risk trading internet outage liability LLC

August 21st, 2010, 06:19 AM

ziebarf

I was one of the lucky few that got plowed by this outage. I was only trading 1 contract, and it was only a few points, but it was still frustrating. The biggest bother is that I called my broker and order desk maybe 30 times, neither answered. But thats what I get for not doing my orders OCO.

Your OCO are managed by your platform, not by the exchange, so it wouldn't have change anything here, imho.

August 21st, 2010, 06:45 AM

sam028

The orders reside on Interactive Brokers servers.

I can't imagine how scary could have been this, down for minutes, impossible to close position by phone, etc.
I'm using IB, like @ Fat Tails, and sometimes I'm not happy with them because of the feed quality, the bad Ninja integration, the high margins, the commissions which could be lower, etc, etc, but I never had an issue like this one in years.
I won't comment the issue itself, it's not supposed to happen, never, unless a 9/11 event, and that was not the case here. Not serious at all, really not.
The easy way to avoid this situation, if people wants to keep a "cheap but maybe not so reliable" broker, is to have another broker, and quickly hedge the positions when things goes wrong.

I even had a quite positive experience with Interactive Brokers. There was a major failure of one of the transatlantic backbones, so I could no more access US internet servers via my habitual service provider. My backup mobile service provider had similar problems. The interesting point here: For European customers Interactive Brokers offers an access via Swiss servers (many European customers trade futures via EUREX, so a login to US server and than back to EUREX would not make sense). The Swiss servers are directly linked to their US operations. The result: During that internet failure, Interactive Brokers data and order execution worked as usual, as their lines were not affected. Took me then 30 min to call up my prov�der and change the routing to alternative backbones to be able to access US servers (not brokerage) again.

Although the servers of IB are extremely reliable (most failures I experienced were due to failure of the exchange trading systems), I doubt they are able to handle customer requests in the case of a major incidence. The service level they offer (phone and chat) is quite low. Summary: Excellent technology, but service should be improved.

August 21st, 2010, 08:45 AM

Hello,

thanks for your reply. Yes, this was the issue. Couldn�t do anything! Your idea with second broker is right, and I know about as I did already to check out as a strategy maybe (same as straddle and strangle with options - but only commissions then).

However, as I know exactly what you mean I can answer you from my position: you are right 100% ...if...IF you would know if your initial position is still running. The problem is that you don�t know - because of data and connection issue - so maybe you think you are long and you open the opposite position for ES maybe with TF. But it could be that the ES is already flattened. Then your position you made to hedge the other one itself is the problem. We can now of course think about this one with stoploss or not, or what distance of stoploss. But the actual problem still persists - you don�t know if you are flat or not.

Referring to the OCO for me it�s clear that I do not anymore brackets. To avoid what happend 8/16.

And referring the liability issue I do transfer all my assets to my wife. Do you know if in US maybe the marriage partner is liable for the dues of the other one??

"Freedom is just another word for nothing have to lose";-)

Fat Tails

Hi Tony,

I apologize. I did not read your first post in depth, you already wrote that you tried to call your broker. If your broker's order execution system also relies on Zenfire, which I do not know, for sure they cannot do anything. Only way out of this might be an account with a second broker, and make sure that the second broker is not using Zenfire.

Following your post, I have tested my OCO/Interactive Brokers functionality with NT7 once again. It works as expected. If I cut off NinjaTrader or my computer, the OCO stilil resides with Interactive Brokers on their servers and is correctly executed.

However if Interactive Broker's systems are down, I will have the same problem as you had. And then I do not know what happens, if their servers will run again. Will the order still be executed? At what price? I do not know if they hold both legs of the OCO, the limit order and the stop order on the exchange. If this is the case, I might be first stopped out and then reverse the original position at the profit target. How would I know, whether I am long, short or flat?

August 21st, 2010, 08:50 AM

tony2604

And referring the liability issue I do transfer all my assets to my wife. Do you know if in US maybe the marriage partner is liable for the dues of the other one??

Why not keep the assets and transfer the risk?

August 21st, 2010, 02:46 PM

sam028

Your OCO are managed by your platform, not by the exchange, so it wouldn't have change anything here, imho.

You are correct, but they don't offer a bracketing feature for the free version. My mistake.

August 28th, 2010, 03:54 PM

Thanks for this information,

so the only possibility then is to transfer everything - except my guitar - to my wife. Or could it be that in US law my wife is liable for my losses??

"Freedom is just another word for nothing have to lose"

steve2222

See attached (page 11 I think), well at least Dorman (Mirus/Amp etc) requires a personal guarantee for an LLC account - so no protection there.

risk trading internet outage liability LLC

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risk trading internet outage liability LLC