Interactive Brokers Troubleshooting

[sails]

Hi

I am trading options at ASX. I know that ASX is going to split options by factor of 10. So 1 option will correspond to 100 shares (it used to be usually 1000 shares). According to my IB account, the split was already done (overnight) for ANZ. For instance -2 c24.0 ANZ became -20 c24.0 ANZ. Theoretically nothing should be changed...
HOWEVER my margin requirements has increased by factor of 10 as well (!?). Obviously I have no sufficient funds to cover such idiotic requirements. There is a warning that if I do not make actions to reduce margins then it will be done by IB automatically in 10 minutes. What actions I supposed to make in order to prevent the enforced closure of my positions ? I emphasize that requirements are completely unrealistic because margin requirements per one option did not change in IB's software while the size of options decreased 10 times (and number of options increased by factor of 10 due to the split).

Alex, I agree that theoretically your margin requirements should not have changed at all. I suspect IB haven't yet made the necessary adjustments...

Anyway, the most urgent thing to do is call IB as early as you can on Tuesday morning BEFORE the market opens - or may be even try to get someone in the US on Monday evening to explain what's happening. Explain to them what is going on and that their software is incorrectly calculating their margin on the 1000 rate since it has changed to 100 AND ask for them to ensure that their software doesn't start liquidating your positions. I have heard that it randomly shuts down positions that may not be anything to do with the cause of the problem. Hopefully that has changed, however, people have been quite badly burned in the past.

Make sure you get to them before that 10 minute deadline after the Aussie market opens because I understand that, unless one of the IB operaters puts a stop to it, their software will indeed start attacking your positions.

I had a situation with IB recently where I had miscalculated a margin requirement and had a similar warning. I rang the Aussie or Hong Kong help number and they were helpful and quite practical in their assistance.

I posted a question to PerryT from IB some time ago asking about how brokerage would be calculated with the change in contract size in this thread: https://www.aussiestockforums.com/forums/showthread.php?t=10838&highlight=interactive+brokers

He said he would get back to me, but no reply as yet. Makes me think IB isn't up to speed on these changes yet. Maybe repost your question in that thread as well to make sure Perry sees it. Hopefully our moderaters will allow a repeat post in this circumstance - or just post the link back to this post.

Maybe someone else can add any further info. Anyway all the best with it and please let us know how you get on...


PS: Maybe also send PerryT a PM. There is a small chance he might get it before the market opens on Tuesday morning and be able to help as well.

 

[alex21]

Hi sails

I've exited and restarted TWS and the problem has gone. What a relief... The point is that I'm trading USA (together with ASX) so I do not exit TWS overnight. People who do this maybe even did not notice anything wrong.

It was a very serious matter for me so I reacted as quickly as possible in as many places as possible, including this forum. As soon as the problem disappeared I've tried to react also very quickly. However your reply has come earlier than I've restarted TWS... Thank you for your reply. The margin matters are of highest priority for me, because they may lead to a complete disaster. In this particular case I am not responsible for this fake "margin call". It is not my fault definitely. But it would be difficult to undo automatic closure in any case.

The question about fees for "small" options is an interesting one. I've played a bit with orders for ANZ options in TWS just now. My results - a minimum fee is 2 AUD, fee for 7 options is 2.10, for each option plus - additional fee of 0.30. So for a fee's optimization it is better to trade blocks of minimum 7 options (at least not less than probably 3-4)

Regards

 

[cutz]

Good news folks,

New rates regarding ASX stock options on the IB "Commissions" webpage.

30 cents per contact on the 100 multipliers, $2.00 per contract on the 1000 multipliers (obviously these are getting phased out).

Even the XJO index option commissions have dropped.

It just keeps on getting better.

Thanks IB .

 

[mazzatelli]

Good news folks,

New rates regarding ASX stock options on the IB "Commissions" webpage.

30 cents per contact on the 100 multipliers, $2.00 per contract on the 1000 multipliers (obviously these are getting phased out).

Even the XJO index option commissions have dropped.

It just keeps on getting better.

Thanks IB .

Oh no
There's going to be a surge in MQG options traded
Fade him!!!:

 

[sails]

Good to hear you have it sorted, Alex - or rather that IB has it sorted...

Good news on the fees too.

 

[alex21]

I am impressed that fees for futures options and "AP" options dropped. I had thought that option size reshuffling/split would cause insignificant increase of commissions. I was wrong. The only unpleasant thing is that partial filling of the order will (probably) trigger $2.0 fee. For instance, let you put limited order for 10 "small" options at 1.00 and only 1 lot is filled, the share price goes in such way that 1.00 option price is unrealistic, you move order to 0.95 once again only 1 lot is filled, you move order to 0.90 and so on. Each partial fill and your order price move will trigger $2.0 fee. Or maybe not ?

 

[sails]

I am impressed that fees for futures options and "AP" options dropped. I had thought that option size reshuffling/split would cause insignificant increase of commissions. I was wrong. The only unpleasant thing is that partial filling of the order will (probably) trigger $2.0 fee. For instance, let you put limited order for 10 "small" options at 1.00 and only 1 lot is filled, the share price goes in such way that 1.00 option price is unrealistic, you move order to 0.95 once again only 1 lot is filled, you move order to 0.90 and so on. Each partial fill and your order price move will trigger $2.0 fee. Or maybe not ?

Yes, would need the "all or none" order type to ensure that doesn't happen. But whether they allow that on the Aussie options market, I'm not sure.

http://www.interactivebrokers.com/en/trading/orders/aon.php?ib_entity=llc

 

[village idiot]

I had a similar problem as Alex21, which i posted at similar time in a different thread;

https://www.aussiestockforums.com/forums/showthread.php?t=22252&page=2

although I actually had positions liquidated becuase of it.

Like alex, they fixed the margin problem shortly after I/we sent in a ticket about it, but I still was out of my positions.

I have just had a conversation with them via 'live chat' and they have agreed to reinstate my positions when the market reopens later on.
If they make good on that then kudos to them because it is more than i was expecting...

Nevertheless everybody should be on guard when the next lot happens as I am not sure they have it entirely sorted out yet.

 

[sails]

...Anyway, the most urgent thing to do is call IB as early as you can on Tuesday morning BEFORE the market opens - or may be even try to get someone in the US on Monday evening to explain what's happening. ...

oops - I forgot it was only a public here in Qld today...

Just as well I have no positions at the moment...

 

[alex21]

I had a similar problem as Alex21, which i posted at similar time in a different thread;

https://www.aussiestockforums.com/forums/showthread.php?t=22252&page=2

although I actually had positions liquidated becuase of it.

Like alex, they fixed the margin problem shortly after I/we sent in a ticket about it, but I still was out of my positions.

I have just had a conversation with them via 'live chat' and they have agreed to reinstate my positions when the market reopens later on.
If they make good on that then kudos to them because it is more than i was expecting...

Nevertheless everybody should be on guard when the next lot happens as I am not sure they have it entirely sorted out yet.

Hi

So the IB's threat regarding position liquidation was not just an empty/void statement ?! I somehow avoided the position closure (so far) because of this bug. Did IB restore your positions ?

Regards

 

[sails]

Hi

So the IB's threat regarding position liquidation was not just an empty/void statement ?! I somehow avoided the position closure (so far) because of this bug. Did IB restore your positions ?

Regards

Alex21 - it's no idle threat from what I have read on other forums over the last eight years that I have been learning and trading options. Many have been badly burnt as it seems that IB's auto system randomly closes positions whether or not they are related to the problem. If closing a position makes it worse, then something else goes. Rinse and repeat until eventually margin is back under control. Too bad if it empties the account of the holder in the process.

With any luck, IB have improved their auto system, but the above is from horror stories I have read from burnt traders.

IMO, it pays to have either more than sufficient funds in the account or trade naked short positions with an Aussie broker who will usually give you a good part of the day to trade out of any margin issues. Even if IB permitted the first hour for Aussie options, it would give time for MMs to be actively quoting and allow for sensible adjustment or closing of offending positions.

With our Aussie market opening each morning over ten minutes, it could be near impossible to adjust or close a position for something like WBC. And Aussie MMs used to be very slow at entering quotes. I haven't traded live for three -four months (I think) due to other pressing family care issues, so can only hope that is also changing for the better.

 

[alex21]

Alex21 - it's no idle threat from what I have read on other forums over the last eight years that I have been learning and trading options. Many have been badly burnt as it seems that IB's auto system randomly closes positions whether or not they are related to the problem. If closing a position makes it worse, then something else goes. Rinse and repeat until eventually margin is back under control. Too bad if it empties the account of the holder in the process.

With any luck, IB have improved their auto system, but the above is from horror stories I have read from burnt traders.

It is really a horror story - when broker picks up RANDOMLY not liquid contracts and closes them at God knows what price... But in this particular case the trigger for the closure was completely FAKE. There was NO lack of money at the account. So if liquidation had happened then it would be fair to restore portfolio (or "undo" the closure). Currently I have illusions than I have (and will have) sufficient funds in my account to avoid automatic liquidation due to REAL lack of money, at least I have a plan what to do in this case in order to reduce margin requirements. Obviously I am vulnerable to the FAKE deficiency at any time, especially now (when WBC and WPL options split is pending)...

 

[borntosucceed]

Anyone else having problems loading FX history into Ninja? Worked well every morning thus far. This morning NT just displays "Loading data $EURUSD at 26/05/2011" and does so for the other symbols when I abort the task.

Thanks
Thomas

 

[excite]

I just opened a margin account with IB, since I currently have sufficient fund in my account, I do not want to use margin at this stage, but when I tried to place a bid on a stock in ASX, it looks like I have to use margin according to the information given under the "margin impact". Can anyone let me know how to avoid using margin when you have sufficient cash in account? Many thanks.

 

[borntosucceed]

Anyone else having problems loading FX history into Ninja? Worked well every morning thus far. This morning NT just displays "Loading data $EURUSD at 26/05/2011" and does so for the other symbols when I abort the task.

Thanks
Thomas

After many attempts trying to contact them I finally got through to the chat support. Yes there is an issue with their historical data server, they are working on fixing it.

I can now stop checking my firewall, computer etc.

 

[village idiot]

alex, sorry I didnt see your 10th may post till this thread got bumped. To answer your question, yes they did reinstate all my positions at the exact prices they closed them at, about an hour after the opening on the following monday.

(I wished they hadnt though as i could have reinstated them myself at that stage at better prices on the market lol. perhaps i should have waited till monday to kick up the fuss.)

as far as the random choosing of positions to liquidate, bear in mind that there has to be a market open to liquidate them in, and that at least narrows down the subset of positions the computer can choose to liquidate. In my case, at the time the computer glitch happened, I think only the CFE was open so they wiped out all my positions traded on that exchange. If there had been more markets open presumably they would have had some more.

 

[IFocus]

I just opened a margin account with IB, since I currently have sufficient fund in my account, I do not want to use margin at this stage, but when I tried to place a bid on a stock in ASX, it looks like I have to use margin according to the information given under the "margin impact". Can anyone let me know how to avoid using margin when you have sufficient cash in account? Many thanks.

Simply don't place orders for more than the amount in the account.

 

[excite]

Simply don't place orders for more than the amount in the account.

Thanks, but when I place an order for less than the cash amount, I click "check margin", and it shows that the order will be partially paid by cash, and mostly by margin, maybe this can be adjusted by settings somewhere in the account?

Another question is: if I did use margin to buy a stock someday, and then after several days I have sufficient cash at hand, can I pay the loan straight away.

 

[village idiot]

I asked similar question a year or so ago and here is what they said;

2010/07/27
10:21:15 IBCS Margin is automatically calculated for every margin account. As long as you have enough cash in your account to cover the position, no margin is used. Once the value of all your positions exceeds your cash amount, then margin kicks in.
Regards,
IB
2010/07/28
03:34:15 yeah but that doenst really answer the question of why there is margin listed on a position i have already paid for. Are you saying that although there is maintainence margin listed in my margin report it isnt really counted towards the overall maintainence margin? If that is the case then why have a figure there at all?
is it just there to helpfully tell me what the margin would be IF i then bought more shares in excess of my cash ?



thanks


2010/07/28
09:25:08 IBCS Since margin is calculated for all account, it is a simple a helpful way of tell you what the margin will be if you bough in excess cash.
2010/07/28
10:14:38 thanks for taking so much time to really explain it properly

so you can just ignore it .
but just to be sure; you arent buying a stock in a different currency than your base currency are you?
If so, they do apply margin and charge interest to the position becasue they have lent you the money in the other currency

 

[excite]

Thanks Village,
do you have the answer for my another question: if I do use margin, can I pay back the loan to IB anytime when I have sufficient cash?

By the way, I am buying stocks in the same currency as my base currency.