MF contagion

Discussion in 'Index Futures' started by billsafari, Nov 19, 2011.

  1. Just looking for other futures traders thoughts. Is anyone pulling some or all of their funds as a precaution? Getting nervous this could be the tip of the iceberg? Not worried at all?
  2. It could be, but that the risk we have to take. Can not trade without margin. :)
  3. Maybe better to post T-bills in lieu of Cash for margin and roll all cash earned into t-bills.

    fdic >>>

    Treasury Securities
    Treasury securities include Treasury bills (T-bills), notes and bonds. T-bills are commonly purchased through a financial institution.

    Customers who purchase T-bills at banks that later fail become concerned because they think their actual Treasury securities were kept at the failed bank. In fact, in most cases banks purchase T-bills via book entry, meaning that there is an accounting entry maintained electronically on the records of the Treasury Department; no engraved certificates are issued. Treasury securities belong to the customer; the bank is merely acting as custodian.

    Customers who hold Treasury securities purchased through a bank that later fails can request a document from the acquiring bank (or from the FDIC if there is no acquirer) showing proof of ownership and redeem the security at the nearest Federal Reserve Bank. Or, customers can wait for the security to reach its maturity date and receive a check from the acquiring institution, which may automatically become the new custodian of the failed bank's T-bill customer list (or from the FDIC acting as receiver for the failed bank when there is no acquirer).

    Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor's deposit account at an insured depository institution ARE covered by FDIC insurance up to the $250,000 limit. And even though there is no federal insurance on Treasury securities, they are backed by the full faith and credit of the United States Government - the strongest guarantee you can get.

    What SIPC Covers... What it Does Not

    The cash and securities – such as stocks and bonds – held by a customer at a financially troubled brokerage firm are protected by SIPC.

    Among the investments that are ineligible for SIPC protection are commodity futures contracts (unless defined as customer property under the Securities Investor Protection Act) and currency, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

    It is important to recognize that SIPC does not work the same way as the Federal Deposit Insurance Corporation in terms of blanket protection of losses. For more information click here.
  4. We know this already.
  5. Apparently quite some people are getting nervous.

    I received several unsolicited mails from brokers that assure that nothing like this could happen with them.
    (Obviously they lost already a number of clients.)