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Interactive Brokers Having A Really Tough Day With Locates, Meg_C Wishes It Was Tomorrow
"Based upon information available through 14:30 today, we remain unable to locate and borrow / re-borrow the shares necessary to meet delivery obligations on certain short stock positions in your account. As current SEC regulations now strictly enforce delivery obligations, these short stock positions will be subject to forced buy-in by IB should our continued efforts to borrow or re-borrow the necessary shares today be unsuccessful.
A list of stocks in your account UXXXXXX that may be at risk to a forced buy-in, based on current settlement information is provided below. You may wish to consider repurchasing your position(s) in these stocks in order to control your portfolio/risk at any time prior to the end of the current regular trading session (16:00 EST). Transactions occurring after 16:00 cannot be considered against the delivery obligation.
ACWI (XYZ shares)
As noted above, we will continue to make every effort to locate and borrow the shares necessary to allow you to maintain these short positions, however, given the limited time available in the current trading session we will be unable to provide any further updates as to your account status until delivery of your daily activity statement.
Now the oddest thing is that according to the below screen capture, IB had quite a few shares available at any given moment during the day, and definitely at 14:30
So which was it IB - recall or available?
Also, in a separate issue, Zero Hedge is starting to feel bad for Megan_C?
Megan C: Hello, this is 'meganc'. How may I help you?
traderxxx:I'd like a thourough explanation of why a fully funded cash postion was liquidated, namely AMSC
Megan C: alright
Megan C: your account was in margin violation
Megan C: and our system is automatic
Megan C: andliquidates a position to free up your margin
traderxxx: there were no margin postioins how is that possible
traderxxx: no margin should have been required for any postions in my account
traderxxx: hello??
Megan C: yes I am still here
Megan C: I am looking at your account information
traderxxx: ok
Megan C: alright
Megan C: you were charged a fee of -.01
Megan C: which caused you to have a negative cash balance
Megan C: and whenever there is a negative cash balance
Megan C: the account is immediatley liquidated to make up for that
traderxxx: gee, what did you charge me a penny for?
traderxxx: and this implies my cahs balance was zero
Megan C: I understandyour frustration
Megan C: I'm looking at your account statement from last night
traderxxx: I'm not frustrated
Megan C: and there was a charge for settle cash
traderxxx: what's that
Megan C: well I apologize for saying that then, but the charge is shown on your daily statement for yesterady
Megan C: your starting cash yesterday was .19
Megan C: there was an interest charge of 20 cents
Megan C: which caused you to go negative
traderxxx: I'm looking at yesterdays statement and seeing that I was
charged 20 cents interest against a 19 cent balance, whay was I charged
interest?
Megan C: and that is where the -.01 comes from
traderxxx: when did I ever have debit balance to charge interst for?
traderxxx: you stillthere?
Megan C: yes I am still here
Megan C: you were charge interest on the cash that you had
Megan C: .19
Megan C: it is a monthly charge
traderxxx: you chrged me interest on a positive balance??
traderxxx: what is this charge called and where is diclosed?
Megan C: i am getting that information to you righ tnow
Megan C: IB collects interest on a daily basis, and charges them at the end of the month. Cash in the account is charged interest on a daily basis for holding it over night etc. Megan C:and then the charges are all done at the end of the month
Megan C: if you go to www.interactivebrokers.com
Megan C: and under fees
Megan C: go to interest and financing
Megan C: there is a breakdown of these fees
Megan C: and it shows you how it allots for these charges each day and tehn each
month
traderxxx: still I don't understand how apositive balance could
charged interest?
Megan C: cash balances are charged intrest
traderxxx: what? that is insane it is supposed to work the other way! HELLO? are we on the same planet?
traderxxx: can you please cite exactly where in theuser agreement, or exactly where on your website it states that actually charge interest for a oistive balance?
Megan C: on the website
Megan C: go to fees
Megan C: and then interest and financing
traderxxx: I'm there and I can't find it
Megan C: what are you seeing?
traderxxx: interest is typically charged on negative balances not on positive balances!!!
traderxxx: I'm seeing a very long page with lots of example and I want to
know where i ever agreed to pay interest on a postivie balance
traderxxx:btw i'M NOT FRUSTRATED AT THIS POINT i AM FURIOUS!!
Megan C: alright
MeganC: there is interest charged in ending settled cash
Megan C: it is all right there on this page for you
Megan C: you were charge a monthly fee for your cash balance
traderxxx: where exactly on that page are you referring to? section, line number paragraph heading
Megan C: then go toexamples on how we calculate intereset
Megan C: click on that link
Megan C: and the information is there
traderxxx: whcih one there are many
Megan C: well look at the calulations sections
Megan C: and then the final
posting
Megan C: the final posting information I think is what you would
be most interested in
Megan C: can i help you with anything else today?
traderxxx: I'll have to hire an accountant to figure that one out. Well if you take a look at my permissions you'll I just updated and broadened them
with the intent increasing my balance with company and increasing my trading with your firm, but until I figure out what sort bamboozelment you
folks are pulling here. I've had many trading accounts over the years and never ever been charged interest ona positive balance
traderxxx: this is ludicrous!!
Megan C: if you need any additional clarification please let us know
Megan C: have a nice evening
traderxxx: yes ineed additional clarifiaction, I jsut don't understand it
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OMG.
And I thought my accounts were plagued with error and unrest from these wily brokerages.
WTF!!! Thank you for posting! I will now close my account at IB immediately...unbelievable.
Someone with an open IB account please ask Megan_C if she reads ZH!?!?!
So am I right in thinking they liquidated an entire position of AMSC --which closed at 24.82 today--- to pay for a penny of overdraft?! Not to mention the insanity of charging you interest to hold cash. Don't they already make enough charging on the trades themselves??
Holy cow, I guess I better go read all the fine print in my IB account.
That's dicked up.
come join me at www.tradeking.com
$4.95 trades and i've never had a problem like this
Ok maybe I am slightly pandering for the $50 dollar signup bonus haha but seriously I've been nothing but happy with them since March
Online brokerages are the 21st century 2-dollar bucket shops of old. Only worse. You should see what the spread-betting firms in the UK get upto..
Spot on.
Tarde futures and say fuck it to stocks! Stocks are for whimps!!!
That comment somehow came out perfect.
LMAO.
Has this been happening all week in what has been a short squeeze rally on top of another?
IB charges a penny and then liquidates the position. Wow. What the hell is going on there?
what kind of dick head leaves the account on $.01?
IB charges a monthly $10 fee so i guess that's where they got him. if you don't have it in your account they will sell you out.
must have been a long day for megan to not catch the chat's meaning, she's usually very good. but it's kinda scary they have only 2 people on cust service.
"IB charges a monthly $10 fee so i guess that's where they got him."
Kinda, sorta. I only get charged the ten bucks if I fail to generate $30 in commissions during the month.
But she's talking about an interest charge, not a monthly fee. I'm still trying to figure out how he was charged interest on a positive balance.
I'd better look at the fine print of my IB account, although I'm probably OK because I trade S&P futures, not stocks.
LOL -- Poor Megan. Poor traderxxx. Poor IB. Pour me a drink!
+1
OT - Marla could we please have a set now.. so I have some tunes to drink with?
Please.
hoh
Tyler what do you think of this analysis? I am not a trader so a lot of what you are talking about goes over my head but I still enjoy reading since I am trying to understand the economy. Before I came upon your site I found Market Skeptics and while it is a bit more apocalyptic than Zero Hedge he seems to make sense....or does he? What do you and your readers think of this post? I have no affiliation with Market Skeptics and my interests before the collapse ranged around the war being waged against us by certain very unhappy sectors of Islam.
Government Sanctioned Insider Trading***** by Eric deCarbonnel
The easiest way to think of options is as a type of insurance. Investors pay a premium to protect themselves against sharp swings in the market. If these sharp swings don’t happen, those selling options (option market makers) keep the premiums as profit.
Now, WHAT DO WE KNOW ABOUT WALL STREET FIRMS AND SELLING INSURANCE? They are addicted two it! Bond insurers sold insurance on risky mortgage backed secuties. AIG’s financial product unit sold insurance on all kinds of risky bonds. Etc…
Just like selling credit default swaps on toxic debt provided a nice steady stream of insurance premiums based on the assumption of no defaults, options market makers (ie: Goldman Sach) made a nice profit every month selling insurance against sharp swings in the market, based on the assumption of market stability.
In a legitimate free market, every single option market makers would have already gone bankrupt, especially with the volatility over the last two years. Luckily for option market makers, US markets are neither legitimate nor free.
Below are the three ways options market makers manage to stay solvent, despite the flaws inherit in their business model.
1) Market manipulation
Conveniently for options market makers, US regulators have created a market systems with no transparency or accountability, perfect for manipulation. If prices go in a direction they aren’t supposed to, causing catastrophic losses, options market makers can take matters into their own hands. In futures markets, this means expanding or shinking open interest (the supply). In stock markets, this means buying or (naked) shorting selling a stock.
Since there is no transparency in US markets, most manipulation is hidden from investors. Even when suspicious activity does show up in published statistic, it is conveniently never investigated, creating a complete lack of accountability.
Here are a two articles showing this blatantly obvious manipulation occurring in US markets.
The New York Times explores the mystery of the stock price and the strike price.
The interest that IB charges for balances under
$10,000 is (BM - 0.50) - and they use the fed funds
rate as their benchmark, now at 0.14. Hence you
pay to hold any cash balances at IB.
nice.
no. cut off at 0.
the question is where the interest charged came from, because he seems to have a cash account which doesn`t allow shorting nor using unsettled cash
The day my broker charges me for keeping money in my account is the day I switch brokers.
INSANE
I think the CEO of IB should post to this site and explain what you have done to this guy. After explaining, bust the trade and put him back to where he was.
IB = Intense Boning
PS...we already know the IB management is reading this so don't try to hide. Just do the right thing, ok?
Intense Boning - LOL
The guy made $850 million last year...he could care less.
More than likely he was charged interest on the borrow of the stock and that's where the fee came from. If the cost to borrow is higher than the interest earned on the cash in the account then you have a debit. I was under the impression that these charges accrued until month end. I've been with IB for many years and while I've had issues with them on other things, never for borrows and I've never been bought in on any position.
He was long. There was no borrow.
He was boned. There was no Astroglide.
MeganC is a dirty whore just like all the other crooks in this business
More likely she's a meagerly paid man from India or Pakistan, who has been instructed to use an American sounding name, and a female persona (to appear more accommodating)
The conversation shows all the markers:
#1 - Constantly telling you what they're going to do next before they do it (part of the training). Props to Rick Moranis for instituting that one.
#2 - Being in no position whatsoever to refer you to someone with any kind of decisionmaking power - only to remind you of things you could have read on the internet.
And, most glaringly,
#3 - Not having the slightest clue as to the social, cultural, or technical CONTEXT of what you're talking about.
This is not the fault of the Indians or Pakistanis. It's the fault of companies who don't give a shit about their customers and who figure it's cheaper to pay a pittance for a simulation of customer service rather than the real article.
#9115 is correct. i get charged interest when i hold positions overnight. why all the complaining from people?
WOW.
So glad I didn't go with interactivebrokers.com. It's clear at this point that they're absolute scum.
I've been very happy with IB, but I trade futures, not stocks.
YEEHAAW lets trade some stock! on margin! I foresee no problems in this perfectly rational and legitimately run market.
Screw IB.
Today I also received a buy in notice from IB. Been with IB a long time now and this is my first buy in. I understand buy in's happen but as I received the notice I am looking at my screen which is telling me shares are available. As strange as I thought it was I didn't think too much of it until reading ZH tonight and reading others with the same problem today. Just a little head scratching now....
what knuckleheads these customers are. One has no idea that he could get bought in on a hard to borrow stock and the other has $0.19 cash in his account. Such people should not be allowed to have a brokerage account.
I've used IB for 6 years and never ever had any problems with them. Meanwhile I can trade futures, options, international stocks and currencies all from one account and the lowest commissions in the industry. Try that at Schwab, TD Ameritrade, Fidelity, etc.
Can I get a Sham-Wow with that IB subscription you are selling?
I get about 5 buy-ins per day on the exotics I trade. A small inconvenience compared to the 7 figures I will make trading this year. IB is not for amateurs. IB doesn't care about whiny nooobs with $500. But if you are a Pro and have 70-80% margins because of all the GREAT things about IB... you will just absorb the minor bullshit. I have never seen a profitable, hi-volume Pro complain about IB. This entire thread is beneath tabloid.
5 buyins a day huh. You have what, 300 stocks short? Keep it real.
My colleagues from India tell me that before you open a brokerage account in India, you have to go sit for a 2 day class where you learn basic shit like not keeping 19 cents in a brokerage account, some basics about the products you can invest in etc... We need rules like that over here, especially for the 401k crowd.
NO KIDDING!!! When I read all of these "facts" I just shake my head and wonder why on earth they are even in the market.
IB is a disaster. Their cheap comish is great but thats where the positives end.
Their data feed is the most incomplete inaccurate thing I have ever seen in my life. There are numerous times a stock is hitting new highs and IB will report its still 0.04 under the new highs even when there are enough contracts trading to print (as indicated by eh hem, a real data feed). IMO their feed is criminal to be that inaccurate. It;s like your using an FX MM....
Speaking of FX, never "close position" on an FX position from your account window in IB. It can generate erroneous trades as a result (35,000,000 yen erroneous). Of course they will deny this is possible when you speak with customer service. Offer to video tape it happening and send it to them, they will not recommend you do that :)
This happened to me with Scottrade also. I bet Goldman Sachs does not have these type of problems.
I was having a relatively good day, reading that just totally fucked it up. I felt like I was in customer service hell. Now I want a tranquilizer and a scotch!
Fuck the pitchforks...LOAD THE GUNS!
Why trust any prime brokerage?
hi...
I got an email from Ameritrade about my SPY short on 9/24/2008, and I decided to ignore it, well, forced buyback did not happen, and you all know what happen to SPY after that...
apparently, someone else wants to short the SPY and want my shorted shares very badly!
the email is as follow:
TD AMERITRADE, Inc. Potential Forcible Buyback Notice
You have a potential forcible buyback of your entire current short position of SPY.
The potential buyback date is the close of business on 09/26.
If you have already closed this position, please disregard this message.
TD AMERITRADE will make attempts to try to borrow the shares from other brokerage firms. However, if we are unable to obtain the shares, you may need to buy back the stock.
Please note that TD AMERITRADE make take forcible action at anytime on the due date to ensure the short position is covered.
When holding a security short, you must remember you are borrowing shares from other clients. To determine whether shares are available to short, Ameritrade Clearing pools all shares held on margin of a given security and then calculates the number that are available.
Keep in mind that this Potential Forcible Buyback Notice is a new notice. Any previous notices sent may still be in effect.
If you have any questions, please log on to your account and click the "Contact Us" link.
Thank you. We appreciate your business.
I shorted ETFs with IB before. And a positive cash balance does not guarantee no margin interest. This is how they calculate it. Let's say you have $10,000. You are long a stock with capital $5,000. Then you move on to short two positions at $5,000 each. So you have a total of cash position at: $10,000 - $5,000 (long) + $5,000 (short) + $5,000 (short) = $15,000. However, you equity (if fully liquidated) is only $15,000 + $5,000 (long) - $5,000 (short) - $5,000 (short) = your original $10,000. Margin interest is accessed in this case (despite the positive cash balance) because you are using margin in holding all your positions ($5,000 long + $5,000 short + $5,000 short = $15,000, which your $10,000 does not cover); thus you would be charged margin interest on the uncovered equity ($5,000 in this case).
What I really want to know is:
How do brokerages determine *who* to force a buy-in for? Is it first-come-first-serve? Does the pain get spread around evenly? After all, it's not a binary thing. By that I mean they have to make up the shortfall of shares they can no longer loan - not all shorts outstanding on a particular security.
If you'd like additional information regarding these two issues, log into your Account Management and send a webticket to the attention of Andrew.
Regards,
IB
If HFT wasn't the tip of the criminal iceberg; some more to think about w/ IB.
http://74.125.155.132/search?q=cache:fFAJAX-7fO0J:wilmott.com/messagevie...
{Wed Nov 19, 08 04:30 AM
No surprise if IBKR will face SEC investigation into front running, data mining customer order flow, throttling order flow to manipulate one side of the market etc. This occurs in spot as well as derivative markets. Some of this is alluded to in the customer waiver but there is much we don't know about their practices. They are using this information in their market making activities, using dark pools to cross trades against customer orders.
Of late the few large prime brokerage customers are getting wind of this and fleeing IB much like Lehman and Morgan Stanley, combine this with the inventory they must keep in their market making activities in this very illiquid market and it's a recipe for disaster.
Other outstanding issues relate to the current corporate structure which renders shareholders powerless in relation to Thomas Peterffy and has been detained in SEC filings. Try to formulate the logic in "longterm" ownership once you read about that. The best you can do with the equity is short term scalping.
Then there the issue last year of failing to supervise "compliance staff" for further reading here:
http://www.cftc.gov/newsroom/enforcementpressreleases/2007/pr5354-07.html
If you call and ask there really is not a compliance department at IB at all, even employees know this. There is no real chinese wall at IB between customer order flow and market making activities, hence "Interactive". I encourage you to call IB and enquire about the nunaces of simply calculating p&l on their platform. Seems simple but not even the progammers there really know how it is done because they time slice data and induce network latency in their plaform data feeds to create small profits for themselves at customer expense sort of a technology induced payment for order flow.
Further, they are trying to create an introducing-broker arrangement with MF Global but MF wants no part of it because of the type of business IB is engaged in.
See here:
http://www.bloomberg.com/apps/news?pid=20601103&sid=al0iBVv90ltQ&refer=us }