Thank you. Is it correct that if you have a margin account at IB and IB failed, which I of course agree is highly unlikely, you cannot eliminate the risk by owning stocks, bonds or ETFs as they are not held in the name of the individual account holder. You would not be able to point at those stocks, bonds and ETFs and say: "Those are mine. I am not affected by the bankruptcy." Is that correct?
There is a difference between having a margin account and utilizing margin. I can post from our site re fully paid securities: Current SEC regulations require broker-dealers to perform a detailed reconciliation of client money and securities (known as the "reserve computation") at least weekly to ensure that client monies are properly segregated from the broker-dealer's own funds. In order to further enhance our protection of our clients' assets, Interactive Brokers sought and received approval from FINRA (the Financial Industry Regulatory Authority), to perform and report the reserve computation on a daily basis, instead of once per week. IBKR initiated daily computations in December 2011 along with daily adjustments of the money set aside in safekeeping for our clients. Reconciling our accounts and client reserves daily instead of weekly is just another way that Interactive Brokers seeks to provide state-of-the-art protection for our clients. Client-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of clients. IBKR reconciles positions in securities owned by clients daily to ensure that these securities have been received at the depositories and custodians. Financial Strength - Strength and Security | Interactive Brokers LLC
FYI, this bit was added to hopefully provide additional comfort on how we look at risk much more stringently than others and the underlined (my addition) addresses your question: How We Handle Client Assets A portion (approximately 9% at March 10, 2023) of client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker. As a practice, IBKR places a portion of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all clients. A majority (approximately 78% at March 10, 2023) of client funds is typically invested in short-term U.S. Treasury securities and reverse repurchase agreements, where the collateral received is in the form of U.S. Treasury securities. IBKR’s investment policy targets short-term government securities and reverse repurchase agreements, with a typical weighted average maturity of 30 to 40 days and a maximum term of one year. In this way, we can avoid mismatching the maturities between our on-demand obligations to our clients and our investments. This practice also allows us to avoid excessive price volatility and the risks of large losses stemming from declines in investment values that may be exhibited by longer term securities. As a broker dealer, we must mark to market the value of investments of client funds daily, unlike banks that may hold securities classified as “held to maturity”, which are not required to be marked to market. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IBKR does not currently invest any client money in money market funds.
224 Billion assets in the Bank. 7 Trillion is assets under management,, total company, not just the bank.