Shorted Interactive Brokers today

For a very short-term trade, I have shorted Interactive Brokers (Nasdaq: IBKR) today.

There is no excuse for their account management and quotation server system being down for the duration of a trading day, which I believe represents their largest reliability failure at least in the past decade, if not ever.

Their trading systems are still active, but this is probably due to the fact that they need them online in order to liquidate customer accounts that are caught on margin in a timely manner and manage risk. I had issues logging into their trader workstation earlier today.

My suspicion is they got hacked. Perhaps now that Spectre and Meltdown are public knowledge, the people that knew about this in advance are trying to “cash in” on this before the loopholes are closed and major system providers are in the race as well.

If this trade works, it will be a high gainer. If this blows over the weekend, the cover will cost a few bucks but it won’t be anything catastrophic. It is the high risk/reward ratio that I typically like for these sorts of trades, even if the desired result doesn’t materialize. There is a significant amount of information which hasn’t permeated to the public on this and when it does hit, the price will probably take a short-term drop.

(Update, January 5, 2018: They got their data server back up around 1:00pm Pacific Time, which corresponded to the closing of the market… very interesting)

5 thoughts on “Shorted Interactive Brokers today”

  1. Spectre and Meltdown could allow someone to steal a cached password, but they would not bypass two-factor authentication?

    If their system is being hacked that raises the interesting question is now a safe time to log in to Interactive Brokers or not?

    IB once took a bond I held, which had special distributions attached to it that were supposed to be distributed uniformly to all holders through an auction process, and used that to pay me 0% interest on the bond and hand over all of my bond proceeds to its preferred clients. That happened three times in a row, with six months interval between each distribution. I calculated that the statistical odds of this event were lottery odds: one in 100 million odds. I realized for the first time after that how dirty the system really is, and how the regulators actually protect this kind of behavior. IB has great technology, but they are not your friend.

    Maybe you could keep us updated on this by adding comments to your article over the next few days?

  2. TD Webbroker has had its problems the last week also. Yesterday, I was on hold 1 hour and 28min to cancel an order the system would not let me do ( for some reason). On Tuesday I was on hold for 55 minutes for the same thing.

  3. Wow, this is quite a leap to a conclusion. As an IB client as well, I hope for yours and my sake that they were not hacked. Another platform I used on Jan 4th had a different issue blamed on a downstream data feed provider. It resulted in routes being disabled and many of their clients were impacted and weren’t able to close out trades (think open CNET long and short positions). You have an interesting theory. I didn’t think much about the bulletins and joked with a friend that I hoped they weren’t hacked. Having worked in IT before, you would expect that a large corporation like IB would indeed have multiple data centers and multiple redundancies. However, human errors still slip through from time to time that could explain unplanned outages. Again, to leap to the conclusion that they might’ve been hacked, and then to place a short trade against IBKR… hmm is slightly impulsive if you ask me, respectfully. Did you do a naked short or short via put options? I would have chosen the latter personally. And in the coming days should there be any merit to your thesis, I’ll follow your hunch and craft a debit put spread to play this event.

    As far as P One’s first comment, I would expect the two-factor authentication system to be effective at preventing hackers from gaining access to client’s accounts (at least from the client’s logon interfaces). However, if somehow IB got hacked from the server or database side, 2FA might not help. Or if hackers gained physical access to the servers and somehow were able to bypass authentication systems and encryption defences, we might all be screwed.

  4. Hymas makes some inference to something bigger going on at TD Waterhouse (in particular) but others too here – http://prefblog.com/?p=35949

    As a TD Waterhouse user, I had trouble all day Friday – getting around the problems a bit by cycling through my phone app, the trading platform imported from TD Ameritrade and their “normal” Webroker system. I suspect there is more to these common stories than the volume in pot stocks trading.

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