SIPC protection in IB

Discussion in 'Interactive Brokers' started by Nasdaq5048, Mar 17, 2008.

  1. I don't know how much longer SIPC / FDIC can hold up if brokers fail left and right.
     
    #11     Mar 17, 2008
  2. client#9

    client#9

    Mr Potter will pay 50 cents on the dollar for your deposits!
     
    #12     Mar 17, 2008
  3. The description of the Lloyd's policy is confusing. It has an "aggregate limit" of $150mm. I assume that is intended to cover all customers...that's what "aggregate" means to me. But unfortunately, what we don't know is how many customers have cash in excess of $100K, the SIPC limit, and how many dollars that represents. Because you would need to know that in order to determine even in a reasonable ballpark what "aggregate" really means in terms of your cash position.

    OldTrader
     
    #13     Mar 17, 2008
  4. The real question is which bank is holding the cash for IB?

    If that bank goes belly up than IB won't be able to get customer cash. IB the brokerage might be strong but they do not hold the cash directly as far as I know.

    Does anyone know where the cash is being held?
     
    #14     Mar 17, 2008
  5. Daal

    Daal

    I think deposits at IB are made at a Citigroup account, so I guess thats where the cash is
     
    #15     Mar 17, 2008
  6. ssss

    ssss

    So SIPC has no limit? and as long as our account is under 100K in cash and 500K in equities, we are completely covered??

    If thats the case, i am pretty comfortable
    #######################

    Some companies ,as example SWIM offer until 25 mln$ per account through Lloyds
     
    #16     Mar 17, 2008
  7. gnome

    gnome

    That's not specifically the issue. If a bunch of brokers failed, theoretically no customers should lose anything because their accounts are segregated from assets of the firms.

    SIPC insurance is for "missing securities and/or cash"... missing would include such things as lost, stolen, or illegally spent by somebody in the firm.... like if customer money were illegally used to pay the firm's rent, parties, lap dances, etc... which of course would be theft from customer accounts.
     
    #17     Mar 17, 2008
  8. SIPC covers up to 500k in stocks, ETFs and bonds.

    100k in cash.

    Options and futures are NOT covered by the SIPC.
     
    #18     Mar 17, 2008
  9. quannabe

    quannabe

    Hold the phone. Did everyone digest what gnome just said? ".......Missing cash and securities."

    Let me understand correctly here. FDIC is a federal guarantee that the cash in my bank account will be paid back to me in the event of a run on my bank, but SIPC cannot guarantee my cash account at XYZ brokerage in the event of an investor run?

    Does the Lloyd's of London policy cover my margin cash in the event of such a run, or is it also for "missing cash/securities"?

    Please clarify...
     
    #19     Mar 17, 2008
  10. I believe missing refers to money that is owned you but not available for whatever reason.

    I don't think it means the money has to have disappeared in the night.

    Someone correct this if it's wrong.

    That said, the more I read about SIPC the less I'd rely on it as a 100% guarantee.
     
    #20     Mar 17, 2008