Have you seen the CNBC interview [1] with IBKR chairman, basically saying "once the stock goes back to the price we want we'll let retail investor trade it again"?

[1] https://www.youtube.com/watch?v=7RH4XKP55fM

Just saw the interview, looks about what I'd expect from IBKR and why I use them.

So you are ok with your broker restricting your investment options, because one of hedge funds they sell your order flow to made a bunch of dumb decisions which put the whole market into very fragile position?

FYI: IBKR Pro doesn't do PFOF, only IBKR Lite

https://gdcdyn.interactivebrokers.com/Universal/servlet/Regi...

FWIW, this is how the market works more or less.

There is a fixed amount that is deposited into a varaiety of accounts, let's say the total is T and individual accounts are T_i.

There are also consistent monthly inflows into a variety of T_i's that are dwarfed by T. These mostly go into scheduled investments (ETFs, etc). Call these TM_i.

The majority of T is invested and not traded. The total amount available for short term trades is T_t which is perhaps (in my estimation) 20% of T. That's still a large amount. Howver, this 20% sets the price. Everything happens at the margins.

Trading is the act of taking from one T_i into another T_i. That's it.

That's the job of clearinghouses. Each broker has to settle up at some point but also has to have collateral deposited in order to make sure that they can settle up. This collateral fluctuates depending on volatility.

The worry was that given the obscene run, brokers would not be able to settle up.

IBKR did the right thing to keep a catastrophic problem from developing.

Of course, shorting 130% of a stocks float is a problem that needs to be resolved as well as this is the root cause. If it were just 20-30% then this would never have happened.

So where was IBKR when people were shorting 130% of stocks?

Your guess is as good as mine but my guess is that _their_ risk management, which is very good, handled this reasonably well in their little bubble and they could have potentially been punished by the actions of other people and decided that this was not a risk they were willing to take.

Tough thing to resolve but by talking about it, I think it can be resolved well.

Root cause: somehow, you can short more than the float.

I am a big fan of IBKR, but if you want someone who will be there in the morning... Pick someone bigger. Fidelity, for example, is Too Big To Fail. They will get bailed out if something happens. Not 100% sure that Interactive brokers will be.

Does Fidelity have an API?

My rep at fidelity said they don’t really have the same offerings.

IBKR's highly visible and active risk management-- e.g. their proactive increase in margin requirements in advance of recent political events-- is a major positive point in their favour.

Exactly. And it turns out, if you are a good trader, you can negotiate your margin.