Are fund segregated at IB?

which are?

 

The wiring info you get from IB has Citibank as the fund's bank. No other bank is specified. Also, there is no other indication that accounts are insured or segregated (not syaing that aren't but there is nothing to affirm it either).

 

SEC Rule 15c3-3 isn't good enough for you?

 

There are at least 5 banks. Call IB and ask them which ones.

From IB Security FAQs:

"In order to reduce exposure to any single counterparty, these segregated customer-benefit accounts are spread across multiple large banks (at least five separate banks as of March 2008), federally-approved clearinghouses and federally-approved AAA rated money market funds -- all subject to periodic review by IB’s senior management. All investments are in federally-approved, liquid investments such as top-rated federal government securities and related instruments. "

 

The rule is fine, but do all brokers follow the rules?

 

But an individual's funds are still concentrated in one bank... how does this help the individual trader diversify?

 

Call the SEC and ask them.

 

The normal way to diversify is to buy securities with your funds. Then you don't have to worry about having funds in a bank.

 

yeah, I think EFPs are the way to go. its basically lending money to the US treasury(and collaterized by the OCC capital) but being paid libor. they would probably rescue the OCC if they went under

 

I agree that it is best to diversify. I wouldn't do this with day trading funds, but would with one account for long term stuff, and one for day trading. I am not worried about losing my cash, but just in case....

IB also has some sort of bond which protects against fraud. this is the real in my book because:

A) as stated, no one has ever lost funds in a futures account except in cases of fraud.

B) it has already happened to me. Futureswise Trading about 8 years ago I believe. I only got about half my money back. It took two years to even get that. The head crook did go to prison for about 5 years though. In case anyone is curious, the guy never made real trades with customer funds, they were all paper trades, and since most people lose, figured he could just pocket the spread there. He was vetted by the CFTC and NFA also, which is somewhat scary. He didn't get caught until the NFA took a look at his offices. He told them he wasn't allowing real trading in customer funds yet, when he told customers something different of course. I should have known ahead of time. his name was Snively!