It is my intention to reply but I am not in treasury and am thus seeking further info from my US colleagues as I want to make sure anything I post on this topic is accurate and clear. We've always been at the forefront with our risk management policies but i surely understand why a statement from me stating how I know we are risk adverse with client funds is meaningless without an official statement. Hopefully I'll be able to be provide more detail to you in a day or two.
Hi, I have a 50k account with IB I set up for trading equities markets... I have never traded a futures contract in my life... So is my account just as safe as anywhere or should I be concerned? This MF mess and reading he article on it all and then seeing IB in the same class worried me... I understand a rep is here to explain but confused on if I have to worry about it or if it only applies to futures accounts... Thanks for any help... Also, is a trading account one of the safest places to keep cash in a crisis? Would it survive over bank runs? Thanks for any and all help!
It is very interesting that the account agreements of so many firms contains identical language referring to re-hypothecation. This suggests that the language comes from a common source. Could this source be whoever (e.g. a major investment bank) is providing the hypothecation services to these firms, and insists that its language be inserted into their account agreements?
I finally heard "hypothecation" used by a guest on a Bloomberg interview today. Has anyone in the mainstream media caught on yet? Kaminsky? Greenburg? This is a major story in my view....
"IB returns interest income to customers after the first 0.5% and does not depend on the float. "A broker should be able to provide their services in exchange for a commission," Peterffy says." http://www.futuresmag.com/Issues/20.../Top-50-Brokers-This-one-is-on-us.aspx?page=3
10 times commission for zero credit risk? Not for me. I want it to be cheap and I want it to be good as well. Otherwise, you might as well donate all the money to brokerage over the long run by overpaying commission.
I deal with two futures firms: IB and DeepDiscount/Crossland and a variety of FDIC insured commercial banks. Years ago, with a partner, I owned three separate small brokerage firms -- one in NY, one in London and one in Lugano, Switzerland. I learned quickly that the investment business at every level makes even a whorehouse look antiseptic. The business is a sewer. Here is the key: Learn the rules and if you have significant funds keep most of the $$$ spread among commercial banks. Most people don't realize that FDIC insurance can apply to the max for EACH of multiple accounts at even one institution. You and your wife can have separate insured accounts (and I think a separately insured joint account) certain trust accounts count as separately insured accounts. The permutations are valuable for those who learn the ropes. I choose to use separate financial institutions but you can do $500,00 + ALL SEPARATELY INSURED at one bank if you do it properly. I believe -- but do not know -- that multiple accounts work on SIPC insured accounts as well. You may be able to keep very substantial funds at IB for example. At Crossland I have at times kept enough to trade 15 lots of ES. Since the day session there is calculated as 8AM to 4:15PM and I'm always (without fail) flat at EOD $10,000 covers 15 contracts which is more than I ever trade anyway. Knowledge is power. Nothing is 100% safe but I'm reasonably well diversified, dealing with good firms that I have confidence in and confident in my ability to adjust quickly if things change. The CFTC puts out a statement of financial condition on or about the 11th of every month for the prior month and it took me about 30 seconds to sign up for a copy of it to be emailed to me and one to my wife every month. My wife compares month to month and knows she needs to show me if any of the numbers change drastically. Am I 100% covered? No ... but I'm not going to take a major hit under almost any set of circumstances short of nuclear war or an overnight total financial collapse. BTW ... Crossland has made a superb banking choice -- Fifth Third Bank in Cincinnati . A good sized regional with one of the highest credit ratings from S&P and Moodys of ANY BANK IN THE US as well as a grand total of $11 (that $11 not 11 million or billion!!) in foreign loans and bonds. The institution is good sized, diversified, highly rated and extremely well managed. They still have a Midwestern approach but modern technology and a balance sheet like the proverbial brick shit house -- solid, solid ... solid! The decision to bank there reflects very well on Crossland and because DeepDiscount clears through them as a guaranteed IB I get great personal service -- day and night -- and a small, smart clearing firm to boot. Would I leave the whole wad there -- I simply do not have to! There balance sheet is solid but their size is modest. But am I comfortable with 10G's there? Yes ... VERY. And the margins are so good the 10g's goes a long way! If you are competent and willing to spend a handful of hours protecting your $$ you can relax. If not you should be worried. Now ... if trading were this easy I'd really be in good shape. C'mon guys ... quit bitchin' and acting like sheep. This just ain't that tough.
Yes 10k here and there is easy to spread out and feel safe. Try taking 10 mill that takes about 200 trades a day and is usually 50% invested at all times and doing the same thing... not so easy now. Anyone know of some other brokers that dont seem to be involved in this re-hypothecate stuff. Any other avenues discovered other than spreading out below SIPC limit? Outside insurance etc?
i've said this before, use a tbtf bank like gs, jpm (heck just look up the "systematically important institutions" the gov lists). they will be bailed out every time. just look at what happened w/ gs and their cds bought from aig. they were made whole 100 cents on the dollar. you'll pay higher commission there than at ib but you have the piece of mind you won't wake up one day to see on your bloomberg "jpm declares bankruptcy, plans to liquidate". mf failed b/c it was NOT a tbtf institution. i guess to sum up for everyone reading this thread here are the steps traders can take: - spread money over multiple brokers AND multiple clearing firms (this is esp important after the pnsn fiasco - a lot of brokers clear thru pnsn) - keep less money to back intraday futs trading at broker like one op said re crossland - have a "wire out first, ask questions later" policy when it comes to potential probs at your broker - this is something maybe all of us et'ers can do - start a campaign and tell our brokers in no uncertain terms "knock off this horsesh*t rehypo, commingling, etc. or my account will be gone like shawshank". obvi i don't know how effective this will be but it would take each of us less than 5 mins to call/email them so if nothing happens b/c the brokers are dirty scumbags you're not out a lot of time