Does IB take responsibility? An amazing story

Discussion in 'Options' started by Option Trader, Feb 9, 2006.

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  1. WD40

    WD40

    IBJ:

    thanks for your reply. your answer makes sense.

    I am not a client, but I surely appreciate your "no margin call" policy and automated compliant process. It makes the customers' money safer in the long run.
     
    #11     Feb 10, 2006
  2. I for one am glad IB is taking this stance, over and over. I don't want my commissions increased because someone can't play the game right. When you sign the user/client agreement with IB you agree that IB has the right (and will do so) to liquidate positions IMMEDIATELY if inadequate margin exists in the account. It is the responsibility of the ACCOUNT HOLDER to make these determinations and monitor their situation accordingly.

    Thank you IB for doing the right thing, which benefits those who understand their responsiblities and play by the rules set forth in your user agreement.
     
    #12     Feb 10, 2006
  3. IBj:

    Thanks for the informative reply. I too appreciate both your answer, and IB's effort to contain risk. It helps all of us.

    OldTrader
     
    #13     Feb 10, 2006
  4. MR.NBBO

    MR.NBBO

    An almost beautiful reply, IBj, clear, concise, non-hostile,well thought out.

    I vote it the best response by a broker for a scenario in question.
     
    #14     Feb 10, 2006
  5. ktm

    ktm

    Ditto.
     
    #15     Feb 10, 2006
  6. the auto- liquidation process is one of the IB peculiarities that motivated me to trade trough them.
    I am sure mine and other traders funds are much safer this way.
     
    #16     Feb 10, 2006
  7. ellokn

    ellokn

    No trade is ever risk free.

    IB offers an execution platform. For those that understand what they are doing and what they are trading it is fine.

    Many of us need a little bit more than IB's technology. which appears to be quite good. Some of us even need some hand holding at some points. This can cost a broker a whole lot to provide to the trading public.

    If you need more than a trading platform, and don't realize it, and are not willing to pay for it; and then believe in the idea of risk free trades your costs are without end.
     
    #17     Feb 10, 2006
  8. Choad

    Choad

    I too, appreciate IB's way of doing things. Very solid broker IMHO and I've used them for years with thousands of stock and option trades. Very few problems.

    And I can sympathize with option_trader too. Things *could* have been done differently and lessoned the impact of margin violation. But that's not IB's model and that's fine.

    The simple and obvious answer is that IB is not the right broker for ot's operation. A more expensive broker with a dedicated and knowledgeable option staff is the way to go. They could take the time ensure compliance without the brute force of autoliquidation. IB can't.

    Good luck to all.

    C
     
    #18     Feb 10, 2006
  9. sail

    sail

    IBj your response is well thought out.

    There is however something that troubles me about auto-liquidation. If the programming to do so is well thought out everything seems reasonable.

    Suppose however, an erroneous quote or closing price causes a low-risk well capitalized account to be auto-liquidated. Who bears the responsibility? We all acknowledge the possibility of auto-liquidation when accounts are first opened. Brokerage account agreements tend to be somewhat one-sided.

    In theory it is possible for a large equity credit balance account to be auto-liquidated if it has even 1 share or contract short. (Should that contract be erroneously valued at some arbitrarily large number).

    This is where human common sense would look at the account and know that there must be a bad quote.
    IB's programming is generally excellent.
    They could not have gotten to where they are today by being anything less than the best of the best.

    Yes, any human common sense metric can be programmed into an auto-liquidation program. But has it been? If not, who would be responsible for damages caused by an unreasonable liquidation.
     
    #19     Feb 10, 2006
  10. I can't believe what I'm reading. IB takes a completely outrageous position to cut their customer's throat without notice and they are getting praise?

    I was going to post a cartoon to illustrate the ridiculous stance that IB has taken, but now I worry it might inspire riots.

    How much more programming would it take to flash an alarm on the TWS screen and give the customer a little notice before you willy nilly sell them down the river?

    Okay market meltdowns or other unusual circumstances I might see IB's way, but treating your customer that callously as a routine function is unimaginable to me.

    Don

    P.S. I love IB otherwise.
     
    #20     Feb 10, 2006
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