the way I understood it is Harris IS BMO and they buy up everything they can get their hands on that's for sale. Like I said, they've been around longer than I have. The first money I ever bet on corn went through Harris bank. (I think I lost that money, I don't know if they had anything to do with it.)
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Is cash no longer fully insured in an IB account ?
- Thread starter Damrak
- Start date
Quote from atrocious:
what is the treatment of an account with a $1,000,000 6-month T-bill that wishes to trade commodities? Which side is the T-bill held on (securities/futures), and is the 99% margin available as futures collateral without incurring a margin loan?
I would like to know this as well. This seems like the only viable option for traders with accounts over $500k. I have never been able to obtain a straight forward answer from customer service. Can def or IB-AN comment on this?
Does anyone keep treasuries in their account and uses the 99% margin to trade against without incurring debit interest?
Quote from rallymode:
I would like to know this as well. This seems like the only viable option for traders with accounts over $500k. I have never been able to obtain a straight forward answer from customer service. Can def or IB-AN comment on this?
Does anyone keep treasuries in their account and uses the 99% margin to trade against without incurring debit interest?
It may not help because it was reported that in the MF Global case that the trustee was applying the haircut even to tbills held in customer name!
maybe so, MF was banking with Harris and that's about as solid as I know, fuck it man, I'm just gonna go buy gold and hide it in my back yard, I can't take all this risk anymore
The banking with Harris was not where the problem lay.
The banking with JP Morgan was where the issues arose.
Quote from atrocious:
...what is the treatment of an account with a $1,000,000 6-month T-bill that wishes to trade commodities?
This is an interesting question. By buying T-bills, the money has already been invested. So the question devolves to "can IB help hypothecate that investment back to me", so I can invest in T-Bills PLUS some other asset class at the same time.
Thinking this question through should illustrate there really is a sharp distinction between "risk free" investments and "least risky" investments.
Quote from atrocious:
IB-AN, thanks for following up - it sounds like IB is doing the right thing for the customer as usual, look forward to the final implementation.
PS - I'm not sure if it's your realm of expertise but WRT the universal account, what is the treatment of an account with a $1,000,000 6-month T-bill that wishes to trade commodities? Which side is the T-bill held on (securities/futures), and is the 99% margin available as futures collateral without incurring a margin loan?
Happy new year everyone!
A t-bill is a security and is therefore carried in the securities account at IB. It does have loan value however based upon it's margin rate and if this loan is the source of cash for meeting the margin requirement on the futures position, you will be charged interest on that loan and would be eligible to earn interest on the long margin cash balance on the commodities side. The overall result will be a financing cost however based upon a variety of factors (tiers at which interest is paid vs charged and the spread between credit and debit rates). This is all spelled out in detail on our website.
Quote from Lady7:
I am not a lawyer I don't understand any of this
Can someone tell me is my margin account flat end of day safe in IB or not and I trade futures
By "flat" you probably mean your account is all cash at the end of the day. Since you trade futures, and IB acknowledged that they have stopped sweeping available cash from commodities account to securities account at the end of the day, your cash is sitting in the uninsured commodities account.
Therefore, you are sitting in the same boat as former MF Global futures customers, although IB is a much bigger and better boat than MFG.
If IB goes bankrupt, and like MFG fraudulently uses customer money in a futile attempt to shore up their own liquidity pre-bankruptcy, you will lose all or part of your money.
To decrease your risk/ increase your insurance you can
- buy US Treasury Bills in your IB account with ALL your cash and keep them. Then at the end of the day after your futures margin is released you are fully invested on the securities side and therefore SIPC eligible.
- move your account to a TBTF investment firm like JPM, C, BAC etc.
It is very unfair to IB: Even though they are IMO by far the best brokerage offering the best product range at the best prices with the fairest and most transparent rules, unless they find a way to improve their account security to a level that is essentially failsafe, they will never be able to compete with the TBTF firms that essentially win business not because of their service but just because of who they are.
Quote from freedinner:
By "flat" you probably mean your account is all cash at the end of the day. Since you trade futures, and IB acknowledged that they have stopped sweeping available cash from commodities account to securities account at the end of the day, your cash is sitting in the uninsured commodities account.
Therefore, you are sitting in the same boat as former MF Global futures customers, although IB is a much bigger and better boat than MFG.
If IB goes bankrupt, and like MFG fraudulently uses customer money in a futile attempt to shore up their own liquidity pre-bankruptcy, you will lose all or part of your money.
To decrease your risk/ increase your insurance you can
- buy US Treasury Bills in your IB account with ALL your cash and keep them. Then at the end of the day after your futures margin is released you are fully invested on the securities side and therefore SIPC eligible.
- move your account to a TBTF investment firm like JPM, C, BAC etc.
It is very unfair to IB: Even though they are IMO by far the best brokerage offering the best product range at the best prices with the fairest and most transparent rules, unless they find a way to improve their account security to a level that is essentially failsafe, they will never be able to compete with the TBTF firms that essentially win business not because of their service but just because of who they are.
The above may not be the case for a Portfolio Margin account.
If your account is PM, then this is a must-read.
http://www.elitetrader.com/vb/showthread.php?s=&postid=3400793#post3400793
It means that your fully-paid-for long securities are pledged to someone other than yourself.
Quote from Options12:
The above may not be the case for a Portfolio Margin account.
If your account is PM, then this is a must-read.
http://www.elitetrader.com/vb/showthread.php?s=&postid=3400793#post3400793
It means that your fully-paid-for long securities are pledged to someone other than yourself.
Among the investments that are ineligible for SIPC protections are commodity futures contracts (unless in portfolio margining accounts and defined as customer property under the Securities Investor Protection Act), fixed annuity contracts, and currency, as well as investment contracts (such as limited partnerships) that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.