I had never done a trade in the IB cme pits. When I did not get a fill right away I waited about a half hour for it to come through. Then I called IB. I was put on hold. When I finally got a guy he said he would check into it to see what happened to my fill. Then he came back to me and said he would have to call me back. Then he called me back over a half hour after I made the call to them and suggested that he could not put a position in the account and that I should email IB relative to compensation which is what I then did. All that time I thought I was filled, so why would I institute a trade that would be double what I wanted?
This is no hyupothetical trade, the audit trail shows it was entered, and the TWS blue light came on showing it had the order. See attached screen shot.
There is lots of irrelevant commentary about the IB website so let's clear this whole thing up: IB's (and every Company's) website is informational unless parts, such as Ebays transaction areas, are specifically qualified as being binding. A website is NOT a legal contract. Websites of financial service organizations are not allowed to be intentionally misleading but there is no regulation that says that a staff level editor can bind an organization to some statement published in error. Anyone who believes othewise will eventually find themselves disappointed. IB's web site was NOT in error. We did (until yesterday, and until this event came up) support stop orders in a simulated way. The Customer Service Rep was wrong. As of today, and until we solve the problem, we are no longer accepting market orders, and clients should set reasonable prices on limit orders (see below). Knowing how pits work (as a former floor trader), it was my decision to eliminate most of the complex order types for pit traded products but I thought stop orders would be OK. It seems that was an optimistic assessment of the way pit trading operates. The real problem was as follows: IB implemented market orders in a simulated manner by setting a limit order x% through the last market data where x is a non-trivial amount, say 0.25-1% depending on the contract. We discovered yesterday that the floor brokers were rejecting these orders believing they were mistakes because of the differential between actual market and limit prices. the way that the order was rejected was non-standard so we did not identify the rejection message correctly. Unlike fully digital systems, human activity is analog and it is possible to take an action (such as 'reject') and accomplish that in more than one way. IB's interface was not expecting the rejection method that was used; frankly, we are surprised they reject orders based on price since the prices used were not insanely distant (for example 12 instead of 1.2) The whole issue is being addressed: 1) we removed market orders and stop-markets from our order types (and web site) while we upgrade the code [it will be updated by start of day today] 2) we will implement native market orders (perhaps we should have done so in the first place but we were afraid of wholesale thievery in "fast" markets) 3) we are coding changes to trap and map rejections more effectively Floor markets are a quagmire of exception handling. I am sure brokers who have serviced the pits for years have gone through this learning curve but unfortunately, we are just going through that painful experience now. There is a reason that we have a pretty harsh risk disclosure that must be agreed to prior to allowing access to pit traded contracts. Pit trading is much higher risk than electronic trading, particularly in terms of execution prices. IB offers pit products reluctantly and only because our client base repeatedly asked for it. But traders should recognize that there are very different real-world rules and experiences in non-electronic trading environments, and caveat emptor is the law of this particular jungle.
Come on guys... my first trading lesson taught to me by my first teacher was "NEVER MAKE ASSUMPTIONS' You guys are asking "himself" to make an assumption that he wasn't filled and then replace the order. No experienced trader would do that and run the risk of a double-fill. Mistakes happen in this business ALL THE TIME, even with the best intentions and numerous failsafes. The annoying thing with IB is that they NEVER ever seem to make a compromise, they are ALWAYS right and the customer is ALWAYS WRONG! Unbelievable. This kind of error with most brokers would be resolved fully in the customer's favor or as we would say in trading parlance both parties would "split" the error.
So, under this scenario, when I entered the order at 10:10 AM EST it was immediately rejected and yet IB never told me it was rejected so that I could have reentered the order which would not have then been elected until 12:31 PM EST. This is supposed to make me feel that it was not IB's fault? I appreciate IB's working at its learning curve, but I should not have to pay for IB's tuition. IB's error cost me $480 and want to be compensated.
how was it an error if the order type was not supported, and you mistakenly relied on the website for information? Sucks but that is the reality.
The issue is NEVER about right or wrong, This is not a morality question. We handle all issues in the framework of 'responsibility'. IB does not work in "grey". If we did, we would have stayed in the old-boy way of doing things and would not have made the commitment to technology. We are a black/white organization. Philosophically, we believe in creating a clear structure for our services (technology) and adhering to that structure. When an error occurs that is due to IB negligence or gross error, we eat the whole loss. If something happens that is not due to some negligence on our part, we don't eat the loss. Inside these broad boundaries, we strongly evaluate issues based on the 'free option' principle. If a problem is reported immediately, we consider it about 20X more carefully than if there is any time lag. We have seen dozens of events where some system wide error occurs and there are unexecuted orders (or conversely late reported orders). If there are a lot of them, we see without exception that people who win by the error never report the fact. People who lose, do. I assume most people are honest in their lives. If they saw someone drop $100 on the ground, most would give it back to the owner. But in trading, there is somehow a different prevailing ethic, namely ' to take what one can get'. Ot to rephrase: good luck is "luck" and bad luck must be someone's fault. Because of the asymmetry in the way people view unentitled gains vs losses (the free option factor) IB developed a very black/white policy on errors and problems. Clients who eliminate the perception of using the free option, which is usually time dependent, will find our working policy acceptable.
IBj says that is not what happened, he says that the order type WAS supported, that the website was CORRECT but that the floor rejected the order. Under that scenario, IB got the reject at 10:10 but never told me about it so I could reenter, which I would have had plenty of time to do since the price was not hit until 12:30 PM.
As clearly stated in my post, we did not capture the rejects because they were effected in a non-standard way. Had the order been poorly formatted then that would have been an IB error. But the orders were properly created and reasonable but the floor personnel, on a case-by-case basis (i.e. no known rule or algorithm) decided to second guess the order's intent. Their action was not predictable not the way in which they deployed their decision. Your case was not the only one. It happened to several people who submitted market type orders. Some were accepted by the floor brokers, some not. The ones that were rejected were not recognized as rejections so it was not possible to notify you or anyone affected since we did not know ourselves. We only tracked down the problem after we were notified by a client and actually called down to floor personnel, talked to the exchange technical groups, and waded through the message logs, etc all of which takes real time. If you feel there is compensation due then make the request through the appropriate channels, which is IB customer service. This is not the forum for such a discussion.
After not receiving a fill which should have been at 12:31 EST, I waited 15 minutes for a fill. You can check the phone records at 877- 442-2757 to see that I phoned promptly. I was on hold for 15 minutes and then spoke with "Bob". Bob and I talked and he then said he would look into it and called me back about 1:40. So look at your own records and you will "eliminate the perception of using the free option."