Screwed by InteractiveBrokers!
I was screwed by IB big time and I'm seeking a good explanation from IB on their system error and slow investigation response. Otherwise, I'm seeking financial compensation from them.
I had some bull put spreads on the index and as always with any of my overnite positions, I practice good risk management by attaching either bracket orders or in this case a conditional market order (CMO)to buy back my sold leg if it threatens my defence line. As everyone already knew, the market collapsed on Tue and it went way beyond my defence line. I don't think anyone has seen this coming. I mean, yeah I expected some sort of correction, over days or even weeks, but not a market collapse in a SINGLE session! Anyway, I digress. Due to the time zone difference here in Singapore, I woke up on Wed morning shocked to see such drastic action. And more shocked to realise that my CMO was not triggered!!! I still have the trades in my account but the pending order of the CMO had mysteriously disappeared!
I talked to IB via IB chat and was informed that the the error message was:
"your order is not accepted, margin deficit would increase". IMO, this is not possible because if I did not have sufficient funds in the first place, IB would not have allowed me to open credit spreads position. I challenged the IB rep and he too was clueless and forwarded this issue to the IB technicians. Despite my pressing for a response time for this issue, IB repeatedly say that they can't tell when they can update me on the status of this issue. However, the rep said that I can place a new conditional market order now. And I went on to do just that. Because of the slight rebound on Wed, my defence line was still intact. However, I was still very concerned and it was important for me to know what happened on Tue. What if it happens again? I'm really disappointed at the sloppiness in which IB treated such time-sensitive trade issues.
On Thurs, the market opened very weak and my defence line was triggered. Luckily, I was watching it. The CMO didn't get triggered and the same error msg which IB rep told me flashed on my screen. And the market was sliding like a flood gate just opened. In the end, I had no choice but to close the whole bull put spread position, as opposed to my initial plan to only buy back the sold leg and let the bought leg profit under such circumstances. However, because of the delay in executing the closing of position (yes, its probably a matter of seconds or minutes), the loss I incurred was greater than planned had the CMO got triggered.
I have written a formal complain to IB and also seeking financial compensation from them if the explanation is not satisfactory. Their system failed me on Tue and once again on Thurs. I have made 3 contacts with them prior to Thurs BMO, and they are taking sooo long to come back to me on this issue. And as I'm writing now, they have acknowledged my formal complain, but they are STILL investigating. Unbelievable! If the IB rep that I talked to was sure that my problem was indeed due to margin, I would have gladly closed up the position on Wed. But as I said earlier, I seriously doubt so. And contrary to what the IB rep had advised me, if I had known that the CMO is still not working (at least for me), I would have also closed up my position.
Have anyone encountered such situations with IB or other online brokers? I know seeking financial compensation from IB will be quite a tough fight. I would like to hear from you. Meanwhile, I need to hear a proper answer from IB.
I had some bull put spreads on the index and as always with any of my overnite positions, I practice good risk management by attaching either bracket orders or in this case a conditional market order (CMO)to buy back my sold leg if it threatens my defence line. As everyone already knew, the market collapsed on Tue and it went way beyond my defence line. I don't think anyone has seen this coming. I mean, yeah I expected some sort of correction, over days or even weeks, but not a market collapse in a SINGLE session! Anyway, I digress. Due to the time zone difference here in Singapore, I woke up on Wed morning shocked to see such drastic action. And more shocked to realise that my CMO was not triggered!!! I still have the trades in my account but the pending order of the CMO had mysteriously disappeared!
I talked to IB via IB chat and was informed that the the error message was:
"your order is not accepted, margin deficit would increase". IMO, this is not possible because if I did not have sufficient funds in the first place, IB would not have allowed me to open credit spreads position. I challenged the IB rep and he too was clueless and forwarded this issue to the IB technicians. Despite my pressing for a response time for this issue, IB repeatedly say that they can't tell when they can update me on the status of this issue. However, the rep said that I can place a new conditional market order now. And I went on to do just that. Because of the slight rebound on Wed, my defence line was still intact. However, I was still very concerned and it was important for me to know what happened on Tue. What if it happens again? I'm really disappointed at the sloppiness in which IB treated such time-sensitive trade issues.
On Thurs, the market opened very weak and my defence line was triggered. Luckily, I was watching it. The CMO didn't get triggered and the same error msg which IB rep told me flashed on my screen. And the market was sliding like a flood gate just opened. In the end, I had no choice but to close the whole bull put spread position, as opposed to my initial plan to only buy back the sold leg and let the bought leg profit under such circumstances. However, because of the delay in executing the closing of position (yes, its probably a matter of seconds or minutes), the loss I incurred was greater than planned had the CMO got triggered.
I have written a formal complain to IB and also seeking financial compensation from them if the explanation is not satisfactory. Their system failed me on Tue and once again on Thurs. I have made 3 contacts with them prior to Thurs BMO, and they are taking sooo long to come back to me on this issue. And as I'm writing now, they have acknowledged my formal complain, but they are STILL investigating. Unbelievable! If the IB rep that I talked to was sure that my problem was indeed due to margin, I would have gladly closed up the position on Wed. But as I said earlier, I seriously doubt so. And contrary to what the IB rep had advised me, if I had known that the CMO is still not working (at least for me), I would have also closed up my position.
Have anyone encountered such situations with IB or other online brokers? I know seeking financial compensation from IB will be quite a tough fight. I would like to hear from you. Meanwhile, I need to hear a proper answer from IB.
posted by Simply Options Trader at 10:00 AM PERMALINK
2 Comments:
IB routinely accepts orders it "knows" cannot be executed. I see that often. The firm doesn't filter orders for do-ability. It only does so upon attempted execution. Why this is true, I do not know, but that's been my experience.
Thanks buckydent. Do you mind sharing your experience with us? Like what sort of orders you experienced in IB is not do-able? So we all can avoid making it. On the other hand, have you suffered any loss due to this and try to seek redress?
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