Perhaps IB will pay that $1M ?!?!?!?!? Anyway, you failed to provide all the vital information. This ultra super brave day trader Syed Shah from Toronto traded - the contract that was going to expire in a few seconds' time !!!! - very very massively (212 Futures contracts) !!! He lost $ 100 million, and he did have to pay. Traders don't trade contracts that are going to expire. ____________________________________________________________
Hmm seems like IB should hold some responbility for not attuning their software for the unexpected to occur but what do I know.
Only when they guaranteed negative balance protection, which is only for some Forex and CFD brokers the case. Usually for professional traders and most brokers they are not responsible for your losses, so this is your problem to cover funds when account goes negative. You might be sued legally from broker here when this happens. In any case you setup account with limited company from Cayman or so, then you can just shut down the company but again it is not that easy, as you can be sued too. But certainly with such a limited company you have more protection from unexpected larger losses beyond companies total assets.
If there are no extraordinary circumstances and you have assets they will try to collect. If you have no tangible assets - cars, houses and the like then it's pretty much over. If there is a bankruptcy filing that implies some assets - they will join in. Again no extraordinary circumstances they may spread the word to as many brokerage firms as their back office has good relationships with. It can be a very small community as many of the BO and compliance community know each other.
IB has a pretty strict margin protocol, and your position will likely get liquidated before it ever reaches that level.
%% Good points; but hard to believe any would not turn it over to a collection agency , even with no assets. But you may know something i do not...........................................