Thanks. So what happen when the account exceeds limit? For bank deposits, FDIC always covered beyond limit.
Then we have this case: Account started with $100k, opened a LongStock position and current account value is say $250k, ie. with the unrealized profit. What happens in the event of a broker bankruptcy: how is this account evaluated by the SIPC? As $250k or as $100k?
This was in many ways worse than Bear Stearns because I think the management at MF Global used customer funds to trade firm money. At BS, they lost their money trading. That was why it took so long.
"How do you tell someone you are a failed trader without saying you are a failed trader?" "You ask about SIPC protection for your 25,000 cash account."
I've never checked. I'm not very worried about Schwab and Ibkr going bankrupt on the same day. I suspect that would be the result of such a big Marco event that the government might very well choose to ignore whatever the law says anyway, like it did during covid. I'm more concerned with the relatively frequent outages, ransomware attacks, etc. I believe it was also quite some time before MF global's customers were made whole.
The answer is: Source: https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp
They were all made whole on the securities side, it just took time. I'm not sure about the futures business. You would have to do a search for that.