IB faces the same risks as Knight Capital

Discussion in 'Interactive Brokers' started by Retired, Aug 2, 2012.

  1. They can still sell order flow
     
    #11     Aug 2, 2012
  2. Specterx

    Specterx

    I don't have any opinion on the OP's concerns, but certainly IB hasn't exactly fallen over itself to reassure customers that they're safe from the same risks as customers of/investors in PFG, now Knight, and to a lesser extent MFG.

    It couldn't hurt to be a bit more communicative in these turbulent times.
     
    #12     Aug 2, 2012
  3. neke

    neke

    Daily loss limit might be useless if there is a software bug, although I believe IB has far more checks built into their market making operation than KCG.

    One reason I could think of for KCG having this bug , and taking more than 30 minutes to halt it, is they might have been thinking the NYSE would cancel ALL the affected trades. It has happened before, and the trades were cancelled. It is a good thing NYSE did not bow to KCG. Now every broker and algo developer will do a better job of software QA, and not rush to release new software/version every couple of months. Even my individual trading algo, I am always thinking of what might go wrong, and programming exception handlers. Stuff like:

    1) Maximum number of orders allowed to be placed per hour or per day (if system goes into a buggy loop)
    2) What if the quotes coming in are unreliable?
    3) What if the balance info fed from my brokers API is wrong (and my sizing is based on that?)
    4) What if the spread on the price is too big, or price moves seem too fast?

    You would think a big brokerage had covered all those and more with enough checks and manual intervention triggers.
     
    #13     Aug 2, 2012
  4. Options12

    Options12 Guest

    Weakness following late 10-Q's is normal.

    Still, the accounting question that underpins the issue that lead to the late 10-Q should have zero impact on the security of brokerage customer segregated funds.
     
    #14     Aug 2, 2012