broker bankrupt: currency futures safe???

[rmorse]

Quote from oldtime:

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.

IB makes it hard because they give the illusion of one account. If you trade equities, FX and Futures, there must be three separate accounts that have to be funded independently. They each have there own margin requirements and internally, they can move funds back and forth. But when you have unused cash, your securities account would offer better protection under the SIPC limits. If you're at a brokerage account that offers a sweep to an FDIC bank account, you can also balance some money there.

To be honest, I'm not as concerned about the safely of my money to the extent of many people here. If I had many millions or was trusted with the funds of a large hedge fund, I would multi prime and use a large bank for protection. I find it interesting that many of the ET participants that I speak to are more concerned about the safety of their funds that are under the SIPC limits, than people I speak to that have a person net worth over $50M.

Bob

 

[oldtime]

Quote from rmorse:

IB makes it hard because they give the illusion of one account. If you trade equities, FX and Futures, there must be three separate accounts that have to be funded independently. They each have there own margin requirements and internally, they can move funds back and forth. But when you have unused cash, your securities account would offer better protection under the SIPC limits. If you're at a brokerage account that offers a sweep to an FDIC bank account, you can also balance some money there.

To be honest, I'm not as concerned about the safely of my money to the extent of many people here. If I had many millions or was trusted with the funds of a large hedge fund, I would multi prime and use a large bank for protection. I find it interesting that many of the ET participants that I speak to are more concerned about the safety of their funds that are under the SIPC limits, than people I speak to that have a person net worth over $50M.

Bob

when I start trading over the SIPC limit I'll start worrying a lot less

 

[rmorse]

Quote from oldtime:

when I start trading over the SIPC limit I'll start worrying a lot less

I guess because I was a Broker Dealer for 25 years, and not protected by anything, I'm accustom to not be concerned with it.

 

[oldtime]

Quote from rmorse:

I guess because I was a Broker Dealer for 25 years, and not protected by anything, I'm accustom to not be concerned with it.

when it comes to my worries about trading, the broker going bankrupt before I do is way down on the list

 

[vetten]

I live in NZ, but have an IB account. IB seems alright, but you can never tell. I have an account >500k trading Ozzie stock and forex and it might be time to look for a broker linked to a bank.

any ideas?

thank you everyone for your contribution.

 

[rmorse]

Quote from vetten:

I live in NZ, but have an IB account. IB seems alright, but you can never tell. I have an account >500k trading Ozzie stock and forex and it might be time to look for a broker linked to a bank.

any ideas?

thank you everyone for your contribution.

Again, this is just my opinion. You're never going to know who the next broker/bank bankruptcy will be. There is NO reason to believe IB will be it. Find a place you like there platform, customer support, access to the market you want and fair pricing. If you have a very large accounts and your concerned, multi prime. Spending this much time and effort moving money around, you're just as likely to end up in the bank/broker that will have issues, then concentrating on what helps your trading business.

 

[vetten]

thank you rmorse for your reply.

I think its best that even before somebody starts trading to look for the safest broker around who suits your needs.

no use having the best trading strategy and compounding profits in your broking account and ending up with nothing.

for now I`ll keep my stock with IB and look for a "safe" currency futures broker elsewhere.

 

[rmorse]

Good luck. Unfortunately, most of the large banks and well funded FCMs that offer FX, don't want retail business. They offer accounts only to eligible contract participants. Most of the small brokers that offer retail FX are very small firms. Your counter party risk is with the FCM on all your FX trades.

http://www.iso-ne.com/committees/co...s/may232008/eligible_contract_participant.pdf

 

[FrankSlaughtery]

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

IIRC, the regulated side of refco (futures not spot) was ok. those trading spot got hosed. if i'm wrong pls correct.

unless you're trading some exotic pair (insert inappropriate joke here) like EURTRY or USDPLN or whatever and can't find liquidity in the cme futures, just stick w/ futures.

 

[comintel]

Quote from rmorse:

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

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[/B]

I wish that futures accounts were segregated individually in the name of each client but unfortunately it seems that such is not the case.

There is just one big "Client segregated funds" account maintained by the broker and if a deficiency occurs, everybody shares in the loss.