Are fund segregated at IB?

Discussion in 'IB Technical Issues' started by short&naked, Aug 7, 2008.

  1. I have heard (could just be a rumor) that unless you specify that you want your funds segrated from IB's working funds, it will not happen automatically. It seems you have to specify this. If your funds are indeed mingled with IB's are they still insured? Could somebody verify this?
  2. It's illegal to co-mingle client funds with broker "working funds". Whoever you heard that from is a complete idiot.

    In the case of IB, your funds in the Universal account are insured by SIPC.
  3. That was my understanding as well. Thank you. It seems a lot of people complain about IB, nut quite sure why. If you've been in business this long you must be doing something right.
  4. Why don't you read SEC Rule 15c3-3?

    In part:

    e. Special reserve bank account for the exclusive benefit of customers.

    1. Every broker or dealer shall maintain with a bank or banks at all times when deposits are required or hereinafter specified a "Special Reserve Bank Account for the Exclusive Benefit of Customers" (hereinafter referred to as the "Reserve Bank Account"), and it shall be separate from any other bank account of the broker or dealer. Such broker or dealer shall at all times maintain in such Reserve Bank Account, through deposits made therein, cash and/or qualified securities in an amount not less than the amount computed in accordance with the formula set forth in Rule 15c3-3a.
  5. Last time I checked about 3 years ago, IB was ranked number 1 in the World for security of funds based on customer funds to equity ratio.

    I don't think you need to worry about IB too much. Also, no one has ever lost a cent in their futures account when a firm goes under, except in the case of fraud where the firm just flat out took the money. In all cases, even Refco, other firms have just taken over customer accounts. The futures industry is extremely paranoid about this, and has taken measures to safeguard funds, they are not insured however.
  6. Daal


    the problem is if the reserve account goes bust. I sure hope Citibank is too big to fail
  7. So, insurance wouldn't cover this?
  8. Daal


    as I understand, IB has one account with citibank which they keep all the clients funds. I believe IB has more than a billion in deposits, I dont think $100k insurance will save that account, maybe they should change to JPM
  9. Statistically, complainer-type personalities are more likely to post than commending-type personalities.
    There's useful information at ET, but you have to sift through it with a critical eye.

    A large fraction of ET posters use IB; that speaks for itself.
  10. As of June 30, 2008 IB had payables to customers of $7.672 billion.

    IB uses multiple banks, not just Citibank.
    #10     Aug 8, 2008