Broker safety

Discussion in 'Retail Brokers' started by MCN, Aug 24, 2011.

  1. MCN


    I'm looking for a new, preferably online, broker. I'm not a trader, more of a buy and hold (hope) type investor, slowly building a portfolio. But my current broker is expensive- 1.75% everytime i pick up the phone!

    The things i like about my broker is that they offer a very wide, international choice (Korean sml caps etc), they use Pershing (for custody, i believe) who i understand are rock solid and there are no other account fees.

    I was just reading an earlier thread on here that Penson may be in trouble. What does this actually mean for a retail investor with an account at a broker using Penson eg Noble Trading, which is one i have been looking at?

    And is this only a concern if you keep your shares registered with the broker in 'street name' rather than hold the certificates yourself?

    Finally, can anyone recommend a broker with good international equity offerings, reasonable trading costs (fixed price per trade rather than a %), preferably no/low inactivty fees and offers rock solid safety?

    Many thanks.
  2. Catoosa


    I think Interactive Brokers (IB) is the safest place to hold cash and shares. IB is also a self clearing broker. At this time I would be concerned about Penson as a clearing firm although one of my accounts is with a broker that clears through Penson (I could decide to close that account due to exposure to Penson). IB does have international trading in most of the larger markets. IB does have a small minimum activity fee for each month you generate less than $30 in commissions.
  3. jayre


    What are you trading in your account, stocks? options? futures? also do you use margin? All of this makes a diffrence when choosing a broker.
  4. jayre


    You must be kidding. IB has a BBB+ rating from S&P, while TD ameritrade (thinkorswim) has an A, Chares schwab A- and Fidelity A+.
    I would agree that IB is probably the cheapest, but the safest? come on
  5. def

    def Interactive Brokers

    If you are going to make a post claiming some knowledge on the subject, you should start by making some accurate facts. Otherwise your credibility will be questioned.

    Here's a fact: IB LLC has an A-/A-2 rating at S&P

    For the OP, if you're interested in international markets and want to consider IB, feel free to give me a PM. We do believe we have a great financial position and are amongst the most financially secure brokerages. For info on our strength and security, you can take a look here:
  6. Catoosa


    I am not kidding. As for the examples you used, one of my accounts is with TD Ameritrade which I consider safe but not on par with IB. I have had an account with Fidelity and closed it some years back due to questionable order entry practices. As for S&P, I for sure do not trust their ratings after their role in the mortgage-backed securities collapse. I also consider Moody's and Fitch to be no more credible than S&P. All three of these rating agencies were part of the largest financial scam and investor ripoff in world history with their AAA+ ratings of mortgage-backed securities.
  7. jayre


    I was looking on the on the rating relating to IBG LLC which is the parent company of IB LLC & Timbar hill & has a BBB+ rating as of mid 2010. I now realize that IB LLC itself has an A-/A2 rating & I appolagize for the mistake.

    However the point has not changed, To sugest that IB is the safest broker (better then JPM securities, TD, charles schwab, fidality, BAC merril etc.) like catoose wrote is a redicules position. Yes, IB has a lot of advantages, but being the safest broker out there is not one of them..
  8. def

    def Interactive Brokers

    There are a number of brokerages who I personally would call safe but I can only speak for IB but I'll let IB's financials speak for itself and would encourage anyone considering IB to review our financials.

    Somewhat related, have you checked out the share price of many of the bank stocks lately? Do you have any concerns about about off balance sheet items? I'm assuming the market knows something and that there is a reason many of the banks are trading well under book value. Do that research and you might remove 2 of the names off your list above that you consider so safe.
  9. MCN


    Thanks for the replies so far.

    I trade equities, no margin but as mentioned, i'm more of an investor than trader, so i trade infrequently. I'm not looking for the cheapest trade just cheaper than what i pay now (~350- 800 for an average trade)

    Of most concern is safety.

    In the case of a a broker that settles with Penson, if Penson were to go belly up, what would be the outcome for a) the broker and b) the client ?

    And am i right in thinking that the choice of broker should also factor in which custodian firm they use?
  10. jayre


    I think IB would be your best choice, they are a safe broker, you could trade almost any international market, and your commisions will be in the $1 range, their platform is a little difficult to learn, but once you know it its very simple.
    (My personal sugestion would be to open a IB "cash" account that way you know you don't have to deal with any margin issues, again that's only my opinion)
    Good luck
    #10     Aug 25, 2011