Account protection - IB custody accounts

Discussion in 'Interactive Brokers' started by freedinner, Mar 19, 2013.

  1. Dak

    Dak

    Thank Zyker... and all !

    May I suggest that you sent the IB customer service answer, to
    the SIPC, for confirmation?
    Because as long as we have not an official answer from the SIPC, we have only ... a broker interpretation of the law.
    A littel bit light for an hedge...:D
    And the second very important confirmation is: " Does the SIPC protection is attached to the clearing firm?" as Zorroverd interpretetion?
    All this juridic stuff is decisive in the case where things turns
    very bad... And at this moment, it's too late.:eek:
    Better to clear it now.
     
    #11     Apr 19, 2013
  2. Hello Dak,most of your doubts can be resolved if one is doing his homework properly.
    SIPC has a very good website where these topics are explained in detail.
    I reproduce here IB's own interpretation of SIPC rules
    which I find a fair and true representation of the applicable regulations in this regard.Particularly interesting is the part dedicated
    to forex or "currency", as it is called under SIPC regulations:

    Quote
    Information Regarding SIPC Coverage




    1. Interactive Brokers LLC is a member of SIPC.

    2. SIPC protects cash and securities held with Interactive Brokers.

    3. SIPC does not generally cover commodity futures or options on futures.

    4. SIPC protects cash, including US dollars and foreign currency, to the extent that the cash was "deposited with Interactive Brokers for the purpose of purchasing securities."

    5. SIPC does not generally cover cash or foreign currency that is not "deposited with Interactive Brokers for the purpose of purchasing securities." For example, SIPC does not generally cover cash in commodity futures trading accounts.

    6. Interactive Brokers is not able to make any statements or representations about how cash deposited into a securities account in connection with forex trading or swept from a commodities account would be treated by SIPC. SIPC protection would depend in part on whether the cash was considered to be "deposited with Interactive Brokers for the purpose of purchasing securities." Interactive Brokers expects that at least one factor in deciding this would be whether and the extent to which the customer engages in securities trading in addition to or in conjunction with forex or commodities trading.
    Unquote
     
    #12     Apr 19, 2013
  3. Do not know how they treat the cash and stock in margin account, especially when you short stocks and get more cash on hand. cash part is only 100K by SIPC
     
    #13     Apr 20, 2013
  4. According to SIPC brochure available on their site cash claims are
    guaranteed up to 250K.
     
    #14     Apr 21, 2013
  5. man, where have you been? They have been debating this for years. There are over 1,000 pages on the topic just on ET.

    The general consensus is, you have 250K SIPC on cash or stocks (not margined), but what is cash?

    At one time I considered moving all my money to ib. Because I am a simple man, and don't really care that much about money. But changed my mind.

    I keep it spread around. Stocks one place. mutual funds another, trading at ib.

    If my little itty bitty forex trading account at ib ever hits the big time, then the best call to make is to Lloyds of London, and get a quote on what they would charge you to protect you. They deal in million dollar units. If you don't have a million dollar trading account, then you are just a little worry wort starting threads on ET.
     
    #15     Apr 21, 2013
  6. Does this mean that a guy with say a $700,000 account is a "little worry wort" if he engages in a discussion about account protection?

     
    #16     Apr 21, 2013
  7.  
    #17     Apr 21, 2013
  8. for instance, most my life I drove a paid off vehicles, and had plenty of money in the bank, so I never carried full coverage, because the total loss of that vehicle only meant I could justify buying a new one.

    Now I live very close, and drive a like new paid off 7 year old vehicle, and the total loss of it would put a real cramp in my style, so I keep full coverage.
     
    #18     Apr 21, 2013
  9. The question was not if 700K was a big deal or a small deal to you the question was was a guy with 700K "a little worry wort" -- your phrase.



     
    #19     Apr 21, 2013
  10. ok, but you already know going in, anything over 250k is gone, and the only way to get protection over sipc is to pay for it privately, or to reposiition yourself so it's not a total loss to your lifestyle.

    my point was just the busllshit detector

    I often think what my tax implications will be if I win 100 million on a lottery ticket, and may even start a thread asking the question

    If you are trading more than 250k at ib, you already know what the deal is

    If all my borkerage accounts go broke at the same time, then I am SOL. But I knew that going in.

    The government only protects you up to 250k, and most people living in Florida who just worked at the factory and maxed out their 401k and contributed to ther IRA have substantially more than that.

    It's up to you to protect it, and you won't find that protection in the fine print, or on an internet trading site.

    but yes, ok, sorry for the interruption, carry on and discuss how to protect your ib trading account. If you don't already know that, I doubt you will have to worry about it much longer.
     
    #20     Apr 21, 2013