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Oil price negative?


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Oil price negative?

  #221 (permalink)
futures trader
san diego, ca USA
 
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NotKenGriffin View Post
Okay, what is your point? You want the financial contracts to have some special floor that the contract they settle against doesn’t?


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My point is this was a take down. There were inconsistencies with FCM's, data, platforms and there was no level playing field. Interactve brokers went -110 million, nothing to see here?

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  #222 (permalink)
NotKenGriffin
Houston TX
 
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futures trader View Post
My point is this was a take down. There were inconsistencies with FCM's, data, platforms and there was no level playing field. Interactve brokers went -110 million, nothing to see here?



Was it Saudi Arabia? Greta Thunberg? The Illuminati? We may never know. My money’s on it being gross incompetence, and IKBR really has no one to blame but themselves. Peterffy trying to shift blame to CME was pathetic. When your company lets someone buy >200,000 barrels of oil with a $77k account, you only really have yourselves to blame.


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  #223 (permalink)
SunTrader
Boca Raton, FL
 
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From April 8th:

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-152.pdf

I'm not sure how often I get these (I believe weekly) but this was the latest I received:

CME Globex Notices: May 4, 2020

Your CME Globex notice for the week of May 4, 2020, is now available.

This weekly notice includes details and effective dates for:

Upcoming CME Globex Technology Impacts
CME Group Product Launches and Changes
Events and Announcements

+ + +

Then you click on link to read actual individual notices themselves.

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  #224 (permalink)
 
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 SMCJB 
Houston TX
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NotKenGriffin View Post
Okay, what is your point?

Wants somebody to blame!


NotKenGriffin View Post
My money’s on it being gross incompetence

Mine to. I don't think it was as nefarious as some suggest. I think things got out of control, people thought it can't get any worse than it already is, and then panicked when it did. Add in the algos and things ran further than anybody believed.


NotKenGriffin View Post
IKBR really has no one to blame but themselves.

Clearly. You would think they have a team that does nothing other the liaise with the exchanges.

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  #225 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
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SunTrader View Post
From April 8th:

https://www.cmegroup.com/content/dam/cmegroup/notices/clearing/2020/04/Chadv20-152.pdf

I'm not sure how often I get these (I believe weekly) but this was the latest I received:

CME Globex Notices: May 4, 2020

Your CME Globex notice for the week of May 4, 2020, is now available.

This weekly notice includes details and effective dates for:

Upcoming CME Globex Technology Impacts
CME Group Product Launches and Changes
Events and Announcements

+ + +

Then you click on link to read actual individual notices themselves.

Yes that's them. You can also sign up for all margin change announcements. Additionally you can also sign up for Global Command Center messages. GCC sent a message at 12:06 (Central) on Monday April 20th stating "May 2020 Energy Limits. The following May 2020 Energy Products (CLK0, HOK0, QHK0, QMK0, QUK0, RBK0, HCLK0, RTK0, WSK0, RLXK0, TCSK0, MPXK0, 23K0, CSXK0, 26K0) have no low limit and may trade negative." This is information I copied onto this very website 7 minutes later!


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  #226 (permalink)
futures trader
san diego, ca USA
 
Posts: 29 since May 2014
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SMCJB View Post
Wants somebody to blame!


Mine to. I don't think it was as nefarious as some suggest. I think things got out of control, people thought it can't get any worse than it already is, and then panicked when it did. Add in the algos and things ran further than anybody believed.


Clearly. You would think they have a team that does nothing other the liaise with the exchanges.

So we agree, the FCM's are accountable to some extent. I'm not looking to set blame on any one party, but rather get a better understanding of how the exchange, technology/data providers, FCM's and their customers all participated in the outcome. Interactive Brokers is not the only one impacted by this, other platform providers and FCM's have come out and stated that they were unable to handle negative pricing as well.

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  #227 (permalink)
 
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 SMCJB 
Houston TX
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futures trader View Post
So we agree, the FCM's are accountable to some extent.

Well they are accountable to themselves and their shareholders and they are accountable to the exchange in that they have a margin and credit obligation. But they only have an accountability to the customer in the sense that if they force all their customers to leave they will go out of business. Their legal obligations to the customer are probably very one sided and dictated by the law rather than what you (and I) would hope. Unfortunately most companies are like this not just FCMs

futures trader View Post
I'm not looking to set blame on any one party, but rather get a better understanding of how the exchange, technology/data providers, FCM's and their customers all participated in the outcome. Interactive Brokers is not the only one impacted by this, other platform providers and FCM's have come out and stated that they were unable to handle negative pricing as well.

The chain is simple. The exchange modified some exchange rules. I don't "think" this effected data providers in anyway. The issue came with software vendors and ill prepared traders. I agree any software vendor that was unable to show or transact at negative prices should have liability. If I was a trader and I had, say $10k in my account, and my broker allowed a position to go $20k against me, and then liquidated me at the close, I would be very frustrated. I would expect the FCM to liquidate me immediately I was technically insolvent. But I probably have no legal grounds to sue them. This is why its so interesting that IB is currently in the spot light for this. IB are know for having extremely aggressive liquidation policies. This implies to me that not only was their software flawed in that it could not display or transact at negative prices FOR CUSTOMERS, but also their internal risk control software was also unable to liquidate positions at negative prices.

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  #228 (permalink)
 mykee 
Johor, Malaysia
 
Experience: Beginner
Platform: Sierra Chart
Trading: CL, GC
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"If I was a trader and I had, say $10k in my account, and my broker allowed a position to go $20k against me, and then liquidated me at the close, I would be very frustrated. I would expect the FCM to liquidate me immediately I was technically insolvent. But I probably have no legal grounds to sue them"

Agree..

1. Traders need to be responsible for their trades. 70k account shouldn't be able to trade that many CL contracts during high volatility period.

2. Brokers/FCM/Exchange need to be fair to their clients. Traders should be liquidated immediately when they are technically insolvent (account balance reach zero)

Sleep well, Eat Healthy, Breathe...
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  #229 (permalink)
 
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 TraderMich 
Copenhagen + Denmark
 
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SMCJB View Post
WOW!
Then came what looked like the deal of a lifetime: buying 212 futures contracts on West Texas Intermediate for an astonishing penny each.

...

At midnight, Shah got the devastating news: he owed Interactive Brokers $9 million. He’d started the day with $77,000 in his account.


How is a guy with $77,000 in his account allowed to buy 212 futures contracts, approximate overnight margin requirement of $2.1 Million? That's day trading margins of 27+:1.

A person trading 212 futures contract on a 77.000 USD account deserve to end up loosing - Just one tick against him ment a loss of 2120 USD or 2,75 % in loss just in one tick - Not trading very hasard gambling

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  #230 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
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Nobody wants the same thing to happen with June...


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