lundi 13 avril 2015
Incorrect date costs broker nearly $23M in liabilities
Posted on 05:35 by nice news
A trading regulator found discount brokerage Interactive Broker liable for posting an incorrect date and awarded a New Jersey man a record $2.4 million in damages.
But that’s only a fraction of the $22.7 million he lost on a botched trade because of the bad information.
The pyrrhic victory for day trader Frank M. Cerisano Jr. by the Financial Industry Regulation Authority is three times the next-largest award against IB, according to Cerisano’s lawyer, Sam Lieberman of Sadis & Goldberg.
Cerisano plies his trade in the backwaters of day trading — derivatives and the esoteric future contracts, where millions can be bet with little upfront.
This special breed of people manage to get to sleep at night with huge positions hanging fire as Asian markets can take out a wager in a flicker of the screen.
The last thing a futures trader needs is to have his trading platform also go against him. This is what Cerisano and his lawyer alleged.
In June 2013, Cerisano was taking a huge position in VIX Futures that climbed as high as $200 million with leverage.
The Chicago Board Options Exchange’s Volatility Index (VIX) was on the move then. In the six weeks prior to the position, the VIX spiked nearly 42 percent on central banks sending markets mixed messages of future easing.
If the trade had been executed on the expiration date Cerisano found on IB’s Web site, he would have netted roughly $2.5 million in profit.
But IB maintained the expiration date was the following day, which created a huge loss as the VIX moved dramatically away from Cerisano’s position.
The botched futures trade appears to be human back-office error at IB, which used the correct expiration date internally, but then inexplicably displayed it as a day earlier on its Web site, which Cerisano used to price his gains.
Interactive was not accused of fraud. But Cerisano certainly felt misled.
At the IB
But that’s only a fraction of the $22.7 million he lost on a botched trade because of the bad information.
The pyrrhic victory for day trader Frank M. Cerisano Jr. by the Financial Industry Regulation Authority is three times the next-largest award against IB, according to Cerisano’s lawyer, Sam Lieberman of Sadis & Goldberg.
Cerisano plies his trade in the backwaters of day trading — derivatives and the esoteric future contracts, where millions can be bet with little upfront.
This special breed of people manage to get to sleep at night with huge positions hanging fire as Asian markets can take out a wager in a flicker of the screen.
The last thing a futures trader needs is to have his trading platform also go against him. This is what Cerisano and his lawyer alleged.
In June 2013, Cerisano was taking a huge position in VIX Futures that climbed as high as $200 million with leverage.
The Chicago Board Options Exchange’s Volatility Index (VIX) was on the move then. In the six weeks prior to the position, the VIX spiked nearly 42 percent on central banks sending markets mixed messages of future easing.
If the trade had been executed on the expiration date Cerisano found on IB’s Web site, he would have netted roughly $2.5 million in profit.
But IB maintained the expiration date was the following day, which created a huge loss as the VIX moved dramatically away from Cerisano’s position.
The botched futures trade appears to be human back-office error at IB, which used the correct expiration date internally, but then inexplicably displayed it as a day earlier on its Web site, which Cerisano used to price his gains.
Interactive was not accused of fraud. But Cerisano certainly felt misled.
At the IB
Incorrect date costs broker nearly $23M in liabilities
Inscription à :
Publier les commentaires (Atom)
0 commentaires:
Enregistrer un commentaire