Not upheld: order execution and best execution obligations complaint against Interactive Brokers (U.K) Limited

Decision detail

Summary

Mrs D complained that IB failed to properly execute a sell order for shares in company B, resulting in an approximately $8,000 loss. She recalled placing an order to sell at $8 or better, but the order executed at $0.52. Mrs D believed IB should have treated her order as a Stop-Limit order or that a system error occurred. The ombudsman found that IB's records showed a Stop order was received and correctly executed according to IB's clear definitions. The price difference was due to market volatility and exchange halts during execution, not firm error. The ombudsman concluded that IB provided sufficient information about order types and that Mrs D, trading on an execution-only basis, had the responsibility to select the correct order type.

The Ombudsman's reasoning

The ombudsman found that IB provided clear, fair and not misleading information about different order types, and that Mrs D, trading on an execution-only basis, had sufficient information to place the order she wanted. The order received by IB was a Stop order, which IB correctly executed according to its definition - when the stop price was triggered, it became a market order executing at the best available price. The significant difference between the trigger price ($8) and execution price ($0.52) was due to market volatility and exchange halts, which are beyond IB's control. The ombudsman was not persuaded that IB failed its best execution obligations or that there were system errors. Mrs D's expectation that her separate stop and limit orders would function as a Stop-Limit order was not IB's responsibility to correct, as IB offered a separate Stop-Limit order type.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website