Ronin_ClientProtect
Recruit
- Messages
- 13
Dear friends,
I request for your kind assistance as I am currently in dispute with a broker house.
I'm choosing not to name the broker house (BH) first in order to clear any potential mistakes on my end.
Here is the chain of events so far (at the best of my ability to explain):
1) On 16/02/2016, The BH was quoting the benchmark CL1 (in this case the March, 2016) WTI futures contract at a price similar to Bloomberg, Reuters, news reports, other broker houses, and any generally widely available pricing source quoting that contract.
2) On 17/02/2016, The BH performed a rollover to the April 2016 WTI futures contract causing a huge spike in price as shown in the chart (please refer to left side of the chart below):
3) On 18/02/2016, The BH seemed to have reversed this position briefly as shown in the chart to reflect the March, 2016 contract price once again. In one of my many correspondences, I was notified by the BH that this was due to a system error. The explanation was given as follows: "The 'anomaly' you have referred to in your chat is due to a technical error which streamed few quotes from the old contract after the rollover to the new contract already had taken place." Further enclosed are pictures of how the chart looks like on a mobile device.
4) Following the brief revision downwards, the BH then reversed the position upwards once again to reflect the April, 2016 WTI Futures contract as shown above resulting in almost a +-200 points gap. The chart was then modified by the BH on the MT4 platform later on the 18/02/2016 and smoothed out as shown below:
5) Therefore since 18/02/2016 up until 22/02/2016, the price quoted by the BH differed greatly from benchmark providers, for example from Bloomberg and Dukascopy. Differences in price is as shown below:
6) Upon further dispute, I was given the following information which I would like to highlight:
i) With XXX, the old contract is being rolled over to the new one, at the time when the old contract is stopped from trading on the exchanges.
ii) Rollover happens automatically, and if I have an open position, it is said to automatically be rolled over to the new one.
iii) Under their order policy, no rollover dates are provided as this is said to be determined by their liquidity providers.
iii) Time and time again instead of obtaining a proper reason, I was told that "xxx does not however guarantee that execution at our price will be more favorable than one which might have been available elsewhere."
iii) I was pointed out to this link to analyse the indicative pricing. I noticed that the March 2016 contract is only set to expire on 22/02/2016 and was still trading at the time. http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html
iv) I was also told "Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month"
v) Just for laughs, when I was told I would bring this issue here: "Also please note that we do not negotiate in cases of blackmail. We consider this case closed". What an easy way for them to brush off this issue. I must say I am quite offended by this.
Finally with all which has been said, this brings me to my closing argument and my questions:
They have performed rollover of their March, 2016 contract to the April, 2016 contract on February 17, 2016 and immediately pricing the security based on the April, 2016 contract. By doing this, they have deliberately created a mismatch between the existing *still traded in the market *March, 2016 contract and the new *April, 2016 *contract.
As previously mentioned and shown, the market *is still largely trading the March 2016*, contract. The still
heavily traded *March 2016* contract is closest to the cash price of the underlying futures, for this case WTI and the price quoted was still reflected in other broker houses, news, Blooberg, Reuters, etc as evident above.
1) Can they legally do this (early rollover?). Isn't the March, 2016 price supposed to reflected until 22/02/2016?
2) Why does the market price (other brokers and benchmarks) differ largely from their quoted price between 17/02/2016 - 22/02/2016 when the rollover dates are about the same or differ by one or two days?
3) Do the liquidity providers ultimately determine their rollover dates?
4) Is there anything else I am missing out in regards to the issue?
5) What is the bigger picture of the 'technical error's link to this issue?
All the help in the world would be much appreciated. I really need to understand this better. Thanks all and god bless! Happy trading =))
I request for your kind assistance as I am currently in dispute with a broker house.
I'm choosing not to name the broker house (BH) first in order to clear any potential mistakes on my end.
Here is the chain of events so far (at the best of my ability to explain):
1) On 16/02/2016, The BH was quoting the benchmark CL1 (in this case the March, 2016) WTI futures contract at a price similar to Bloomberg, Reuters, news reports, other broker houses, and any generally widely available pricing source quoting that contract.
2) On 17/02/2016, The BH performed a rollover to the April 2016 WTI futures contract causing a huge spike in price as shown in the chart (please refer to left side of the chart below):
3) On 18/02/2016, The BH seemed to have reversed this position briefly as shown in the chart to reflect the March, 2016 contract price once again. In one of my many correspondences, I was notified by the BH that this was due to a system error. The explanation was given as follows: "The 'anomaly' you have referred to in your chat is due to a technical error which streamed few quotes from the old contract after the rollover to the new contract already had taken place." Further enclosed are pictures of how the chart looks like on a mobile device.
4) Following the brief revision downwards, the BH then reversed the position upwards once again to reflect the April, 2016 WTI Futures contract as shown above resulting in almost a +-200 points gap. The chart was then modified by the BH on the MT4 platform later on the 18/02/2016 and smoothed out as shown below:
5) Therefore since 18/02/2016 up until 22/02/2016, the price quoted by the BH differed greatly from benchmark providers, for example from Bloomberg and Dukascopy. Differences in price is as shown below:
6) Upon further dispute, I was given the following information which I would like to highlight:
i) With XXX, the old contract is being rolled over to the new one, at the time when the old contract is stopped from trading on the exchanges.
ii) Rollover happens automatically, and if I have an open position, it is said to automatically be rolled over to the new one.
iii) Under their order policy, no rollover dates are provided as this is said to be determined by their liquidity providers.
iii) Time and time again instead of obtaining a proper reason, I was told that "xxx does not however guarantee that execution at our price will be more favorable than one which might have been available elsewhere."
iii) I was pointed out to this link to analyse the indicative pricing. I noticed that the March 2016 contract is only set to expire on 22/02/2016 and was still trading at the time. http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html
iv) I was also told "Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month"
v) Just for laughs, when I was told I would bring this issue here: "Also please note that we do not negotiate in cases of blackmail. We consider this case closed". What an easy way for them to brush off this issue. I must say I am quite offended by this.
Finally with all which has been said, this brings me to my closing argument and my questions:
They have performed rollover of their March, 2016 contract to the April, 2016 contract on February 17, 2016 and immediately pricing the security based on the April, 2016 contract. By doing this, they have deliberately created a mismatch between the existing *still traded in the market *March, 2016 contract and the new *April, 2016 *contract.
As previously mentioned and shown, the market *is still largely trading the March 2016*, contract. The still
heavily traded *March 2016* contract is closest to the cash price of the underlying futures, for this case WTI and the price quoted was still reflected in other broker houses, news, Blooberg, Reuters, etc as evident above.
1) Can they legally do this (early rollover?). Isn't the March, 2016 price supposed to reflected until 22/02/2016?
2) Why does the market price (other brokers and benchmarks) differ largely from their quoted price between 17/02/2016 - 22/02/2016 when the rollover dates are about the same or differ by one or two days?
3) Do the liquidity providers ultimately determine their rollover dates?
4) Is there anything else I am missing out in regards to the issue?
5) What is the bigger picture of the 'technical error's link to this issue?
All the help in the world would be much appreciated. I really need to understand this better. Thanks all and god bless! Happy trading =))
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