Let me start by saying that I am the biggest worrywart there is.. but there is 1 thing I simply refuse to worry about.. that I will lose my money in an SIPC retail account. If SIPC does'nt work nothing will. If my BD goes under, they will simply move the account to another BD clearing for that firm. If that clearing firm goes under then SIPC will pay up to 100K in cash and since I don't have in excess of that, it is not a problem. Furthermore, short of a financial meltdown of a systemic nature, there is an extremely remote possibility that clearing firms would fail that in aggregate would deplete SIPC of monies it needs to pay for that errant clearing firm.
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Important Question about Retail B/D's
- Thread starter jay123
- Start date
Quote from arnegr:
it has so many conditions, your money will almost never be returned, and if it is, it will take an effort and time greater than the loss. you lose twice, in trying to get any money out of sipc.
Would you elaborate please? Is this from personal experience? What kind of conditions? I thought that if your money and/or equity positions were in a retail account, and below the 100K/500K limit, you were covered - period.
it has so many conditions, your money will almost never be returned, and if it is, it will take an effort and time greater than the loss. you lose twice, in trying to get any money out of sipc.
Would you elaborate please? Is this from personal experience? What kind of conditions? I thought that if your money and/or equity positions were in a retail account, and below the 100K/500K limit, you were covered - period.
Quote from GATrader:
I don't think futures account are protected by any form of insurance other than the integrity of the clearing firm...
This is yet another reason why IB's universal account rocks. Any money not required as performance bond for a futures position is swept to the (insured) linked equity account.
I don't think futures account are protected by any form of insurance other than the integrity of the clearing firm...
This is yet another reason why IB's universal account rocks. Any money not required as performance bond for a futures position is swept to the (insured) linked equity account.
Quote from jay123:
Follow up to my original post about concerns of a B/D bankruptcy and how it relates to a retail account holder. I called up Penson Financial this afternoon. After going through a bunch of channels I finally got to the compliance dept. Spoke with a manger there who was also a legal counsel for Penson. In any case they have had B/D's go out of business in the past, in each case it is a fact that the retail account is tied only with the clearing firm. In other words the clearing firm holds the money. The broker dealer is simply the middleman providing the front end support for a clearing firm in terms of handling the customers needs and provides the sales staff etc. If ever there was any problem where a broker dealer shut down. The retail account holder's money, in this case with Penson, would safe. Furthermore, the customer would be told to transfer to another broker/dealer of the account holders choosing. Furthermore, the SIPC insurance and the additional insurance is not insurance of the Broker/Dealer it is insurance and I use the term insurance loosely (more adequately I should say insured) that the clearing firm provides if "god for bid" the clearing firm goes under. This applies for any clearing firm. The major ones being Penson and Instinet Clearing Services. Wanted everybody to know this, as I was on the phone for over a half hour with this person and really got an eye opener as to how things work as far as the clearing firm is concerned.
Southwest Securities has about three times the capital that Penson does. I have not checked out others like Instinet, whoever XOOM uses, and Assent. Who does Track trade use?
I don't think the question of your b/d is totally irrelevant, as they have the opportunity to make changes in your trades and psotions to resolve outtrades, etc. They also have the ability to request wire transfers from your account. If they had a crooked employee, I'm not sure if the clearing firm would make it good.