That is an excellent point. I'm a bit surprised that it hasn't happened already - perhaps it has. I think IB could improve upon security by having two API access levels - the lowest being data only for charting and whatever, and a higher level for submitting orders, account data/functions etc. The higher level should be authenticated and authorised by something like a user configurable password in TWS. The user would need to explicitly supply this to any application requesting "privileged" TWS access. The user would thereby be made aware that they are explicitly granting the application the authority to make trades. And the user would thereby assume responsibility. There are numerous "tools" available such a historical data downloaders etc that are a recipe for trouble in this area.
No, this isn't correct. If other customers have uncovered trading losses in excess of the broker's capital and insurance coverage, as might happen in an unexpectedly large market event, then customer property will be seized from non-defaulting customers, in order to cover these trading losses; and then this will mean losses for the non-defaulting customers. The only exception for securities brokers is for customer property not held in street name, which will be protected; but any other customer property at a securities broker, and any customer property at a futures broker, can be seized to cover losses caused by other customers OR by embezzlement or fraud. This is a matter of broker bankruptcy procedures, not criminality (although it is always possible that crime might underlie a particular broker's failure). The risk of loss from crime is in addition to the risk of loss from broker bankruptcy.
In the event of bankruptcy, securities and/or cash (within limits) is covered by SIPC, even if held in street name. OldTrader
This is not accurate. Cash, T-bills, and any other property held in a futures account receive absolutely no SIPC coverage whatsoever. Cash held in a securities account receives SIPC coverage only for the first $100,000. Securities held in a securities account receive SIPC coverage only for the first $500,00.
Rockford: What was inaccurate was your statement above where you say that property held in street name by a securities broker is not protected. That's what I responded to. Securities and cash held in street name are absolutely covered by SIPC. My post regarding such was absolutely accurate. I said nothing about futures. Read my post again. OldTrader
First, I didn't say the things you attributed to me. I said property held in street name, beyond insurance coverage limits, receives no protection from loss in a securities broker bankruptcy. The structure of the second and third sentences, in my relevant post, must have confused you. Second, the discussion already involved all kinds of brokers, not just securities brokers. I'm sure you intended to limit your comments to just securities brokers, but you didn't actually express this limitation. It seemed like you were assuring people that they would get SIPC coverage for their futures or FX accounts. A lot of people incorrectly believe this coverage to exist, and a lot of people make false statements about this fact. I corrected you so that newer traders would be aware that they have no insurance coverage whatsoever in a futures or FX account. Any broker who tells you that your futures or FX account is SIPC-protected is lying to you. Third, it is not true that property held in street name is "absolutely protected" by SIPC. SIPC coverage is limited to $100,000 in cash, and $500,000 in securities. It might also be helpful to mention that in a large market event, if too many brokers fail, then SIPC itself can fail, in which case customers might not receive the SIPC coverage to which they were entitled.
Sentence structure? Maybe that's what you think you said, but here's what you actually said: Nothing about "insurance coverage limits" Rockford. Sounds to me like what you actually said is that the only property protected is that property not held in street name. Now, I suspect YOU know what you're trying to say...but unfortunately, it's not what you said. Instead of simply correcting what you actually said, you decided to try to correct what I said, and in the process, cloud over the fact that your original post was not correct. Why don't you take a look at what you actually said, and explain to me how you would have rearranged the sentences to include "insurance coverage limits". OldTrader
You misquoted me, Oldtrader. You quoted only the third sentence from my relevant posting, which sentence begins with the words, "The only exception for securities brokers is..." The only way you can understand the meaning of the "exception" in the 3rd sentence is to read my preceeding sentence, the 2nd sentence in that posting, which you ignored. If you go back and re-read that sentence #2, then you will see that you misquoted me. I'll include the second and third sentences, and underline the most important words, to help you understand. I doubt that anybody reading this thread really cares about this side issue of whether or not you are correct in trying to prove I made a mistake. I think that anybody reading would rather just hear about the risks to their brokerage accounts, and that if they are still reading this exchange between us, they are yawning.