Never trust a computer application that you yourself didn't write. And even then don't trust it.
Only slightly kidding. ________________________________ From: IBM Mainframe Discussion List <IBM-MAIN@LISTSERV.UA.EDU> on behalf of Bob Bridges <robhbrid...@gmail.com> Sent: Wednesday, May 13, 2020 5:28 PM To: IBM-MAIN@LISTSERV.UA.EDU <IBM-MAIN@LISTSERV.UA.EDU> Subject: Oil futures and computer "help" This fascinating article isn't really on the topic of mainframes, but we've been talking about similar things recently and I thought some would be interested: https://www.bloomberg.com/news/articles/2020-05-08/oil-crash-busted-a-broker-s-computers-and-inflicted-huge-losses The main player is a futures speculator who watched the price of oil futures drop fantastically low and bought like crazy - never realizing that the price ~could~ go negative. The brokerage house's trading application didn't know it either: "Crude was actually around negative $3.70 a barrel when Shah’s screen had it at 1 cent....Compounding the problem, and a big reason why Shah lost an unbelievable amount in a few hours, is that the negative numbers also blew up the model Interactive Brokers used to calculate the amount of margin -- aka collateral -- that customers needed to secure their accounts." "At midnight, Shah got the devastating news: he owed Interactive Brokers $9 million. He’d started the day with $77,000 in his account." Another player "bought contracts for his friends on Interactive Brokers that day at $11 and between $4 and $5. Just after 2 p.m. New York time, his trading screen froze. 'The price feed went black, there were no bids or offers anymore,' he said in an interview. Yet as far as he knew at this point, according to his Interactive Brokers account, he didn’t have anything to worry about as trading closed for the day." "Besides locking up because of negative prices, a second issue concerned the amount of money Interactive Brokers required its customers to have on hand in order to trade. Known as margin, it’s a vital risk measure to ensure traders don’t lose more than they can afford. For the 212 oil contracts Shah bought for 1 cent each, the broker only required his account to have $30 of margin per contract. It was as if Interactive Brokers thought the potential loss of buying at one cent was one cent, rather than the almost unlimited downside that negative prices imply, he said." --- Bob Bridges, robhbrid...@gmail.com, cell 336 382-7313 /* The Constitution is supposed to define the powers of the federal government -- authorizing some powers, which are enumerated, while reserving all other powers to the states and the people. This means that the first question we should ask when a new law is proposed is: "Does the Constitution allow the federal government to do this?" -Joseph Sobran, 2001-01-06 */ ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to lists...@listserv.ua.edu with the message: INFO IBM-MAIN ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to lists...@listserv.ua.edu with the message: INFO IBM-MAIN
