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Is anyone else worried about Penson Financial?
- Thread starter serenfin
- Start date
Quote from Swan Noir:
Why would anyone in their right mind hang around to find out if this covers it or not? Wire transfers are $25 or $30 -- what am I missing here?
What are you missing - blind faith that this will all work out well. You clearly lack an appreciation for everyone acting like a lemming.
Magellan
Quote from Swan Noir:
It would not surprise me if they closed the till at 5PM on a Tuesday and you found out on Wednesday morning that your cash and positions would be available at IB or somewhere else at the opening bell on Thursday
IB = Interactive Brokers (clearing firm)?
Are you suggesting that Interactive Brokers would just slide in and replace Penson, and all of Penson's introducing brokers (Lightspeed, Sogotrade, Zecco, etc.) would continue to function as normal after some potential delays?
Is there any chance that some or all of the introducing brokers get shut down and they have to ship all of their accounts to another brokerage (ETrade, Schwab, Ameritrade, Fidelity, etc)?
Yes, IB = Interactive brokers. I'm not suggesting that some or all of the introducing brokers would get shut down... they would still exist as business entities but what must be realized is that your primary financial relationship is always with the clearing firm which is Penson. Those introducing brokers are not clearing members and have no capacity to service your account.
None of the introducing brokers will be able to transact any business on your behalf until Penson is replaced as the clearing member or as you put it someone "slides in". The exchanges, of course, realize that all the accounts are frozen during the limbo period and help to line up a potential replacement to clear for all the introducers to and direct clients of a failing firm. Should Penson fail or wind up its affairs (which may or may not happen) I would expect a quick replacement to emerge. That said I personally would not keep a dime there!
In the late 80's I happened to have a meeting with a friend/associate of mine in Toronto. When I walked into the office he kept in his home he was finishing up a call with the general manager of a small broker/dealer he owned in London. They had just received a call from the Bank of England requesting that they immediately begin to make a market in a dozen or so small OTC stocks. A mutual friend of ours had closed his firm the day before and those companies that he had done small public offerings were left with no market for their shares.
We laughed at the fact that the August bank of England, the world's second most important central bank at that time, would be calling a broker with fewer than 20 employees to ask for, as they phrased it -- "a favour". Within minutes my friend Mort had the word spread throughout The City that they would be pleased to receive calls on any or all of those issues and stood ready to make the market in each. There was a smooth transition and he ended up taking over most of the retail accounts of the closed firm as well.
I'm not suggesting regulators always do their job well ... we know they don't. But it is important to note where there are billions missing or at least unaccounted for such as MF Global there is no one to fill that hole. and it, at that late point, becomes a difficult job to do. But Penson appears to be different. When there is no hole the customer base has significant value and, as a rule, other firms are eager to acquire those customers. Brokerage is a relatively fixed cost business and as such the opportunity to take on new business without incurring the significant marketing costs generally associate with adding new accounts is a score. Please understand that I have no first had information that Interactive of any other firm is interested in any of Penson's assets or customers. I am simply pointing out that there may be significant value there and where there is value vacuums get filled.
None of the introducing brokers will be able to transact any business on your behalf until Penson is replaced as the clearing member or as you put it someone "slides in". The exchanges, of course, realize that all the accounts are frozen during the limbo period and help to line up a potential replacement to clear for all the introducers to and direct clients of a failing firm. Should Penson fail or wind up its affairs (which may or may not happen) I would expect a quick replacement to emerge. That said I personally would not keep a dime there!
In the late 80's I happened to have a meeting with a friend/associate of mine in Toronto. When I walked into the office he kept in his home he was finishing up a call with the general manager of a small broker/dealer he owned in London. They had just received a call from the Bank of England requesting that they immediately begin to make a market in a dozen or so small OTC stocks. A mutual friend of ours had closed his firm the day before and those companies that he had done small public offerings were left with no market for their shares.
We laughed at the fact that the August bank of England, the world's second most important central bank at that time, would be calling a broker with fewer than 20 employees to ask for, as they phrased it -- "a favour". Within minutes my friend Mort had the word spread throughout The City that they would be pleased to receive calls on any or all of those issues and stood ready to make the market in each. There was a smooth transition and he ended up taking over most of the retail accounts of the closed firm as well.
I'm not suggesting regulators always do their job well ... we know they don't. But it is important to note where there are billions missing or at least unaccounted for such as MF Global there is no one to fill that hole. and it, at that late point, becomes a difficult job to do. But Penson appears to be different. When there is no hole the customer base has significant value and, as a rule, other firms are eager to acquire those customers. Brokerage is a relatively fixed cost business and as such the opportunity to take on new business without incurring the significant marketing costs generally associate with adding new accounts is a score. Please understand that I have no first had information that Interactive of any other firm is interested in any of Penson's assets or customers. I am simply pointing out that there may be significant value there and where there is value vacuums get filled.
Quote from jackhappy2:
IB = Interactive Brokers (clearing firm)?
Are you suggesting that Interactive Brokers would just slide in and replace Penson, and all of Penson's introducing brokers (Lightspeed, Sogotrade, Zecco, etc.) would continue to function as normal after some potential delays?
Is there any chance that some or all of the introducing brokers get shut down and they have to ship all of their accounts to another brokerage (ETrade, Schwab, Ameritrade, Fidelity, etc)?
Thanks so much for your helpful detailed thoughts Swan =)
You're welcome. One further point: You must resolve to never again wire money ANYWHERE until you know who your counter party is and until you have made the judgment that you are comfortable with that party holding your $$$.
No pro ignores counter party risk ... and neither should you. It is just too easy to get it right and too expensive to get wrong.
No pro ignores counter party risk ... and neither should you. It is just too easy to get it right and too expensive to get wrong.
Quote from jackhappy2:
Thanks so much for your helpful detailed thoughts Swan =)
I asked Steve from MBT about Penson and this is his reply (PM posted with his permission)
Quote from GTS:
Steve,
Can you comment on MBT's contingency plan is if Penson goes under and also what exposure MBT's customers have.
Post MF Global, I am nervous about Penson holding my money with its balance sheet in its current state and its stock trading so low.
Quote from Steve:
You know those are totally different scenarios, Penson compared to MF Global? Penson customer funds are segregated and fully insured. Penson as a business however, thats a fair question as to what happens if they go under. Your funds are not affected in any way but naturally as a business MB would move to another clearing firm and have all the accounts moved too. I cant speak to exactly which firms as I must keep that confidential at this point but we know what we would do in such a case. In addition however, Penson at this point has more in capital than they ever had and I am in close contact with their CEO as I have already expressed the same concern. I do feel comfortable at this point that they are going to be fine since they have sold off their under performing assets. That being said, I am always going to keep a close eye on them but I do feel comfortable at this point. To reiterate, I think the Penson vs MFG is apple and oranges.
Steve
This must be a joke!! No serious adult could have said this as if segregation is real protection. There are people out there who have never traded a contract in their life with an IQ of 90 that know better. Anyone who listens to such drivel and thinks it has meaning in their lives deserves to lose it all.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I asked Steve from MBT about Penson and this is his reply (PM posted with his permission)
Quote from GTS:
Steve,
Can you comment on MBT's contingency plan is if Penson goes under and also what exposure MBT's customers have.
Post MF Global, I am nervous about Penson holding my money with its balance sheet in its current state and its stock trading so low.
Quote from Steve:
You know those are totally different scenarios, Penson compared to MF Global? Penson customer funds are segregated and fully insured.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I asked Steve from MBT about Penson and this is his reply (PM posted with his permission)
Quote from GTS:
Steve,
Can you comment on MBT's contingency plan is if Penson goes under and also what exposure MBT's customers have.
Post MF Global, I am nervous about Penson holding my money with its balance sheet in its current state and its stock trading so low.
Quote from Steve:
You know those are totally different scenarios, Penson compared to MF Global? Penson customer funds are segregated and fully insured.
I never suggested it was not accurate I suggested it was meaningless crap. And, correct me if I am wrong, but I seem to recall a Penson director resigned in the spring of 2011 over what was a self dealing transaction of $42,000,000 with a Texas racetrack
Are you freakin' kidding me? Barring fraud!!! Why would anyone bar fraud with these clowns? I have no idea why your firm deals with them but that is your business.
A TEXAS RACETRACK FOR $42,000,000 ON A SELF DEALING TRANSACTION AND YOU SAY BARRING FRAUD!!!
That is hysterical ...
http://www.zerohedge.com/article/st...re-busted-racetrack-loan-director-resignation
Are you freakin' kidding me? Barring fraud!!! Why would anyone bar fraud with these clowns? I have no idea why your firm deals with them but that is your business.
A TEXAS RACETRACK FOR $42,000,000 ON A SELF DEALING TRANSACTION AND YOU SAY BARRING FRAUD!!!
That is hysterical ...
http://www.zerohedge.com/article/st...re-busted-racetrack-loan-director-resignation
Quote from MBT-Steve:
Swan...
Barring fraud its absolutely accurate.
Steve