FCM with SIPC- or FDIC-like insurance

[lukas]

@Robert Morse
By what time exactly does an FCM need to post collateral with CME Clearing in case of a customer who only day-trades? The so-called "day-trading margins" are set at the discretion of an FCM. Now, if a client has closed all positions, say, 5 minutes before the end of day, has any collateral got to be transferred to CME Clearing for that client?

 

[ETJ]

CFTC, CME and ICE and(repeating Chicago gossip) - it would exist already, but they don't want it. Welcome to monopoly clearing.

 

[lukas]

Interactive Brokers has a cash sweep on futures accts which sweeps your excess cash into a pool of FDIC banks that pays interest daily. This is fully automated & completely transparent to your trading. Their FDIC insurance is $2.5M and $250k SPIC.

At current rates, 1 year in the the cash sweep pays about $1,600 per $100k or $16k per $1M.

TD Ameritrade has something similar, but pays virtually nothing in interest.

The people with larger accts are more likely to be more concerned about protecting their wealth & earning interest on their excess cash. The smaller accts have a different agenda and will make nothing to very little in interest anyway.

https://interactivebrokers.com/en/index.php?f=2334&p=fin

In case of day-trading futures, can you be in a position where at the end of each day:
- no funds in Commodities Account
- a tiny portion in Securities Account
- majority in FDIC-insured bank account?

I tried asking them, but could not even send an enquiry via their website ("unknown problem occurred").

 

[Robert Morse]

@Robert Morse
By what time exactly does an FCM need to post collateral with CME Clearing in case of a customer who only day-trades? The so-called "day-trading margins" are set at the discretion of an FCM. Now, if a client has closed all positions, say, 5 minutes before the end of day, has any collateral got to be transferred to CME Clearing for that client?

I do not know. Your question seems to be, if you have a Universal Account where the Broker is protected against losses from funds in a Securities account, can you trade future and have BP to trade with and journal money to cover losses before files are sent to the exchanges, say 4:15pm ET, and hold no positions at end of session?

If I were the FCM/Broker, I would not do that unless I have systems in place, it was allowed by the exchanges, it was allowed by regulators, somebody signed a personal guarantee and that person had material assets or the entity trading had a material balance sheet.

 

[comagnum]

In case of day-trading futures, can you be in a position where at the end of each day:
- no funds in Commodities Account
- a tiny portion in Securities Account
- majority in FDIC-insured bank account?

I tried asking them, but could not even send an enquiry via their website ("unknown problem occurred").

Not sure, my situation is entirely different since I always keep at least 80% of my capital in cash for my risk mgmt. The answers you seek may be found in these links:

I forgot to mention interest is paid only on settled cash >$10k & the interest paid is significantly greater on balances >$100k.

https://www.interactivebrokers.com/en/index.php?f=27462

https://interactivebrokers.com/en/index.php?f=1595

https://www.interactivebrokers.com/en/software/am/am/manageaccount/excessfundssweep.htm

 

[lukas]

Your situation is very similar as day-traders also keep most of their capital in cash, after all