IB margin valuation way off

Discussion in 'Retail Brokers' started by illiquid, Dec 8, 2003.

  1. Is it legal to value your account in such a way that is completely way off actual liquidation values? For example, the way IB calculates account value is completely f***ed up. If you are holding silver march 04 contracts right now, the account management software will show that they are worth 4.83 (basically the spread between the bid and ask of the dec 03 contract, which no one is trading). This is far below the market value of either contract at the moment and can play havoc with account management automatic liquidations.

    The new manner in which they calculate account value (implemented a few months ago) is obviously inappropriate -- is there any recourse to this? Say you are liquidated out of a position due to faulty valuation software -- what can you do?
  2. Quah


    Well, since you "know" it is faulty ahead of time, you accept the fact (and responsibility) that a "bad" liquidation might happen. If you want to prevent it, change brokers. Simple, no?
  3. CalTrader

    CalTrader Guest

    I think the account agreement covers this .... If you disagree you probably need to move to another broker.
  4. I would just like to know if they are truly regarding this as a "glitch" or if they are just saying to hell with YI and YG traders. If it's the former, I would like to have them just fix the error in valuation because otherwise I think they are a great firm to trade with.

    All of it comes down to using a last or closing price on the front month, instead of using the middle of the bid/ask of a contract that no one is trading. It's really that simple.
  5. Quah


    Have you asked them?
  6. IB marks conservatively -- with futures options you'll likely see your haricut based upon valuation above the offer if short, below the bid if long.

    If you're long gamma it won't matter, they're not going to liq a long option position. If short, then is sux. :D

  7. I talked to 2 reps who stated at first that "your account went below maintenance and was therefore liquidated, there is nothing you can do."

    Finally when I asked a rep to humor me and explain exactly how much money was needed to hold a certain amount of contracts, I was suddenly told that management was looking into the liquidation as a possible error. Still waiting for their call back . . .
  8. OK, IB has told me that the error is on their part and that my position will be re-built.

    My recommendation to people is to never use the phone customer representatives and state your case directly with an email to management -- I was told a number of misleading things by 2 separate people who did not understand what was going on, and instead of just letting me know that management was looking into it, tried to stonewall me by giving all sorts of reasons why my position was liquidated.

    I understand that this is just a glitch in their software and I believe they will remedy this quite quickly, I just hope in the future that their phone reps don't continue to automatically assume their customers are brainless idiots.
  9. Sanjuro


    I learned something new today from IB. :D

    I thought you would have 4:1 buying power if you have
    over 25k in your account BUT IB also requires you to have
    more than 4 trades in a 7 day period.

    I was trying some position trading and it was wierd when
    it wouldn't let me taking on a position I normally could take.
    Called in IB and found out I didn't do enough trades to get
    4:1 margin.

    Haahaa :)

    IB is still the best broker out there IMO.
  10. ktm



    It sounds like you have two issues, marking to market and a possibly bad liquidation. It looks like you are getting the liquidation worked out.

    On setting the current value of a contract, aside from splitting the bid/ask of something very lightly traded, how do you propose they effectively do this? Keeping in mind that yesterday's close could be far away from the current market.

    I trade very illiquid contracts myself, and as riskarb? put it in an earlier post, IB is conservative regarding valuations on the fly. I can clearly see a 3.50/4.00 bid ask on my sold contract and the value in TWS is 4.45. I'm OK with this. I know my true net liquidating is a bit better than what's on the screen.

    If you are taxing the maintenance margin calculations that closely, it's tough to walk that line, especially with IB - since they don't give margin calls.
    #10     Dec 8, 2003