Is cash no longer fully insured in an IB account ?

BTW for those who are interested, I just checked and the SIPC coverage applies to all clients of a broker which is a member of the SIPC, including those which are not US citizens. This means ALL clients of IB should be protected (even though in the worst case it may take years to get results, but hey it's something).

 

you sure about that? My understanding is that money in a futures account was not covered by sipc, that's why all the bitching that it's not being swept

 

It doesn't matter what TD Ameritrade/TOS says about their futures cash sweeps. They are not the authority who has control of honoring the insurance. If the time ever came to reveal the truth, it would be highly probable that the SIPC is going to disallow those futures cash sweeps (i.e., they'll be clawed back).

If IB is suddenly changing their policy, it's in response to mandates coming from either the CFTC or SIPC. This is common sense.

 

Wow, nothing like be a fanboy who can’t think for himself.
“If IB does anything ever, it has to be because they were forced to do it and everything they do is best for us – that is common sense.”

My point is simply that you are stating as fact that a governmental body forced IB to stop sweeping cash, and I am pointing out that it does not make any logical sense that they would notify IB but not other brokerages that are doing the same thing.

 

I didn't say anything about futures/commodities accounts. I only said that the standard SIPC coverage (securities and cash) applies to non-US citizens, that's all. It was worth mentioning because someone previously claimed it applied to US citizens only.

 

Well, I just talked to an attorney at the SIPC, and while not able to give me any specifics, she did say that a trustee in charge of a brokerage liquidation could view a trader who only trades futures and just uses the securities account to hold excess cash could be considered a futures only trader and would not have their cash in the securities account covered by SIPC.

I naturally asked about someone who trades some securities, but she could not give any definitive answer. So this opens up an impossible can of worms. If you trade 50/50 of securities and futures then your securities account is probably covered, but what if it is 30/70 or 10/90 then are you not covered, partially covered, or what?

There are no actual answers to any of these questions that I can find. Until they actually lay out specific rules and regulations as to what is covered in an account that has money move back and forth from securities to futures I am not sure we will know. Right now they can only say the legal jargon in that it will turn on the specific facts and intentions of each individual case.

 

As an FYI, thinkorswim/TDA has a choice that you can have your cash be in an FDIC covered account. I would recommend anyone with them choose that option because FDIC just covers you, they don’t try to find ways to not cover you like the SIPC.

 

Its pretty clear, the only long term reliable solution is to keep stocks & futures seperate accounts/brokers, spread your money with a few brokers. Any other solution is a short term solution at best.

 

What's the IB management view then. It sounds like SIPC might be smoke and mirrors for those who primarily trade futures. Perhaps its time IB changed insurers?