what's more important though is that IB's trading is ringfenced from it's brokerage, they have a lot of own capital and they have made decent money over 20 years + they have a good liquidation system if your margin does not suffice ... as a whole this seems very much important to me ... so much I would easily trust them with more money than what is insured ...
IB.UK SIPC protection?
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As it says on their website and T&Cs. IB UK are regulated in the UK by the FCA.
Guys, please ... a little thought before you write !!!
You misunderstand the whole point about FSCS (or I assume SIPC too).
FSCS is predominantly there to cover cash, i.e. you have 85K in the bank, bank goes phut, your cash is protected.
With a broker, anything you trade on the stockmarkets (using cash, not derivatives like CFDs, spreadbets etc.) is either (a) held in your name on the records of the company you are trading (either directly on the company's share register or via a centralised system such as CREST in the UK) or (b) is held in segregated fashion in your broker's nominee account.
In the case of nominee accounts, these are seperate legal entities, specifically setup for the purposes of maintaining client holdings. They are completely ringfenced from any of the brokers other business activities, this is a legal requirement.
Therefore there will always be a firm audit trail that shows "those shares are Bob's".
Most responsible brokers will also hold cash in a segregated client account too.
So really, if you think about it, the likes of the FSCS is there as a last resort.
A well run financial operation should be able to wind-down its activities in a structured and responsible manner without its clients having to resort to government safeguards.
A badly run financial operation would leave you open to the possibility of fraud, negligence and gross administrative errors. Those are broadly the main three areas in which you would end up having to rely on government safeguards.
It is up to you to reach your own personal determination as to whether you feel IB is "well run" or "badly run", and therefore how likely you feel it would be you would need to fallback to last-resort government safeguards.
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> In the case of nominee accounts, these are seperate legal entities, specifically setup for the purposes of maintaining client holdings.
Sadly, the brokers provide usually no specifics about these entities, and IB is no exception.
1) Would be nice if IB made some clarifications what if any protections are international clients afforded.
2)And if this mythical Lloyds insurance really exists what is the credit rating of the counterparty?
Sadly, the brokers provide usually no specifics about these entities, and IB is no exception.
1) Would be nice if IB made some clarifications what if any protections are international clients afforded.
2)And if this mythical Lloyds insurance really exists what is the credit rating of the counterparty?
Actually it says it in their UK client agreement (https://gdcdyn.interactivebrokers.c....formSampleView?ad=uk_customer_agreement.html) if you look in the safe custody section.
B. United Kingdom Client Money and Custody Rules
ii. To the extent that IB LLC holds Customer money, securities, or other assets, IB LLC will hold
such money, securities, and assets in accordance with the rules of the U.S. Securities and
Exchange Commission ("SEC") and the U.S. Commodity Futures Trading Commission ("CFTC"),
as applicable.
(A possible interpretation of this is that because safe custody is performed under US law, you would get your SIPC protection that you seem to be craving)
And if you look on their website (https://www.interactivebrokers.com/en/index.php?f=2334)
Customer-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of customers. IB reconciles positions in securities owned by customers daily to ensure that these securities have been received at the depositories and custodians.
Or, in other words, IB use nominee accounts (or at least that's my understanding of it, you should of course do your own research).
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Does it really matter ?
(a) Lloyds is reputable insurance marketplace, there are very strict rules on the syndicates and underwriters operating there, you can't just pull up a chair and set up shop. Also if you look at the wording on the IB website, it says underwriters (i.e. plural not singular).
(b) As I said, if safe custody is being done correctly, you really don't need to worry too much about government fallbacks.
But if it bothers you so much, just write to the IB Compliance Department politely explaining your concerns and asking for clarification. They are the only authoritative source of information, unlike asking random people here on the internet !
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Yes, fraud. This happens way too often in business and there's no winding down of anything if the customers funds have been looted (has happened before). People go to jail but account holders aren't made whole.
Plenty of brokers have been "solid" before anything serious about them came out, by the time a pikers on ET know about it, it's already too late.
IB has insurance with Lloyds that would protect you up-to $900k cash and $30M combined. If you wanted the SIPC not that, that is an option but then you'll have to pay US taxes also.