broker bankrupt: currency futures safe???

[vetten]

hello folks,

I always wonder if currency futures from CME are safe if a broker blows up.

with the likes of Refco and MF Global going belly-up, I dont feel like pouring big money in spot forex.

so what happens if I bought a currency futures contract through my broker and he goes bankrupt?

thanks

 

[Wallace]

if you're trading with a Canadian broker, your account is insured up to C$1,000,000 -
highest insured amount in the world

 

[failed_trad3r]

Quote from vetten:

hello folks,

I always wonder if currency futures from CME are safe if a broker blows up.

with the likes of Refco and MF Global going belly-up, I dont feel like pouring big money in spot forex.

so what happens if I bought a currency futures contract through my broker and he goes bankrupt?

thanks

if a broker goes bankrupt due to a banking crisis youre out of luck. the insurance is paid by either government or bank guarantee. but in a banking crisis both lack liquidity.

 

[emg]

Quote from vetten:

hello folks,

I always wonder if currency futures from CME are safe if a broker blows up.

with the likes of Refco and MF Global going belly-up, I dont feel like pouring big money in spot forex.

so what happens if I bought a currency futures contract through my broker and he goes bankrupt?

thanks

http://www.finra.org/Investors/ProtectYourself/AfterYouInvest/YourRightsUnderSIPCProtection/




Not all investments are protected by SIPC. In general, SIPC covers notes, stocks, bonds, mutual fund and other investment company shares, and other registered securities. It does not cover instruments such as unregistered investment contracts, unregistered limited partnerships, fixed annuity contracts, currency, and interests in gold, silver, or other commodity futures contracts or commodity options.

 

[drukes1234]

Quote from Wallace:

if you're trading with a Canadian broker, your account is insured up to C$1,000,000 -
highest insured amount in the world

If with a Canadian broker everything is covered including futures. With an American broker, not so much.

 

[rmorse]

I can only speak for accounts the US. If you're trading FX futures or option on FX, your protected by the segregated nature of Futures accounts. For the most part that is considered enough, except in the case like MFG where there appeared to be theft.

If you have an FX account trading non-deliverable FX, which is the most common, you become a creditor of the broker if they go bankrupt. The FX account would offer the least protection.

Bob

 

[Jack_Larkin]

Quote from drukes1234:

If with a Canadian broker everything is covered including futures. With an American broker, not so much.

Only if the broker is CIPF insured. They aren't required to be a member to deal in Canada, but it goes hand in hand with IIROC so most are.

Just to be clear, there are a few non-CIPF insured brokers out there in Canada... but all the big names are covered (Oanda, FXCM.ca, etc..)

 

[oldtime]

Quote from rmorse:

I can only speak for accounts the US. If you're trading FX futures or option on FX, your protected by the segregated nature of Futures accounts. For the most part that is considered enough, except in the case like MFG where there appeared to be theft.

If you have an FX account trading non-deliverable FX, which is the most common, you become a creditor of the broker if they go bankrupt. The FX account would offer the least protection.

Bob

you sure about that? You know a heck of a lot more about it than I do. It was my understanding no futures contracts were covered under SIPC. I was not aware currency futures were treated any different than corn or crude.

 

[rmorse]

Quote from oldtime:

you sure about that? You know a heck of a lot more about it than I do. It was my understanding no futures contracts were covered under SIPC. I was not aware currency futures were treated any different than corn or crude.

I did not say that. Let me be clear:

Bank account: FDIC protection

Securities brokerage account (Equities, options,bonds): SIPC protection

Futures: No Insurance. Account are segregated from FCM in the clients name. This is the way the CFTC expects your account to be protected.

FX: no insurance. No segregation. In bankruptcy, YOU become a creditor of the FCM holding your FX account. This has the greatest risk.

Bob

 

[oldtime]

Quote from rmorse:

I did not say that. Let me be clear:

Bank account: FDIC protection

Securities brokerage account (Equities, options,bonds): SIPC protection

Futures: No Insurance. Account are segregated from FCM in the clients name. This is the way the CFTC expects your account to be protected.

FX: no insurance. No segregation. In bankruptcy, YOU become a creditor of the FCM holding your FX account. This has the greatest risk.

Bob

right, that's the way I understand it. There's about a hundred pages on another thread trying to figure out what protection those of us that trade forex with Interactivebrokers have. It kind of falls in that grey area. My net liquidation value is always equal to my securities value (regardless of what I have on.) Hard to know if that will be SIPC protected.