If you deposit a treasury bond at your clearing firm and they go bust do you get that back or will it be divided up between everyone at your firm just like cash would be?
Depositing Treasury Bond @ Clearing Firm
- Thread starter FroggerMan
- Start date
Securities in an account are safer than cash. What typically happens when a firm goes under is that the securities in your account get transferred to another BD. Since securities are hard to steal, SIPC normally has no problem doing this. Even in street name, there is a Leger saying how owns what. If your broker stole cash or if your cash is missing for any reason, SPIC will start with the limit of $250K per account, then do the best they can to recover the rest, which can take time.
In the end, if your account is way above the SPIC limits and your concerned, it may be worth while deposited or buying short term T-BILLS. There will be a cost to doing this. You will always be borrowing money on debit balances and your buying power will be reduce slightly.
What SIPC Covers... What it Does Not
The cash and securities â such as stocks and bonds â held by a customer at a financially troubled brokerage firm are protected by SIPC.
Among the investments that are ineligible for SIPC protection are commodity futures contracts (unless defined as customer property under the Securities Investor Protection Act) and currency, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
It is important to recognize that SIPC does not work the same way as the Federal Deposit Insurance Corporation in terms of blanket protection of losses. For more information click here.
http://www.sipc.org/How/Covers.aspx
The cash and securities â such as stocks and bonds â held by a customer at a financially troubled brokerage firm are protected by SIPC.
Among the investments that are ineligible for SIPC protection are commodity futures contracts (unless defined as customer property under the Securities Investor Protection Act) and currency, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
It is important to recognize that SIPC does not work the same way as the Federal Deposit Insurance Corporation in terms of blanket protection of losses. For more information click here.
http://www.sipc.org/How/Covers.aspx