From the IB website: "Customer securities accounts at Interactive Brokers are protected under SIPC up to $500,000 (with a cash sublimit of $250,000) and under Interactive Brokers' excess SIPC policy with Lloyd's of London insurers for up to an additional $30 million (with a cash sublimit of $900,000). Your stocks, options, warrants, debt instruments, and cash -- denominated in all currencies -- are covered by this protection. Futures, options on futures, and single stock futures are not covered, but available cash will be swept from your futures account to your securities account periodically to take advantage of SIPC and excess SIPC coverage to the greatest extent possible. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities."
There are two accounts behind the scenes, a securities account and a commodities account. In the old days my IB statements would list how my funds were automatically transfered between each. IB statements no longer seem to show this anymore??? (although there might be an option on the admin website to include these in generated statements) Here is a random snippet taken from one of my 2005 IB statements: Date Description Amount Amnt In Base 02/08/2005 Net cash moved to securities account for date 2005-08-02 -39,363.56 -21,834.97 02/08/2005 Net cash moved to commodities accountfor date 2005-08-02 39,363.56 21,834.97
Thanks for the replies. So it seems it's a bit of a matter of luck (whenever IB feels they should transfer) as to what's in a securities vs commodities account at any given time, plus how much each of these was being traded and how often. It would be comforting to know that on each closed position all cash is always instantly moved to the securities account, but ok, I can live without that. Like somebody said, just watch the IBKR stock price and if it falls to 5, run for your money.
It is not matter of luck. Futures account normally keeps enough money to meet performance bond requirements. Everything else goes to the security side.
Just to be clear, if I have $10,000.00 in my account and I purchase 1 EUR Dec 2011 futures contract, maintenance margin is $4000.00. Only the $4000.00 is in the "futures account" so to speak. How long after the position is closed is the money considered to be back on the security side of account? Immediately, a few hours, end of day? thanks
Sounds like a good trade, but if you short sell IBKR or sold calls using IB itself, could you claim your profits?
Tonkadad, It is not that simple because futures P&L and options values are part of the equation but generally speaking money should just cover maintenance margin. Money transfers are done pretty much instantaneously from the software point of view. I cannot tell you how it is handled legally in accounting.
As I have a substantial balance in purdah at MF Global and am contemplating opening an account at IB, I was pleased to find this thread today. I spent a dull hour or so going through the IB T&Cs for an online signup as a UK resident last evening. Subsequently, I sent this email to their help box as they suggest (and BTW got a response that they don't reply to unrecognised email addresses anymore, so I resubmitted via their message centre): Hello, I'm in the process of setting up an account and I am curious about a few things: 1. The T&Cs plainly state that it is not necessary to accept the arbitration agreement in order to open an account. However, there appears to be no opportunity online to opt out of the arbitration agreement. Why is that? 2. The T&Cs appear to disapply the UK client money rules and, at least for Universal Accounts, also explicitly rule out SIPC indemnification. Elsewhere there is a statement that some customers in some products may be entitled to SIPC protection and/or ICS protection. In light of the events at MF Global and of the very significant latitude that the T&Cs afford IB and its affiliates in respect of customer assets and transactions, do you have a simple statement of the criteria and limits governing customer protection e.g. by account type, security type, exchange and jurisdiction so that customers can reasonably assess the extent to which their assets are at risk of total loss in the event of e.g. default, malfeasance or negligence through no fault of their own? 3. Is it possible for a UK resident customer to open an account directly with IB (US) rather than IB (UK)? I'm grateful for your attention to these matters. I haven't got a reply yet. However, in light of the earlier thread I would draw attention to the following two clauses in the IB T&Cs: "Customer acknowledges that an IB UK Universal Account consists of two underlying accounts: (1) an account for trading securities and equity options, which is carried by IB LLC pursuant to SEC regulations and (2) an account for trading futures and options on futures, which is carried by IB LLC pursuant to CFTC regulations." "Customerâs utilizing IB UKâs Universal Account functionality acknowledge that the funds and positions in the underlying futures/options on futures account are not entitled to any U.S. Securities Investor Protection Corporation ("SIPC") protection nor to any excess SIPC-type insurance coverage that may be provided by IB UK or its Affiliates. " It's also interesting for any of us who don't maintain a number of futures brokerage accounts that: "Electronic and computer-based facilities and systems such as those provided to Customer and used by IB UK and its Affiliates are inherently vulnerable to disruption, delay or failure and such facilities and systems may be unavailable to Customer as a result of foreseeable and unforeseeable events. CUSTOMER MUST MAINTAIN ALTERNATIVE TRADING ARRANGEMENTS IN ADDITION TO CUSTOMER'S ACCOUNT FOR THE PLACEMENT AND EXECUTION OF CUSTOMER'S ORDERS IN THE EVENT THAT THE IB SYSTEM IS UNAVAILABLE. By signing this Agreement, Customer represents that Customer shall maintain such alternative trading arrangements." So, IB had better not be your first or only broker. Finally, under "Investor Compensation Schemes: A. Customers who trade certain products on U.S. exchanges in an IB UK account that is carried by IB LLC may be eligible for certain protections with respect to the equity in those accounts which is provided by the U.S. Securities Investor Protection Corporation ("SIPC"). B. Customers also may be eligible for protection afforded by the U.K. Investors Compensation Scheme ("ICS") which compensates private customers in the event that a U.K. company that is engaged in investment business becomes insolvent. However, to the extent that Customer seeks, or could seek, compensation from SIPC or any other third party, Customer's claim to ICS may be barred. ICS coverage generally does not extend to cash losses and is limited to £48,000 (100% of the first £30,000 and 90% of the next £20,000 of any claim). For further information, Customer should contact the ICS or the FSA. YOU SHOULD KNOW THAT IN THE UNLIKELY EVENT OF THIS COMPANY'S BANKRUPTCY, PROPERTY, INCLUDING PROPERTY SPECIFICALLY TRACEABLE TO YOU, WILL BE RETURNED, TRANSFERRED OR DISTRIBUTED TO YOU, OR ON YOUR BEHALF, ONLY TO THE EXTENT OF YOUR PRO RATA SHARE OF ALL PROPERTY AVAILABLE FOR DISTRIBUTION TO CUSTOMERS. " So, there you have it. Unfortunately, a primebrokerage agreement, which is what IB's amounts to, is a bit short on the rights of customers. You are going to them. So, it's more a matter of open your wallet and repeat after me: "please help yourself". Nevertheless, one hopes that a little more clarity about policies, procedures and protections will emerge (like my monies) from the MF Global affair.