FDIC limit or SIPC limit question for cash?

Discussion in 'Risk Management' started by prc117f, Aug 25, 2015.

  1. prc117f

    prc117f

    I shorted puts on the SPY late evening today and now I have cash wise 322K in cash. now this cash is the premium collected for the puts.

    is this cash only covered by SIPC which means anything over 250 is at risk?

    or does SIPC cover this? not sure what the situation is regarding counter party risk.
     
  2. prc117f

    prc117f

    okay it looks like SIPC is only 250 for cash. how safe is TD Ameritrade? I have cash in other accounts to cover potential assignment (ie etrade has 1.250mm)

    but TD does not seem to offer an extended FDIC like etrade
     
  3. dealmaker

    dealmaker

    All the brokerages are highly leveraged, but at Fed's last stress test TD Ameritrade was lesser risk than e-trade. Does that mean your excess cash is safe, who knows.
     
  4. prc117f

    prc117f

    Sipc of onLy 250k for cash and 500k for securities is too damn low. They really need to increase it. It is annoying to have to have to manage and trade with different brokerage accounts.

    Etrade spreads the account across multiple banks to give you 1.2m fdic for the cash sweep. For some reason td is not offering this.
     
  5. dealmaker

    dealmaker


    The reason e-trade offers this is that they had failed the stress test....
     
  6. Interesting post. TD offers two ways to "cash sweep" your funds, through FDIC or SIPC. Since SIPC offers $500k/total (of which $250k can be cash), vs. $250k total in FDIC, it seems the SIPC sweep is the better option of the two in case the b/d fails.

    https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA1147.pdf
     
  7. J.P.

    J.P.

    I was looking at this and that document seems to provide higher limits:

    "Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurer."
     
  8. Ah, good catch. Looks like they would have to go bankrupt first, and then you're in line for getting paid by the trustee.

    "In the event of a brokerage insolvency, a client may receive amounts due from the trustee in bankruptcy and then SIPC."