so if i have a futures position open and all of a sudden i find out my broker has gone under. what happens then?
SIPC insures accounts up to $100k in cash and $500k in securities, though securities can only be "lost" if your broker is doing something illegal. When you buy a stock or a futures contract or whatever it's in your name, not the broker's. IB has additional private insurance for up to $1.5m in cash, I think.
What should happen is the CFTC would arrange sale of insolvent broker to new broker as in Refco futures to Mann Global. They would transfer your position. I would be more concerned if the bank that holds your supposed segregated account flops.
SIPC does not cover futures contracts. Stock at a broker is held in street name not your name. Customer securities accounts at Interactive Brokers are protected up to $30 million (including up to $1 million for cash).
It is not the futures broker you have to worry about, it is the clearing firm that holds your cash and positions. In the past customers of clearing firm failures have been eventually made whole, but your account could be frozen for days to months.
Often the bank that holds the segregated funds is different according to the currency you open the account with your broker/ FCM: so are foreign currencies deposited in a US-based futures account protected at the same way as in USD? :eek:
I am not sure as I am a US citizen holding only USD at this point. I wouldn't think they holding bank would be different because on the wire instructions I have only seen one?