Can anybody tell me what does a segregated account mean?

does anyone know ballpark what the notional value of MF globals
segregated accounts would be. I would guess maybe a couple of billion if that?
 
Quote from steve0617:

Yes, and I've read the SIPC site over and over again.

*Nowhere* does it say a cash position held inside a futures account is NOT covered. It does say that commodities and futures contracts held (and lost through bankruptcy) will NOT be replaced like securities would (eg they replace the actual security held, not the cash that security was worth if lost to bankruptcy).

But it does not say anywhere, that a cash position, held in a futures account, and then is lost through bankruptcy of the firm, is NOT covered.

<b>I'm reading it's covered. Please provide a link if you disagree.</b>

And let's not forget, this assumes that there is actual money missing from the MF accounts. The SIPC insurance won't be needed if there isn't any actual money gone. Using customer funds doesn't *automatically* mean they're gone. And I've never seen any actual announcement that that's the case. The NYT story saying 'sources' say money is missing and the lawyer for MF quoting MF management that it's not.

No SIPC release, which is only thing I'm listening to, has said money is actually missing.
More...
Are futures brokers like Amp or Velocity members of SIPC? No.
Does IB’s website specifically state that they sweep cash from your futures account back to your securities account in order to get SIPC protection? Yes.

Here is your link:
http://www.nfa.futures.org/news/newsComment.asp?ArticleID=334
Which states “It also makes up for the lack of SIPC-like protection, which would be inefficient in the futures markets.”

And here:
http://www.nfa.futures.org/nfa-faqs...orex/how-is-my-futures-account-protected.HTML
“even though an FCM is required to segregate customer funds, customers still may not be able to recover the full amount of any funds in their account if the firm becomes insolvent and there are insufficient funds available to cover the obligations to all of its customers. Customer accounts are not insured.”
 
Quote from opt789:

Are futures brokers like Amp or Velocity members of SIPC? No.
Does IB�s website specifically state that they sweep cash from your futures account back to your securities account in order to get SIPC protection? Yes.

Here is your link:
http://www.nfa.futures.org/news/newsComment.asp?ArticleID=334
Which states �It also makes up for the lack of SIPC-like protection, which would be inefficient in the futures markets.�

And here:
http://www.nfa.futures.org/nfa-faqs...orex/how-is-my-futures-account-protected.HTML
�even though an FCM is required to segregate customer funds, customers still may not be able to recover the full amount of any funds in their account if the firm becomes insolvent and there are insufficient funds available to cover the obligations to all of its customers. Customer accounts are not insured.�
More...

Well there you go. My mistake. But My God does the SIPC need to make that designation clearer.

Thank you for the links.
 
'Why We Are NOT the FDIC'
""Insurance" for investment fraud does not exist in the U.S. The Federal Trade
Commission, Federal Bureau of Investigation, state securities regulators and
other experts have estimated that investment fraud in the U.S. ranges from
$10-$40 billion a year. In the case of microcap stock fraud, the toll on investors
has been estimated as $1-3 billion annually.
With a reserve of slightly more than $1 billion, SIPC could not keep its doors
open for long if its purpose was to compensate all victims in the event of loss
due to investment fraud.
It is important to understand that SIPC is not the securities world equivalent of
FDIC–the Federal Deposit Insurance Corporation. Congress specifically
considered creating a Federal Broker-Dealer Insurance Corporation, but
lawmakers wisely concluded that such a designation would be both misleading
and out of step in the risk-based investment marketplace that is so different from
the world of banking."
http://www.sipc.org/who/notfdic.cfm

Canada, all-brokers have an 'opt in' non government insurance which covers
up to C$1M - Canadian Investor Protection Fund: http://www.cipf.ca/HomePage.aspx
UK government has 'person of last resort' up to $50K
edit: updated 2010 "Deposits: £85K Investments: £50K": http://www.fsa.gov.uk/Pages/consumerinformation/compensation/limits/index.shtml
Cyprus government has ICFund up to €20,000 or '90% of the losses suffered through
the default of an intermediary, whichever is the lesser.' all EU countries

don't see why the US shouldn't have insured client funds program/s similar to
the Canadian model —
futures/fx - CFTC/NFA — who's going to write them and ask for coverage ?
 
Here in Canada we have investor protection funds. The industry created (CIPF) as well as the (MFDA) IPC, created in 2005 by the mutual fund industry. Both have been created to help foster confidence in the firm-customer relationship. The primary fole for the CIPF is investor protection but it also serves a secondary function of overseeing the self regulated industry. The fund is funded by IIROC member dealers (investment industry regulatory organization of Canada). The dealers pool money into the fund on a quarterly based assesment. As of 2009 the CIPF had 559 million on hand to pay claims.
 
Quote from southall:

I think the UK version of SIPC is company based and not account type based.

Cash, Stocks, FX, Futures accounts are all protected up a limit as long as the financial company is authorized to handle public money by the financial regulator (the FSA).

You guys in the US need something similar, SIPC should cover all account types.
More...
Regarding FSA, I have written en email to FSA and got the answer below:

Dear Mr xxx

Thank you for your E mail about protection for investments involving FOREX companies under the Financial Services Compensation Scheme (FSCS).

I have been liaising with our legal department.

The important question is whether the contract here is a regulated “future” (and so falls within the definition of a “designated investment”, and in turn, is in principle covered by FSCS if the claim made is “in connection with protected investment business” or whether the contract is an unregulated forward FX contract (which falls outside the definition of a “designated investment”) and therefore would not be covered.

As stated previously, unfortunately, until a claim is presented we would be unable to provide a more definitive response as only then would we be able to carry out a full assessment of the eligibility of any claim.

I hope this is helpful. However, if you have any further questions please contact us again or telephone our helpline on 020 7892 7300 or freephone 0800 6781100.

Yours sincerely

Gary Robinson
Senior Claims Officer

Any personal information you provide us with will be held by the Scheme in accordance with our data protection policy, which is available on our website or on request.

__________________________________________
looks like FSA is no different from NFA?
 
Quote from opt789:

And net net that can mean you have absolutely no protections and no insurance of any kind with a futures account at any firm. Even when IB sweeps your excess money in your futures account back to your securities account, all the funds in your futures account are completely at risk.
More...

With IB, one account trades stocks, futures, and forex. How do they sweep your funds from a futures account to a securities account if it's all in the same account????
 
Quote from Traderham:

With IB, one account trades stocks, futures, and forex. How do they sweep your funds from a futures account to a securities account if it's all in the same account????
More...
It is NOT one account, you have a separate account for each. The same thing is done at thinkorswim, but I actually get emailed my futures statement everyday even though from the trading software it all looks like one account. IB just doesn’t let you see your futures statement and they pretend that it is all one account because they think that is easier for people to understand.

A securities account and a futures account are two separate and distinct legal accounts, and that is the same for every broker whether or not they make it appear like one account.
 
Quote from opt789:

It is NOT one account, you have a separate account for each. The same thing is done at thinkorswim, but I actually get emailed my futures statement everyday even though from the trading software it all looks like one account. IB just doesn’t let you see your futures statement and they pretend that it is all one account because they think that is easier for people to understand.

A securities account and a futures account are two separate and distinct legal accounts, and that is the same for every broker whether or not they make it appear like one account.
More...

Thanks for the explanation. I also have a thinkorswim account. Over there it's clear that you have two separate accounts. Each has it's own funds in it, even though you can easily trade both off the same platform as if it was one account. But the money is in two accounts and can't be moved back and forth on the fly. However, IB manages to do this. This is why I thought it was all one account at IB.

Thanks for the explanation.
 
You must log in or register to reply here.
Back
Top