FDIC limit or SIPC limit question for cash?

prc117f · Aug 25, 2015

I shorted puts on the SPY late evening today and now I have cash wise 322K in cash. now this cash is the premium collected for the puts.

is this cash only covered by SIPC which means anything over 250 is at risk?

or does SIPC cover this? not sure what the situation is regarding counter party risk.

prc117f · Aug 25, 2015

okay it looks like SIPC is only 250 for cash. how safe is TD Ameritrade? I have cash in other accounts to cover potential assignment (ie etrade has 1.250mm)

but TD does not seem to offer an extended FDIC like etrade

dealmaker · Aug 25, 2015

All the brokerages are highly leveraged, but at Fed's last stress test TD Ameritrade was lesser risk than e-trade. Does that mean your excess cash is safe, who knows.

prc117f · Aug 26, 2015

Sipc of onLy 250k for cash and 500k for securities is too damn low. They really need to increase it. It is annoying to have to have to manage and trade with different brokerage accounts.

Etrade spreads the account across multiple banks to give you 1.2m fdic for the cash sweep. For some reason td is not offering this.

dealmaker · Aug 26, 2015

prc117f said:
Sipc of onLy 250k for cash and 500k for securities is too damn low. They really need to increase it. It is annoying to have to have to manage and trade with different brokerage accounts.

Etrade spreads the account across multiple banks to give you 1.2m fdic for the cash sweep. For some reason td is not offering this.

The reason e-trade offers this is that they had failed the stress test....

ScalperJoe · Aug 27, 2015

prc117f said:
Sipc of onLy 250k for cash and 500k for securities is too damn low. They really need to increase it. It is annoying to have to have to manage and trade with different brokerage accounts.

Etrade spreads the account across multiple banks to give you 1.2m fdic for the cash sweep. For some reason td is not offering this.

Interesting post. TD offers two ways to "cash sweep" your funds, through FDIC or SIPC. Since SIPC offers $500k/total (of which $250k can be cash), vs. $250k total in FDIC, it seems the SIPC sweep is the better option of the two in case the b/d fails.

https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA1147.pdf

J.P. · Aug 28, 2015

ScalperJoe said:
Interesting post. TD offers two ways to "cash sweep" your funds, through FDIC or SIPC. Since SIPC offers $500k/total (of which $250k can be cash), vs. $250k total in FDIC, it seems the SIPC sweep is the better option of the two in case the b/d fails.

https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA1147.pdf

I was looking at this and that document seems to provide higher limits:

"Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurer."

ScalperJoe · Aug 28, 2015

J.P. said:
I was looking at this and that document seems to provide higher limits:

"Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurer."

Ah, good catch. Looks like they would have to go bankrupt first, and then you're in line for getting paid by the trustee.

"In the event of a brokerage insolvency, a client may receive amounts due from the trustee in bankruptcy and then SIPC."