Since when has funds deposit with a commodity futures firm been <b>insured</b>? I am a retired futures/securities broker and former member of a regulated commodity futures exchange. If you are using a firm that is a combined futures/securities brokerage, then that portion of your funds not being used for futures margain will be insured by SIPC and private insurance, if the firm carries excess coverage with a private carrier. But if you are using a strictly futures broker, then none of your funds on deposit has insurance protection. Those firms that are clearing members of a regulated exchange has some protection for customer funds from a fund maintained by the exchange's clearing house which is paid for the firms that are members of the clearing house.
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Anyone has experience with DeepDiscountTrading.com ?
- Thread starter Peternam
- Start date
Since when has funds deposit with a commodity futures firm been <b>insured</b>? I am a retired futures/securities broker and former member of a regulated commodity futures exchange. If you are using a firm that is a combined futures/securities brokerage, then that portion of your funds not being used for futures margain will be insured by SIPC and private insurance, if the firm carries excess coverage with a private carrier. But if you are using a strictly futures broker, then none of your funds on deposit has insurance protection. Those firms that are clearing members of a regulated exchange has some protection for customer funds from a fund maintained by the exchange's clearing house which is paid for the firms that are members of the clearing house.
Since IB figured out that for your non-futures-margined-cash they can sweep that cash into the portion of your account that is a securities account and avail themselves of the SIPC insurance on those cash balances ... and only those cash balances.
I have cash that sits just that way at IB. I currently have $760 in my commodities account serving as margin for a ratio spread I have had on for months and anticipate holding until May and all of the rest on my balances are in the securities portion of my account. I am looking at this in real time and can see the numbers adjust as CL and its options change price.
QUOTE]Quote from chartman:
Since when has funds deposit with a commodity futures firm been <b>insured</b>? I am a retired futures/securities broker and former member of a regulated commodity futures exchange. If you are using a firm that is a combined futures/securities brokerage, then that portion of your funds not being used for futures margain will be insured by SIPC and private insurance, if the firm carries excess coverage with a private carrier. But if you are using a strictly futures broker, then none of your funds on deposit has insurance protection. Those firms that are clearing members of a regulated exchange has some protection for customer funds from a fund maintained by the exchange's clearing house which is paid for the firms that are members of the clearing house. [/QUOTE]
I have cash that sits just that way at IB. I currently have $760 in my commodities account serving as margin for a ratio spread I have had on for months and anticipate holding until May and all of the rest on my balances are in the securities portion of my account. I am looking at this in real time and can see the numbers adjust as CL and its options change price.
QUOTE]Quote from chartman:
Since when has funds deposit with a commodity futures firm been <b>insured</b>? I am a retired futures/securities broker and former member of a regulated commodity futures exchange. If you are using a firm that is a combined futures/securities brokerage, then that portion of your funds not being used for futures margain will be insured by SIPC and private insurance, if the firm carries excess coverage with a private carrier. But if you are using a strictly futures broker, then none of your funds on deposit has insurance protection. Those firms that are clearing members of a regulated exchange has some protection for customer funds from a fund maintained by the exchange's clearing house which is paid for the firms that are members of the clearing house. [/QUOTE]
Quote from Swan Noir:
I also use IB and, on my cash balance (not futures margin), I have the comfort of the sweep to an SIPC insured account. There is clearly value in that. I also use DeepDiscount/Crossland where I keep much smaller balances, have very low margin requirements and get great personal service from Howard.
Twenty years ago I negotiated an excess line insurance policy for a very substantial individual trader who was moving thirty million dollars to a major brokerage firm. I insisted that the broker pay the premium, that the policy be limited to my client's account and that he be named as additionally insured.
While I have not looked into it (I have less than the SIPC max at IB) I am reasonably certain that their $25,000,000 policy if it covers segregated futures funds at all is for the entire segregated account, is not specific to your funds and you are not named as additionally insured.
In a nutshell that blanket policy might (and I stress MIGHT) net you ten, twenty or fifty thousand dollars (or less) if you are forced to rely on its coverage. If you are counting on that policy you need to educate yourself on the details (and I mean every last detail) of the coverage they have purchased. You might be shocked as to its actual value to you!!
finally people are starting to talk about it. no one really knows how much coverage there is, if there is any at all... how easy it is to believe that we are protected here in the US.. there's nothing a small trader can do about it, but to stick with a larger broker and HOPE that nothing happens to them.
This may b e the craziest thing I ever heard. Of course you can do something about it. Analyze how you trade, how much cash you really need at a low margin broker, how much you want to keep at IB in a SIPC insured position.
Think! It almost always beats HOPE!
Think! It almost always beats HOPE!
Quote from dadidaduda:
t there's nothing a small trader can do about it, but to stick with a larger broker and HOPE that nothing happens to them.
Quote from dadidaduda:
finally people are starting to talk about it. no one really knows how much coverage there is, if there is any at all... how easy it is to believe that we are protected here in the US.. there's nothing a small trader can do about it, but to stick with a larger broker and HOPE that nothing happens to them.
The size of a futures commission merchant does not give a customer protection any more than a small FCM. One must realize there is no insurance coverage for funds being used for futures margain with any firm regardless of size. Any excess funds not currently being used for futures margain should be 'sweeped' into an investment account with SIPC coverage if the broker is also a registered securities brokerage.
Quote from Swan Noir:
This may b e the craziest thing I ever heard. Of course you can do something about it. Analyze how you trade, how much cash you really need at a low margin broker, how much you want to keep at IB in a SIPC insured position.
Think! It almost always beats HOPE!
i have 40000. i have no idea how well my futures account is covered. i hope i will never have to find out.
do you mean there is something i can do to insure myself differently then what the broker is offering me by whatever default there is? can you please elaborate on how to do that?
I know of one broker -- Interactive Brokers -- and there are probably others, that will sweep all free cash (not cash used as futures margin) to the securities side of your account. There you have SIPC insurance up to the stated maximums on cash and securities.
Quote from dadidaduda:
i have 40000. i have no idea how well my futures account is covered. i hope i will never have to find out.
do you mean there is something i can do to insure myself differently then what the broker is offering me by whatever default there is? can you please elaborate on how to do that?
Quote from Swan Noir:
I know of one broker -- Interactive Brokers -- and there are probably others, that will sweep all free cash (not cash used as futures margin) to the securities side of your account. There you have SIPC insurance up to the stated maximums on cash and securities.
so what happens if i day trade and don't have any overnight positions? are they supposed to sweep it every day at the end of the day? do the funds clear by then? if so then i should be protected?
what do other brokers do? sorry for rookie questions, but it's not the information that's widely available or obvious.
Not anymore.Quote from Swan Noir:
I know of one broker -- Interactive Brokers -- and there are probably others, that will sweep all free cash (not cash used as futures margin) to the securities side of your account. There you have SIPC insurance up to the stated maximums on cash and securities.
http://www.elitetrader.com/vb/showthread.php?s=&threadid=233565
I just started trading with DDT, great service and no problems thus far.