InteractiveBrokers "hyper-hypothecates" $14.5b of Customer Funds?

what is required is insurance

the following is from the NFA site listing 'Who Has to Register '

Futures Commission Merchant (FCM)
Retail Foreign Exchange Dealer (RFED)
Introducing Broker (IB)
Commodity Pool Operator (CPO)
Commodity Trading Advisor (CTA)
Associated Person (AP)
Principal
Floor Broker (FB)
Floor Trader (FT)
Agricultural Trade-Option Merchant (ATM)
Notice Registered Futures Commission Merchant and Introducing Broker
http://www.nfa.futures.org/NFA-registration/index.HTML

Canadian's funds have been insured since 1969, currently coverage for all types
of brokers is $1,000,000 with some brokers providing higher amounts
hypothecation is not permitted in Canada (?)
various Canadian frauds have occurred, usually ponzis that haven't been insured
so individuals or companies 'managing/trading' client funds also require insurance
 
If IB doesn't do anything dodgy with money they should change the wording in their agreement. If they don't want to do that, it means they have something to hide.
Also, if anyone here thinks that keeping as little money with them as margin requires is a good idea, should keep in mind that if you have below $1000 you can't trade. I had this problem years ago, my stop loss wasn't executed as I had too little money. WTF? Fcuk knows what they're doing behind the scenes, and their promises here that they're not doing anything dodgy count for nothing. They should change their account agreement. If they don't do that, I don't see why anyone would trade with them.
As to Corzine: I'm pretty sure he will get away with it.
 
Quote from apex82:

Any verification other than one article that rehypothecation is illegal in Canada?
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Here's an apparent statement from a Canadian regarding the rules there.

"The trustee where segregated MF Global Canada customers' funds were held was RBC Dominion Securities. I don't think any of these funds ever left the trustee in Canada. Likelihood is if they left, the Canadian government would have made the parent Royal Bank of Canada eat up the losses and make full restitution."

From this post:
http://articles.businessinsider.com...et/30506937_1_otc-derivatives-link-royal-bank
 
Quote from def:

Here is the link for the updated strength and security info on our site as a number of other items, such as the banks used for client funds, are addressed.

http://individuals.interactivebrokers.com/en/p.php?f=ibgStrength
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That all looks good. 140% margin required for every loan, automatic liquidation same-day, Equity value $4 billion+, cash sweeps in segregated accounts, "conservative management", I don't see them misusing customer funds in foreign accounts to circumvent domestric rules, so this default is highly unlikely by Interactive Brokers. They may hyper-hypothecate but this is conservatively managed and usually done for the customer's own benefit wherein trades placed cause IB to pile on, moving the market in the customer's favor if they choose to do so.

Well written, and I don't see anything wrong with their agreements as hyper-hypothecation is a central tenet of good fcm and broker/dealer operations. Cash sweeping from futures accounts to SIPC protected account reinforces my belief that they are as strong as their assets and their word is.

The world would have to have major problems before this firm ever goes under, and even with hyper-hypothecation it is clear that they will close out customer accounts that have become deficient, and that much is good enough for me as long as they follow their own rules, which it sounds like they do.

All clear on the Western Front!
 
Quote from bwolinsky:

They may hyper-hypothecate but this is conservatively managed and usually done for the customer's own benefit wherein trades placed cause IB to pile on, moving the market in the customer's favor if they choose to do so.
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Can you explain in another way how this scenario is used for the benefit of the customer? It's hard to understand what you mean here.
 
Quote from Options12:

Can you explain in another way how this scenario is used for the benefit of the customer? It's hard to understand what you mean here.
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Hyper-hypothecation is not just a method to boost returns for the firm, but also to boost returns for the customer.

Hyper-hypothecation allows the firm to "pile on" and move markets in the customer's direction, benefiting both parties which seem to have an interest in making sure the trade's profitable for their client.
 
Quote from kgoodfl:

They can only do it if you have a margin loan.

They have been loaning my shares despite no margin loan.

See rule:

http://taft.law.uc.edu/CCL/34ActRls/rule15c2-1.html
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Kgood, check to see if you have reg-t margin. Whether or not you buy on margin is irrelevant since you probably do have margin priveleges then that is allowed, with or without your consent. Your consent is given by your margin account application.
 
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