade in the world. After the trade was initiated you "found out" about "some type of restriction." So you did not even know the rules of your trade BEFORE you entered it. The responsibility is for YOU to know all this and you clearly did not as you write above. To believe and expect to deal with someone on the phone at IB who knows exactly what is going on in your account and also be aware of the encroaching liquidation, and still pay pennies for your trading there, is a naive assumption. If you need that kind of support and guidance, IB is not your broker. It is not mine.
one thing we know Option _Trader is that you and your secret partner have raised margin requirements in boxed trades which happens to be good for the vast majority of traders. secondl some errant but smaller trader may take it upon himself to learn the rules so as to not get himself into your situation. third a thread of this size always brings out those posters who think they know how to run a BD better than the current principals. fourth- it brings out the conspiracy crowd that your loss is the broker's gain. 5th this kind of thread brings out the hand holding deprived individuals who want hand holding +the lowest commissions.. 6th are the individuals who come out of the woodwork who think that if they violate the monetary requirements in the account they should have the same amount of time to meet their obligations as a broker with substantially more capital and lines of credit.
Hypothetically risk-free if you have the capital to handle all possible assignments that might take place - which was NOT the case for your situation. If you understood the real risk of these positions, you would understand why IB has a 50 times equity GPV limit and you probably would not be complaining about your liquidation. As for how they liquidated your positions - that should be an issue you deal with them directly, not in a public forum. good luck.