How much cash is safe to keep at one broker?
- Thread starter HuggieBear
- Start date
Surprised there are no mentions of this.
Some brokers / clearing firms will accept deposits of treasuries - it is standard practice to credit you 90% of the face value for margin. If the firm wipe out, you still own the treasuries.
Most secure option seems to be the likes of IB, with a deposit of treasuries. Note also that with IB you have both a commodities account and securities account, the latter being SIPC insured and all capital not used for margin at the close is "swept" into this account at the close each day.
For very large amounts, you may be able to negotiate a bank guarantee / standby letter of credit with a clearer in lieu of making a deposit directly with them, and of course this can also be negotiated with counterparties in OTC markets, currencies being the obvious example.
Some brokers / clearing firms will accept deposits of treasuries - it is standard practice to credit you 90% of the face value for margin. If the firm wipe out, you still own the treasuries.
Most secure option seems to be the likes of IB, with a deposit of treasuries. Note also that with IB you have both a commodities account and securities account, the latter being SIPC insured and all capital not used for margin at the close is "swept" into this account at the close each day.
For very large amounts, you may be able to negotiate a bank guarantee / standby letter of credit with a clearer in lieu of making a deposit directly with them, and of course this can also be negotiated with counterparties in OTC markets, currencies being the obvious example.
all the brokers i've seen also carry private insurance (typically by lloyd's of london). you can get around the $1mm coverage limit on cash by putting your excess cash into money market mutual funds or buying IB efp's. they are treated as securities for the purpose of insurance coverage.
that's assuming that you trust LL.
I've got those damn SIPC signs and stickers in my office too.:eek: 
I would not put all my money in any one account I would not even have all my money in trading accounts after I got wiped out of 6 figures from Ameritrade because they deliberately supplied the wrong level 2 quotes
Just don't trade with all your money .. You should keep about $250,000 in a bank just for backup and to start over is something goes down . I read about a guy whose brokerage account got hacked into and he go wiped out and the broker refused to refund him so anything can happen to your money . Don't bank on the broker refunding you even if they are insured because they will start playing all kinds of games and try to blame you for being negligent !
Just don't trade with all your money .. You should keep about $250,000 in a bank just for backup and to start over is something goes down . I read about a guy whose brokerage account got hacked into and he go wiped out and the broker refused to refund him so anything can happen to your money . Don't bank on the broker refunding you even if they are insured because they will start playing all kinds of games and try to blame you for being negligent !