Oil crash busted broker’s computers and inflicted big losses
1–10 of 182 posts
Re: Oil crash busted broker’s computers and inflicted big losses
#2Incorrectly assuming values can never be negative is an all-too-common occurrence in trading and financial software. In 2012 Swedish stock futures trading was suspended for a time because their matching engine used an unsigned type for order quantities and someone submitted an order with a negative value which wrapped around to 4 billion: https://www.reuters.com/article/markets-sweden-bug/swedish-s...
Interactive Brokers' software is usually very solid. I'm surprised they weren't ready to handle this, the possibility of oil going negative had been discussed for some time before it happened.
Re: Oil crash busted broker’s computers and inflicted big losses
#3As usual, this nonsense headline is clickbait for the truth - some traders couldn't trade when oil went below zero.
Re: Oil crash busted broker’s computers and inflicted big losses
#4Would any of the traders mentioned that owe all that money to Interactive Broker's have to pay the total amount? Or is that part of Interactive Brokers' loss claim.
Re: Oil crash busted broker’s computers and inflicted big losses
#5non paywall link
https://business.financialpost.com/pmn/business-pmn/oil-cras...
Re: Oil crash busted broker’s computers and inflicted big losses
#6Incorrectly assuming values can never be negative is an all-too-common occurrence in trading and financial software. In 2012 Swedish stock futures trading was suspended for a time because their matching engine used an unsigned type for order quantities and someone submitted an order with a negative value which wrapped around to 4 billion: https://www.reuters.com/article/markets-sweden-bug/swedish-s... Interactive Bro…
I particularly dislike the attitude of the CEO which shows he either doesn't know or pretends that he doesn't know how such contracts work. Please read the contract specs and educate yourself a little, Mr. Peterffy, they're public and free.
> Peterffy said there’s a problem with how exchanges design their contracts because the trading dries up as they near expiration. The May oil futures contract -- the one that went negative -- expired the day after the historic plunge, so most of the market had moved to trading the June contract, which expires May 19 and currently trades around $24 a barrel.
> “That’s how it’s possible for these contracts to go absolutely crazy and close at a price that has no economic justification,” Peterffy said. “The issue is whose responsibility is this?”
Nobody ever promised neither liquidity nor positivity of prices, it is the fault of the brokerage, plain and simple. Thankfully $100M is something that IBKR can take on their books (they have $3B of cash according to the latest filling).
Re: Oil crash busted broker’s computers and inflicted big losses
#7Would any of the traders mentioned that owe all that money to Interactive Broker's have to pay the total amount? Or is that part of Interactive Brokers' loss claim.
From the story:
> Customers will be made whole, Peterffy said. “We will rebate from our own funds to our customers who were locked in with a long position during the time the price was negative any losses they suffered below zero.”
I'd imagine this is so they don't get sued and have some shoddy code pop up during trial.
Re: Oil crash busted broker’s computers and inflicted big losses
#8Incorrectly assuming values can never be negative is an all-too-common occurrence in trading and financial software. In 2012 Swedish stock futures trading was suspended for a time because their matching engine used an unsigned type for order quantities and someone submitted an order with a negative value which wrapped around to 4 billion: https://www.reuters.com/article/markets-sweden-bug/swedish-s... Interactive Bro…
I particularly dislike the attitude of the CEO which shows he either doesn't know or pretends that he doesn't know how such contracts work. Please read the contract specs and educate yourself a little, Mr. Peterffy, they're public and free. > Peterffy said there’s a problem with how exchanges design their contracts because the trading dries up as they near expiration. The May oil futures contract -- the one that went…
Yes this is a very CYA statement. IB has been in this business for a long time, Peterffy knows very well that expiring futures contracts can experience all kinds of liquidity problems and large swings in price.
Re: Oil crash busted broker’s computers and inflicted big losses
#9> Peterffy said there’s a problem with how exchanges design their contracts because the trading dries up as they near expiration. The May oil futures contract -- the one that went negative -- expired the day after the historic plunge, so most of the market had moved to trading the June contract, which expires May 19 and currently trades around $24 a barrel.
> “That’s how it’s possible for these contracts to go absolutely crazy and close at a price that has no economic justification,” Peterffy said. “The issue is whose responsibility is this?”
It’s pretty well known that commodity futures contracts are a game of hot potato for most investors as the expiration date approaches. But the Interactive Brokers CEO doesn’t offer an alternative solution. How would the contracts be structured instead that would avoid this? I don’t see how it would be possible.
Re: Oil crash busted broker’s computers and inflicted big losses
#10Incorrectly assuming values can never be negative is an all-too-common occurrence in trading and financial software. In 2012 Swedish stock futures trading was suspended for a time because their matching engine used an unsigned type for order quantities and someone submitted an order with a negative value which wrapped around to 4 billion: https://www.reuters.com/article/markets-sweden-bug/swedish-s... Interactive Bro…
>Interactive Brokers' software is usually very solid.
That is certainly not my experience. Endless bugs in TWS over the years, and the support people are unbelievably rude. Every time I try to report a bug they start out by blaming me, it usually takes 2-3 back and forth rounds until they admit it's actually broken and tell me they'll forward the issue to the tech people. After that it's radio silence and you never know if they'll actually fix it or not.
And let's not get into the disaster that is their API...