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InteractiveBrokers "hyper-hypothecates" $14.5b of Customer Funds?
- Thread starter Chicago_CTA
- Start date
Quote from saico:
MF Global had a completely different business model than IB, which is a pure online brokerage firm. MF was engaged in several other businesses. The shortfall came when their own huge positions in italian bonds went down the road. They tried to compensate these draw downs with client funds what didnt helped them when the firm went broke.
IB has their timber hill market making division. Perhaps the $14.5bil in re-hypothecates is what IB uses to provide trading capital for that division.
Quote from saico:
MF Global had a completely different business model than IB, which is a pure online brokerage firm. MF was engaged in several other businesses. The shortfall came when their own huge positions in italian bonds went down the road. They tried to compensate these draw downs with client funds what didnt helped them when the firm went broke.
You must not have read all of the information provided by the link provided by the original poster of this thread.
Quote from saico:
MF Global had a completely different business model than IB, which is a pure online brokerage firm. MF was engaged in several other businesses. The shortfall came when their own huge positions in italian bonds went down the road. They tried to compensate these draw downs with client funds what didnt helped them when the firm went broke.
Saico, be careful. There is prop trading going on at IB.
Look over this thread:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=230372
In which a company rep discusses just one such trade.
Quote from IB-AN:
The news sources which state that Mr. Peterffy personally bought these shares in MF Global are erroneous and most have already corrected this. The shares were held by the Company as stated in the 10Q.
It's also inaccurate to suggest that client money or assets were "intermingled" with firm assets as part of this strategic investment.
Quote from western:
SIPC is NOT federal insurance. In any case it only covers 100k in cash and many full time traders have way more than that at IB.
http://www.sipc.org/how/covers.cfm