Living in the Uk where we have just had a run on a mortgage bank, I am wondering what account protection for non-US customers my IB account offers? Are non US dollar balances insured?
Securities Account Protection Customer securities accounts at Interactive Brokers are protected up to $30 million (including up to $1 million for cash). The market value of your stocks, options, warrants, debt, and cash -- denominated in all currencies -- is covered by this insurance. 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 insurance coverage as much as possible. As with all securities firms, this insurance provides protection against failure of a broker-dealer, not against loss of market value of securities. This protection is provided by the Securities Investor Protection Corporation (SIPC) and Lloydâs of London insurers. SIPC provides the first $500,000 per customer (including up to $100,000 for cash). For customers who have received the full SIPC protection, the Lloydâs policy provides up to an additional $29.5 million (including $900,000 for cash), subject to an aggregate limit of $150 million. For the purpose of determining a customer account, accounts with like names and titles (e.g. Individual/John Smith and Individual/John Smith) are combined, but accounts with different titles are not (e.g. Individual/John Smith and IRA/John Smith). SIPC is a non-profit, membership corporation funded by broker-dealers that are members of SIPC. For more information about SIPC and answers to frequently asked questions (such as how SIPC works, what is protected, how to file a claim, etc.), please refer to the following websites:
At what point does the account protection come in? If I buy, say, 100 shares in IBM using IB as my broker, then surely I am the owner of the shares and what happens to IB is immaterial.
As they are regulated by the FSA you should get the usual 100% of the first 2K and 90% of next 32K. Interactive Brokers UK post on trade2win, you might want to post or PM on that board.
If your shares are in "street name", then you are merely the "beneficial owner" of these shares. In fact, I do believe that you are basically an unsecured creditor of the brokerage. They owe you shares, instead of money. Just like a bank deposit, the broker hasn't given you any collateral to lien against. In other words, you have nothing that you can seize and sell at auction. In fact, if you have a margin account, your shares may not even be held by the broker. They may have been lent and subsequently sold by a short seller. According to Federal regulations, the SIPC will ask the court to appoint a receiver to handle to liquidation of the insolvent firm. Those with street name securities will most likely receive them via a transfer of the account to a solvent firm after a lengthy delay. Any deficiency in the claims by account holders will be topped up SIPC based on the $500,000/ $100,000 limits posted here earlier. Arch