But I still find it troubling. If/when they decide to change another rule that they have been promoting, how long will it be till you become aware? What is if its only somthing internal that the clients don't notice (shift in investment approach, investing in euro bonds etc)? Timely & open comunication is crucial for anyone to feel comfertable with a broker.
I think IB said that clients of its subsidiaries are also clients of IB LLC because the subsidiaries clear their accounts at IB LLC. By the way, I am thinking that this may make it very attractive to incorporate a trading company abroad and open an account at an IB subsidiary. That way one might have all of - access to more markets (not just those approved for U.S. residents) - national protection if such exists in the foreign country (e.g. one million in Canada) - low IB fees - U.S. SIPC protection for amounts in the securities account at the same time!
Comintel, your scheme may not bring all of the benefits you cite. In fact there may be additional jurisdictional risks built into this structure. Check out this excerpt from another post from another thread: http://www.elitetrader.com/vb/showthread.php?s=&threadid=229974&perpage=6&pagenumber=8
Yes it looks as if customers with money in U.K. MF Global operations will have to wait several months for anything. The U.K. bankruptcy trustee seized all money in the U.K. and is being slow in distributing anything. This includes MF Global U.S. customers trading on European exchanges. So, from the aspect of trustee operations, it appears that it may not matter which subsidiary and country your account is domiciled in. What matters in that regard is which clearing operations the money ends up at, to trade the markets you are trading. There could be exceptions. I wonder how the Canadian customers got all of their money back already, since one would think that a lot of their money would have been tied up in MFG U.S. operations. Maybe the Canadian trustee advanced some of the money in view of the $1 million insurance there. Anyway, an ideal scenario might be have a foreign trading corp. open an account with IB Canada. You would have $1 million dollars coverage. The Canadian insurance plan does cover accounts of foreigners as well as Canadians.
Comintel, fyi on foreign subsidiary coverage -- from the document below it looks like the SIPC excludes customers of foreign subsidiaries. "(C) EXCLUDED PERSONS The term âcustomerâ does not include any person, to the extent thatâ (i) the claim of such person arises out of transactions with a foreign subsidiary of a member of SIPC;" Page 66, From http://www.sipc.org/pdf/Securities ...act+1970&order=r&id=6078d2a2cc4082ac&cmd=xml: But maybe IB has a different arrangement due to their clearing method. From IB Canada website http://www.interactivebrokers.ca/en/p.php?f=marginCA: "Universal AccountSM Although the Universal AccountSM should be viewed as a single account for trading and account monitoring purposes, for regulatory and segregation purposes, there exists a separate securities and commodities account. If there is a margin deficiency in either your securities or commodities account, cash will be transferred to cover the margin deficiency. At the end of each day, any excess cash in your commodities account will be swept to your securities account, where it is covered by the Securities Investor Protection Corporation (SIPC)"
I think It's pretty obvious. The days of keeping it all at one account like IB advertises it, "One account for stocks bonds options futures and forex" are over. One account for trading, one for buy and hold, one for income and hopefully they all don't even use the same bank. You give up a little in convenience and a little in margin buying power and you gain a little if things go bad. IB's failure to sweep doesn't indicate to me things are getting better. I'm dealing with enough risk as it is without also having to worry about the broker. And like the man said, two trading accounts so you can at least offset is probably an expensive but maybe a neccessary precaution.