d08, I studied IB's liquidation procedures and have not been able to find any time limit that you mention. Could you please be more specific as to where you got that info? It would be of great interest to everyone I am sure. Thanks
they don't mention it anywhere afaik (likely because they don't want people to claim they were screwed when for some reason they don't), but it's common practice.
From IB webpage: Our real-time margining system marks all customer positions to market continuously. All orders are credit vetted before being executed and positions in accounts with inadequate margin deposits are liquidated automatically.
Exactly. If IB advertises risk management in this way, one would naturally expect that to be the case. It's an automatic algo, nobody is 'deciding' anything. It's also very plainly stated here: "In the event of a margin violation, the account is subject to automatic liquidation on a real-time basis. Liquidations are accomplished with market orders, and any/all positions in the account can be liquidated." reference - http://ibkb.interactivebrokers.com/node/199 Pretty straight forward, until one digs into the depths of the account terms and conditions and IB replies stating account liquidation is a right, not an obligation. To which I ask, why did IB not exercise their right to protect themselves, by liquidating client accounts in violation of margin requirements.
Thomas Peterffy - Chairman and CEO Normally our automated risk controls would liquidate client positions to prevent such losses, but in this case the move was instantaneous and we were unable to liquidate. http://seekingalpha.com/article/283...y-on-q4-2014-results-earnings-call-transcript they had 5 minutes...thats not instantaneous
Here are two EUR/CHF forex charts from IB TWS. The color one is a mid-point chart, the white one is a bid/ask chart. IB claims on ther website that they have direct access to 13 largest forex dealers which is equivalent to about 85% of global market share (and liquidity) and I believe them. During the event they never stopped streaming quotes. Not a single minute candle is missing. They certainly had liquidity to match our orders with. Even during the first minuteby looking at the 5 second chart. The move was certainly not instantaneous. It took some 30 minutes to reach its bottom. There were many bids on the way down. ps: I hope the images are readable, timezone is central europe though.
Sure, here is forex EUR/CHF 5 second chart, again color for mid-point, white for bid/ask. The 3rd and 4th are the close-ups you wanted.
OK, so what's the way to proof there was enough volume after the event to auto liquidate. Clearly there was a market in the first 5 minutes that allows for liquidation. Even the currency futures in Chicago traded for a while with some good volumes before shutting down. Would not put it past the IB trading arm Timber Hill to take the liquidity to get out of their position and IB sacrifice the brokerage clients in the process by not auto liquidating them.