Hi. I've just read on the SIPC website that they actually do not include currency held on the account in their coverage. However, I vividly remember reading somewhere that this 500k limit includes 250k in cash. So how is it then? Is the USD cash held on the account not actually covered, and do I really have to purchase stocks or other equity in order for the SIPC protection to apply?
https://www.sipc.org/for-investors/what-sipc-protects - "The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash."
The $500K coverage includes $250K for cash but what it doesn't cover is forex transactions so if you have bought 2.5 million Russian Rubles with your USD as a forex trading transaction for example, that 2.5 million Russian Rubles would not be covered. If the broker where you bought those Russian Rubles went down, that 2.5 million Russian Rubles is gone. This is as far as I understand.
Thanks. So basically if I were to initially deposit 100k USD and then subsequently purchase Vanguard ETF's in 50K USD, then both my ETF's and 50k in USD would be covered by SIPC in the event of bankruptcy of the broker?
Thanks for the response. Although, the SIPC website still lists currency as a security that is not eligible for SIPC protection. So I don't know what to make of it then. Maybe by currency, they mean something else entirely and not cash deposited and held on the account?
Can you be more specific as to what you mean by currency. SIPC covers securities and CASH. Not futures, Crypto or FOREX. It does cover cash. I have never asked if the cash needs to be in USD.