IB or Cybertrader for E Minis?

Discussion in 'Retail Brokers' started by Dominic, May 16, 2006.

  1. IBsoft, I made myself clear already, but if you want me to post this here also, then I will....Per your request above...

    I had an account with IB(interactive brokers) and I had to close it and pull out my money within 3 months of opening it because of their incompetence, mistakes, bad software design, bad fills, rude customer service, lack of professionalism and bad management. IB(interactive brokers) is the worse I have ever seen in my 12 years of trading.
    I have a right to voice my opinion. You(IBsoft) wanted to take this public and harrass me in a PM(personal message) and you requested that I make this public. Per your request above, I made this public. Have a nice day.
    #21     May 18, 2006
  2. mktman


    Contrary to most posts in ET, there are some who did have bad experiences with IB.

    A perfect broker doesnt exist
    #22     May 18, 2006
  3. yeah, but u cant complain about bad fills that's bs...never got filled inside mkt so many times with any other brokers..if u placed a lot of trades u shud have experienced da same since u cant get lucky hundreds of thousands of times...
    #23     May 18, 2006
  4. SarahG


    If what you say above is true, then please post a link so we can read it for ourselves.

    My broker told me something different than what you just posted above. He told me over the telephone the below information.

    If your futures broker goes bankrupt, the client(trader) will not lose his entire account or none of his money in the account. The clients money is deposited from day one in a "clearing firm account" which they put the money in a "segregated customer account". The clearning firm is different. We will get our money back if the broker closes his doors. This is what I was told.
    #24     May 19, 2006
  5. SarahG,

    If you believe what your broker told you, then you are an easy mark. I am simply going to repeat a posting I made in October 2005, during the Refco collapse, with web links to warnings by the United States Commodities Futures Trading Commission and the Chicago Mercantile Exchange, which should give you 100% proof that I am right and that your broker is wrong. Here is my old posting:

    Mind, your opinion is specifically contradicted by the CFTC and the CME. The exchanges and clearing members will only make good on uncovered customer losses, from trading or embezzlement, AFTER all deposits by other customers, in the same pool of segregated accounts, have been seized and exhausted to cover those losses. The exchanges and members have NO obligation to pay one red cent to these customers who have lost part or all of their funds and positions in such a broker bankruptcy. The exchanges and members only guarantee trades against the counterparty risk that a bankrupt clearing member might renege on a trade, thus injuring customers of other firms; but they provide no guarantee that a bankrupt clearing member will return customer funds or property to its own customers.


    Refco was not a wise choice, and this would have been obvious to anyone who performed the due diligence recommended by the CME and CFTC. Refco, in the 1990s, misused segregated customer funds as a means to pay its debts. Refco then returned those funds, after temporarily misusing them to keep Refco afloat. Refco did this over and over again, on a routine, almost daily basis. The CFTC made these findings, and Refco consented to them without admitting or denying wrongdoing, and paid a $1.25 million fine.

    If Refco had gone bankrupt, before it could return the embezzled customer funds, then those customers would lost have the entire amount of the embezzled funds, which was well in excess of $100 million. If the bankruptcy had been triggered by large customer losses, in a black swan market event, then the losses to customers would have been far greater. It appears that the financial crisis of the late 1990s did in fact cause a huge uncovered loss, but that Refco again avoided bankruptcy by concealing that loss and transferring it to the parent holding company; and the present scandal erupted because that cover-up collapsed, revealing the huge loss.

    If the CFTC were an effective regulator, it would have shut down Refco in 1994, rather than fining it. If Jim Rogers had performed due diligence, he would have recognized Refco's history of embezzling segregated customer funds, and he could have avoided his current situation, of not being able to get back hundreds of millions of dollars of client funds which he deposited into Refco's segregated customer funds, but which Refco effectively embezzled by parking those funds in non-segregated accounts.

    It is not prudent to clear through a clearing futures broker having a history of embezzling from segregated customer funds.

    Nature gave us brains so that we could use them to avoid at least some mistakes. It is impossible to avoid all mistakes, but many mistakes are avoidable.
    #25     May 19, 2006
  6. wwx


    Excellent post! Many thanks, jimrockford.

    A must-read for anyone thinking of placing sizable funds with any futures broker.
    #26     May 20, 2006
  7. Damn good read JR.........you learn something new everyday.I`ve always wondererd about this very issue.

    Onto IB,been with them since `97 & without a doubt the best trading platform i`ve seen anywhere.....they cover all markets with reliability.
    #27     May 20, 2006
  8. so jim who's safe for futures? we know ib sweeps every night so most of your money is sipc insured even if you trade futures. what about rcg are they safe?
    #28     May 20, 2006
  9. I think IB is one of the safest companies at which to trade futures. The safest way to do it is to hold all of your cash in T-Bills in your IB securities account. If you then trade futures, IB extends a margin loan of up to 97% of the value of your T-bills, and transfers that margin loan to your IB futures account. If IB went bankrupt, this arrangement would make it impossible for IB to sieze your property legally in order to cover futures trading losses incurred by other customers, which is normally a serious risk when you trade futures at any broker. Another benefit of IB's T-bills technique is that the ENTIRE AMOUNT of your T-bills will be fully covered by $500,000 of SIPC insurance at ALL times, NOT just when unused portions of your funds are nightly swept from the futures account into your securities account. This is because the T-bills never leave your securities account. Another benefit is that your T-bills are covered at ALL times by IB's private Lloyd's of London insurance. Another benefit is that even though SIPC will not guarantee more than $500,000 in T-bills held in your IB securities account, SIPC still provides another benefit: it provides special procedures which will help you quickly get compensated pro-rata for your T-bills in excess of the $500,000 limit, to the extent that customer property has not somehow been embezzled from IB's customer securities accounts, and has not been lost by the securities trading of other customers (which is far less likely for a securities account than in a futures account), and has not been covered by Lloyds. Another benefit is that your T-bills are held in an account regulated by the SEC, which, in the area of protecting retail customers, generally runs a much tighter ship than the CFTC, which regulates futures accounts.

    Many futures brokers will allow you to deposit T-bills in order to meet margin requirements, HOWEVER, you can still lose them in a broker bankruptcy, if the broker is legally required to sieze part or all of your futures account in order to cover losses incurred by other customers. IB offers a superior T-bill technique, because IB allows you to hold the T-bills OUTSIDE of your futures account, and in a separate, SEC-regulated securities account, so that your T-bills CANNOT legally be seized in order to cover futures trading losses incurred by other customers.

    If you want to compare RCG or other brokers, here are some things you need to compare:

    -financial statements (a broker like IB, with a lot of its own capital, is safer, because the broker's capital would have to be exhausted before customer property could be siezed from non-defaulting customers to cover trading losses incurred by defaulting customers)
    -regulatory history (embezzlement, hiring criminals, failing to meet regulatory broker capital requirements, etc.)
    -honesty and reputation
    -do they sweep excess funds and property to and from an insured account like IB
    -do they allow T-bills to be held in an insured account separate from your futures account, or do they put your T-bills at elevated risk by holding them in your futures account?
    -quality of risk management (do they have dangerously low margin requirements, or do they have conservatively higher requirements like IB? do they have a rigorous risk management system like IB's, which automatically and swiftly liquidates to eliminate margin violations, or do they indulge playas and highrollas like Refco did, because individual employees will get rich regardless of whether reckless customers make the entire company collapse?)
    #29     May 20, 2006
  10. RCG offers 500.00 Emini contracts. And yes, they are safe.
    They put your money in customer segregated accounts. Seperate from everybody elses money.
    #30     May 20, 2006