A Disturbing Development: Interactive Brokers Implements Price Caps

Tyler Durden's picture

In a rather stunning development, moments ago Interactive Brokers unveiled a previously unseen warning, one called a "Mandatory Cap Price", which warns traders that the brokerage may set a cap, a floor or outright cancel any order that would otherwise be marketable, due to a "price that is not consistent with a fair and orderly market.

Needless to say, for traders agreeing that they are willing to "trade" only based on what some arcane algorithm decides is a "fair and orderly market", or otherwise get kicked out, leads to numerous questions, chief among which is: just what does IB know about what may be about to happen, and why is the most basic function of a marketplace - the exchange between a willing buyer and seller - suddenly compromised?

Ultimately, price caps should only impact market orders, which means HFTs will have a harder time to frontrun "liquidity providers", however the fact that the interference here is the result of exchange mediation based on some unknown protocol is mildly disturbing.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Rainman's picture

" .. fair and orderly market  "   LOL

buzzsaw99's picture

translation: there is no market.

Hitlery_4_Dictator's picture

I thought we have the freest elections and the best and most liquid stock market in all the world? I used to hate Putin but maybe he is right and I was a dumb-ass sheeple 'Merican? 

SomethingSomethingDarkSide's picture

OptionsFirst just sent me a container of Vaseline courtesy of being bought out by Etrade

mtl4's picture

All these brokerages are fucking everybody, IB is just the latest........wait until the real shoe drops later.

Duane Norman's picture

Sounds like they're trying to reduce orders placed well above/below the market, or cut on HFT... but they'll fuck the retail investor somehow, just you watch. 

knukles's picture

That's like I told one of my old Equity Geek bosses.
He was talking about how curbs should be implemented on the NYSE (long ago and far far away, folks).
I asked him if that meant on the upside as well.
No?
"You are no free marketeer or capitalist, sir."
Needless to say I didn't get along with him.

phatfawzi's picture

i received a letter from my broker telling me tha my IRA account will be closed within 30 days and i need to transfer elsewhere. When i called the agen on the phone would not give me any details. This account has been with them for over 3 years and its actively traded. Somethinig fishy is going on. 

Stackers's picture

So if you place a "market" order it automatically gets changed to a "limit" order with a price level of their choosing ????

Hitlery_4_Dictator's picture

I would demand the details or I would say I'm contacting my laywer. 

QEpp's picture

So far, I can't complain about IB.  I think they are actually pretty good.  Although TD Ameritrade has a better mobile app.

Hitlery_4_Dictator's picture

On second thought that can't be because we gots the NFL, porn and all this cool gay baffroom stuff. USA. USA. USA. 

mkkby's picture

You dumb sheep can't read.  It says it only applies to market orders.  Anyone using a market order is likely to get screwed by market makers or algos.  They are simply trying to protect clients who are too ignorant to understand this.

This place used to be about trading and comments here were actually enlightening.  Now it's just the latest stop for morons and their religious beliefs.

The central planners's picture

The fed has been front running "liquidity providers" aka taxpayers for a century now.

Mark of Zerro's picture

...short it while you can...

johngaltfla's picture

Uh, it's designed to fuck over the shorts. And to fuck those over who wish to buy gold stocks that I anitcipate will experience a 20% decline with the larger market. This is bullshit. Let the HFT faggots set the price and fuck the masses again. I hope Blankenstein's dog vomits in his jock strap before he goes to the gym.

ToSoft4Truth's picture

Agreed.  Say one shorts AAPL at 108 and the stock goes to $3.00....  Brokers could tell us AAPL is really worth $125.

 

Government is gonna say...

 

Goodfellas: Fuck You, Pay Me https://www.youtube.com/watch?v=3XGAmPRxV48
Sh0t's picture

I use IB. I have also expected shorts to get pwned during the collapse, which is why I have been cautious in making long-term shorts in anticipation of it. 

KnuckleDragger-X's picture

Get back in line prole.....

Creative_Destruct's picture

All markets a re trading like thin penny stocks now- huges gap moves and big bid-ask spreads. Welcome to the demise of markets brought to you by Central Banks & HFT.

pickatheweek's picture

Russia shot down a NATO jet...happy horseshit.

reallyseriousstuffnews's picture

A decentralized proof of ownership and exchange would hinder such things, could most likely kill HFT also with a pay to repeatedly play disincentive.

onewayticket2's picture

in other words, whenever we decide we dont want to execute your trade....

 

the Exit just got even smaller....

 

ejmoosa's picture

Are we sure that the exit doors are not being chained shut even as the exit signs remain illuminated?

Scuba Steve's picture

Thats what I thought back in 2013 when I moved all 401k proceeds to cash.

If they can chain it now on small gaps ... Imagine what the gaps will look like when the SHTF, mile long spreads.

Bryan's picture

I'm in cash too, but I don't trust the company that holds it to give me the cash on demand.  If it's not in your hand, you don't own it.

SpanishGoop's picture

Do not worry, we will protect you !

Yea right.

 

offwirenews's picture

Whole bunch of lulz.

BandGap's picture

Just wow.

Putting the braking system in.

huggy_in_london's picture

I've been seeing that message for a few weeks now. Its not new (but not less disturbing of course)

debtor of last resort's picture

PPT gets bigger and bigger. How many employees now, 1984?

RawPawg's picture

this was NOT in my ''Terms Of Sevice" contract 

espirit's picture

Didn't you expect them to move the goalposts?

Where have you been?

bpj's picture

Finally hit the mother load and mama sex NO

medium giraffe's picture

IB dropped their retail FX accounts in the US very recently.  Someone's getting nervous.

holdbuysell's picture

I agree. See my comment below on new fees being enacted.

Chippewa Partners's picture

At least they let you direct orders to IEX.

Doom Porn Star's picture

"Fair" to WHO?

"Orderly" for WHO?

HOLY SHIT

Father ¢hristmas's picture

Come on, bro.  You know "who".

Lol

Chippewa Partners's picture

I thought ACN at a buck was good value!

Boomberg's picture

Are they changing their name to "Sometimes Interactive Brokers"? Plenty of other trading platforms out there, and better ones. Their commercials alone are enough to do business elsewhere.

Scuba Steve's picture

What? ... you dont like a woman putting in a "hedging trade" at 8PM dinner and the white male is like duhhhhh, "what, I didnt know there was trading past 4:30PM,when did they start that?" Haha, thats when you head for the hills with your PM's.

 

Creative_Destruct's picture

There are no true market forces anymore, only Central Banks & Algos. 

Father ¢hristmas's picture

Muppets checking in at the Hotel California.

tarabel's picture

 

 

I like the early Western Outlaw Eagles and hate the eventual sellout PC Eagles they became.

E.F. Mutton's picture

Wow.  I'm speechless.  And that never happens.