[haltingproblem]

“Five days, including the weekend, with the coronavirus going on and a complex system where we have to make many changes, was not a sufficient amount of time,” he said. “The idea we could have bugs is not, in my mind, a surprise.” He also acknowledged the error in the margin model Interactive Brokers used that day.....We have called the CFTC and complained bitterly,” Peterffy said. “It appears the exchanges are going scot-free.”

Thomas Peterffy must think we are idiots. Anyone who trades commodity contracts for any period of time knows that the real cost of the contract is the actual cost of the commodity - storage costs. When storage costs spike and the actually commodity spot costs go down, the future will become negative!

One way to get a handle on storage costs is think of them being inversely proportional to the value density. The higher the value density, e.g. gold the less the storage costs. Oil is not so dense so storage costs matter. Financial instruments like the Treasury Bonds and the S&P futures contract have zero storage costs. Storage cost is of-course different than carry cost (the cost of funding your long position).

On another aside, I have known folks who have worked at IB in the past, and their systems absolutely suck dead goats. Huge masses of legacy C++ code with poor testing. Most of these brokerage firms have legacy code base from the 90s that is poorly understood. They also have nonexistent organizational quotient around code validation, correctness and testing their risk models. A futures margin model is not something one can whip up over a weekend but a good CS undergraduate can program one over a couple months.

Sorry for the IB customers but I have zero sympathy for IB or should I say negative ;)

[Bluecobra]

Peterffy is talking out of his ass, they had more than 5 days. CME's current specifications for order entry/market data has been in place for years now. Whoever was writing their software on their backend failed to read the documentation.

https://www.cmegroup.com/confluence/display/EPICSANDBOX/Posi...

[rossdavidh]

While I don't doubt that what you say is true, systems which, by spec, should be able to handle a given situation, that then years after they were written finally are called upon to handle that situation, fail more often than not.

The CEO also said they would pay $100million to clean up, which is not chump change, even for them I bet.

I'm not saying they were blameless, but I think most systems which have never had a given variable go negative, that years after they were written finally have that variable go negative, will have problems.

[futevolei]

Nat gas prices went negative pretty famously (in the biz) around 2010 or so. I give everyone a pass based on what you said until then. After that no free passes. IB screwed up.

[kungato]

They are not the first people on the planet to encounter edge cases. You either test thoroguhly enough for them or you don't.

[CoolGuySteve]

CME requires certification before you can deploy a connector to them.

If they really cared or if this was as obvious as everyone here is claiming it is, negative price support would be part of their certification suite. It is not.

[ornornor]

> On another aside, I have known folks who have worked at IB in the past, and their systems absolutely suck dead goats. Huge masses of legacy C++ code with poor testing.

As a customer I’m not surprised at all. Their software is terrible, especially the simplified web application and their mobile app. Terrible. But their fees are incredibly low. You can convert a million dollar to other popular currencies for less than 20$ at interbank rates. Just nuts.

[haltingproblem]

At interbank rates? Ok, that is _pretty_cool_. I will check that out, thanks!

[stuzenz]

Thanks for the information. I have been using IB and their API and had always wondered about the quality of their code base. I assumed there was a lot of legacy with their systems - I just had little idea of how well they were managing things internally.

For my limited requirements, Interactive Brokers does seem to meet needs, but do you know of a platform that is highly regarded that is accessible for clients outside of the States?

Interactive Brokers seemed to tick a lot of boxes at the time when I chose them.

[haltingproblem]

The outside the US part, I think, will greatly narrow your universe of choices. Have you looked into Lime Brokerage? They are now owned by Wedbush but they used to have top tier technology.

[stuzenz]

No, it is the first time I have heard of them. I will check them out.

Cheers

[stuzenz]

Thanks for pointing it out, I looked at Lime, but the pricing is prohibitive for the amount of shares I would be trading. From what I can tell you would be looking at about $2,000 or more in fees per month.

[Traster]

This is not really an issue of whether prices can go negative though. It'ss whether IB supported negative prices, and whilst it's true the drop happened quickly, this was a known likelihood for a few weeks. The fact that IB kept letting people go long at positive prices, knowing they couldn't execute stop loss trades at negative prices is frankly terrible.

[rajacombinator]

You couldn’t sound more clueless here. A rare screwup by IB for sure but the only reason you’re hearing about it is because the CEO is a standup guy. (Very sharp one too.) Other brokers would no doubt sweep this under the rug and/or pursue their customers for the losses.

[haltingproblem]

You sound like an employee ;)

On a serious matter, doesn't Peterffy owns a huge chunk of IB and a brokerage is as riskless of a transaction business as you can get to in the financial industry as possible.

IB's frontends used to lead the market and their pricing is decent too. Who else lost $100 million because they did not program futures and span margin properly?

[rajacombinator]

Not an employee but a customer for about 16 years. Not sure their front end ever led the market and they’re far from flawless. But they’re one of a very small number of ethical outfits in a very scummy industry.

[racecar789]

Same here, customer for 18yrs. In 2002, $1 trades with honest exchange routing was unheard of.

[carlsborg]

Spreads have negative prices often enough

[hellofunk]

Agreed. IB's data is also not so accurate much of the time; the way it reports volume in particular is misleading. I've seen traders abandon IB after big losses because their strategies required actual live volume data that didn't suck, and nearly any other broker provides this.

[ajflores1604]

What are some recommended alternative platforms that provide api access?

[hellofunk]

I know a few who moved to tradestation. But there are others as well.