Interactive Brokers and Automatic Liquidation policy for cash / registered / non-taxable accounts

Discussion in 'Retail Brokers' started by andrew black, Jan 26, 2020.

  1. Wondering if anyone can share some more information regarding Interactive Brokers' Automatic Liquidation policy, especially how does it work for cash / registered / non-taxable. Here is the formal disclosure document

    Since for cash & registered accounts, the buying power is the cash balance, it is impossible to get a negative balance as a result of an order execution. The only way to get into a deficiency position is due to fees charged by IB, and there are a lot of complaints on the internet. People had a $40k position liquidated for a $12.50 fee.

    According to the policy

    I was also told by an IB person that IB would actually liquidate a position even when a cash balance is available, if the existing cash balance is in a different currency than the fee currency.

    Can you guys please share your experiences / knowledge on this topic? TIA.
    murray t turtle likes this.
  2. d08


    IB liquidates by 100 shares until margin is positive. So if the stock being held traded at $400, 100 shares means 40k.
  3. %%
    Over all I like IBKR. That sounds in error, ''a lot of complaints,on the internet,40k position position liquidated for $12.50 fee'' Unless the liquidation would could result in a ''negative balance'' -[including the $12.50] in that case, the forced liquidation would be logical.
    And some brokers allow check writing , so there are a lot of reasons that could happen.......
    On a positive note, glad to hear they try to avoid a currency exchange fee.LOL [ I wonder if their ''fractional share program'' would prevent this??]
    Over all , IBKR was a better than average broker.
    nooby_mcnoob likes this.
  4. I was reading through some of the they legal disclosures documents and when they refer to "cash balance" they never specify currency. I would read this that any currency cash balance is "cash balance" and they should use that to cover fees, before liquidating positions.
    murray t turtle likes this.
  5. guru


    IB recalculates margin overnight and sometimes I get to negative overnight, especially with options where some may be expiring. My experience has taught me to try to close my positions by myself as soon as margin gets negative or the market opens. Otherwise IB simply doesn't know which of your positions/stocks/options you'd like to exit, so it may liquidate random positions, or those that they determine would be best to resolve the problem. Recently they closed one leg of my put spread, unrelated to other positions I opened that ate my margin, so I had one put option still open in the morning and spent hours trying to figure out how I ended up with that put, even though it made money after all. I didn't see any fault on IB end though, maybe except unclear margin calculations that often I cannot explain.
    nooby_mcnoob and murray t turtle like this.
  6. The discussion is about "cash" account, not margin account.
    guru likes this.
  7. This approaches and exceeds the idiocy level, no ?

    Where they are now encouraging SUB 1 SHARE trading, why would the system be set up this way ?

    At the very least , there should be some serious lag in doing this, and for sub $100 amounts, zero exposure for the billion dollar baby.
    murray t turtle likes this.
  8. d08


    Round lots behave differently and have different conditions. There's also minimum commissions so doing it by 1 share would be expensive.
    I do agree that the liquidation engine should instead calculate how much is needed to be liquidated and only then take action.
    murray t turtle likes this.
  9. maybe you didnt hear, commissions are zero now . that's 0. , nada, nothing.

    and for the most part theres no diff tween selling 1 share and 1000

    where you been , what rock you been under ?
  10. d08


    You're just another arrogant neophyte. I don't use zero commission schedules because the order flow is sold. Since I have to spell it out, for you that means that you get a worse price on average and that in turn means you're paying more for executions. Firms buying order flow don't do it as charity.
    #10     Jan 27, 2020
    murray t turtle likes this.