September 17, 2008 Dear IB Customer: In these stressful financial times, we thought it would be helpful to remind you of our conservative risk systems and policies that make Interactive Brokers a safe haven for your money. Below please find a reproduction of an ad that we are running in the Wall Street Journal that summarizes our position. Conservative defined in·ter·ac·tive bro·kers [in-ter-ak-tiv bro-kərs] â noun 1. No CDOs, Subprime Debt or Credit Default Swaps. 2. $4 Billion in Equity Capital*. 3. 31 Years in the Trading Business. 4. Automated Pre-trade Credit Vetting. 5. Real-time Margin System Automatically Enforces Limits. Investors concerned about deteriorating credit markets, broker failures, rumors of hedge fund liquidations and counter party credit risk should consider moving their accounts to Interactive Brokers. For over 30 years, controlling and avoiding risk has been the primary consideration in building our automated dealing and brokerage systems. Our company's sole focus is on exchange listed products that are cleared through central clearing houses and are marked daily to external closing prices disseminated by the exchanges. Our proprietary positions and resulting payables and receivables are reconciled against external sources daily. Our real-time margin system prevents the execution of orders for accounts with insufficient margin by continuously enforcing limits for each account, and it automatically liquidates positions if any individual account violates its limits at any time. A safe haven for investors and institutions, Interactive Brokers is ready to serve. Options, futures, commodities, stocks, forex, bonds and funds on over 70 markets worldwide from one account. www.interactivebrokers.com For additional information and FAQs, see our Strength and Security page. We look forward to serving you over the coming years. Sincerely, Thomas Peterffy Interactive Brokers, Chairman & CEO
thanks, I didnt check my email , so this is the first I'm seeing of it. I suggested to IB yesterday that it might be time to 'say something'. I'm sure I had nothing to do with the ad. In any case , I will take this statement to mean that the incredible conditions we are seeing are being handled appropriately. Might even be a + for the bottom line.
I am confident with IBs risk management, but my concern with holding cash at IB is where is it exactly held? IB claim they spread the money across multiple banks which is good but couldnt a number of those banks still fail taking IB and a good chunk of my money out with them? Im sure its very safe but its a bit of an unknown isnt it.. I personally bank with HSBC, so i know exactly where the rest of my cash is. But the money i have with IB, it could be anywhere...
http://www.interactivebrokers.com/en/general/education/faqs/safetyFAQ.php?ib_entity=llc#6 read their Faq page carefully, many things are explained. This is a recently updated faq, and a must read. Excerpt Has IB Suffered Losses from Hedge Funds that Trade through IB or from the Failures or Takeovers of Lehman, Bear Stearns, Fannie Mae, Freddie Mac or AIG? Neither Interactive Brokers, nor any of its affiliates suffered any material losses in connection with the recent failures or takeovers of Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac or AIG.
I totally agree with IB's points. With major financial institutions going under, depending on a 2-person introducing broker that allows $300 day trading margins of e-minis is ASKING to blow up one of these days.
It would appear the market doesn't share all the enthusiasm. IBKR closed beneath 20 today for the first time since its listing. Maybe it needs more ads..
Thanks for the link. "The majority of the bank deposits are held with JP Morgan, Deutsche Bank and Bank of America, with smaller amounts held with Citibank, HSBC and U.S. Bank."