Interactive Brokers fails to dismiss ex-client’s complaint over negligent position liquidation

Discussion in 'Interactive Brokers' started by tonyf, Oct 1, 2019.

  1. qlai


    I suspect that liquidation is not 100% automatic - that would be stupid (could cause all kind of market instability like flash crash). So I assume there is some account rep which looks at the account positions and initiates liquidation via some algo of his choosing. That's is why I think the negligence could be claimed. I suspect they claimed that Frank chose poorly and Frank said he just followed procedures and it's up to the algo. Just my guess.
    #11     Oct 1, 2019
  2. I am absolutely sure it is fully automatic. There is no reason to have it managed by someone manually. It would also strongly weaken IB's legal position, anyone could accuse IB of improperly liquidating positions or unfairly prioritizing some clients over others.

    #12     Oct 1, 2019
    comagnum likes this.
  3. No way that SPX puts premium would change >78 dollars within 19 seconds. Not on that day, perhaps during the flash crash. And no, quotes in index options during trading sessions are not 0.15/85 wide for sure.

    #13     Oct 1, 2019
  4. tonyf


    Can't be any clearer:
    #14     Oct 1, 2019
    GRULSTMRNN likes this.
  5. Brokers determine margin, they can and do change it at will......IB is notorious for its margin tricks.
    #15     Oct 1, 2019
  6. You must not be to familiar with IB.
    #16     Oct 1, 2019
  7. Only 15 years. And how wide markets are and at which levels they trade has nothing whatsoever to do with IB. Show me where an index option changed in premium by 1085% (from 7.xx dollars to 83.xx dollars) within 19 seconds other than during the flash crash. Obviously IB's liquidation algorithm did not function as intended if the numbers in the law suit are correct.

    #17     Oct 1, 2019
  8. If you are remotely suggesting that IB changes margin in order to push clients into margin deficits then you are nuts. If you refer to other margin adjustments then it's in the eye of the beholder whether that is interpreted as a trick but certainly has nothing to do with the case at hand. If IB changed margins during the time span in question then it would be mentioned in the suit.

    #18     Oct 1, 2019
  9. The time is question is clearly a volatile period or the option positions would not have been liquidated. IB clearly has to much exposure to the markets world wide and lean to heavily on algo to protect them. I have never seen a broker raise margin requirements as fast as IB. I can say they have the highest overnight futures margin.
    #19     Oct 1, 2019
    Overnight likes this.
  10. tonyf


    too x2
    #20     Oct 1, 2019