With $500 margins covering $60,000+ contracts like ES, if something crazy happens and the broker fails to liquidate before the account goes under balance, the FCM wants to be able to get their money back, either freely or by suing the customer. If the customer has no assets or income then it becomes a problem.
You are 100% correct, I was responding to "financialmarket" who thinks Broker Dealers are concerned about clients going homeless! Never a dull day on here.
This sucks...now I know another reason why to trade futures with a stop loss, besides being disciplined.
Futures traders get into deficit too often in spite of account policing efforts. The firm has to initially make your losses good with the other side, then try to collect from you. Likely they feel it's not in their best interest to deal with someone whom they perceive as "pockets are not deep enough".
But wouldnt they liquidate my position if my balance falls below required margin requirement ? To keep them safe and me from getting into the negative ? Dont they have risk management? Its not like I would allow myself to blow up either on 1 trade..
That is most/all brokers' intention and effort. But they don't catch them all.. especially when "things" are fast and hectic. Years ago they didn't have computer programs to monitor customer accounts for when they got close to wiping out their equity. Such things were mostly "noticed" at the EOD settle-up. They are much better now about policing account equity, but not always perfect and not always "fast enough". And since they have to make any debit losses good immediately, regardless of circumstance, I suspect firms weigh the potential gain from commission vs. potential debit losses they may be forced to cover.