That's not impossible... In any case, Lloyds of london is a partnership more than 300 years old, and even today the owners still have personal liability. It's still an old-fashioned gentleman's club. I'd be more worried that any of those firms including JP and who knows else went belly up before Lloyds!
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Is cash no longer fully insured in an IB account ?
- Thread starter Damrak
- Start date
That's not impossible... In any case, Lloyds of london is a partnership more than 300 years old, and even today the owners still have personal liability. It's still an old-fashioned gentleman's club. I'd be more worried that any of those firms including JP and who knows else went belly up before Lloyds!
well, first of all, IB is just a little podunk firm like MF Global. MF went under and they are still accepting cash or credit card at the local grocery.Quote from velosoandre:
That's not impossible... In any case, Lloyds of london is a partnership more than 300 years old, and even today the owners still have personal liability. It's still an old-fashioned gentleman's club. I'd be more worried that any of those firms including JP and who knows else went belly up before Lloyds!
Secondly, Lloyds is just the other side of a trade. You don't have to be an English gentleman with bad teeth living on an estate that your relatives stole from the peasants to be a partner. You can be a woman from Oklahoma with no teeth living on a ranch your ancestors stole from the Indians and be a partner at Lloyds if you put up the money.
Thirdly, the protection is only as good as the insurance company's ability to pay. If IB went under I doubt that would be a very big hit to Lloyds so it would probably not be a very big deal.
as a matter of fact, that is really the stark contrast between the retail and the professional trader.Quote from oldtime:
now, on the otherhand, insuring a shipping line (which is where the first idea of insurance came from) could be quite risky.
You go to Hartford and they talk a conservative game, but they are just traders on a massive scale betting nothing unusual will happen.
The professional is always betting that nothing unusual will happen, and the little retail trader is always betting that this time it will be different.
for instance, they will sell you an insurance policy which is nothing more than a bet you won't die.Quote from oldtime:
as a matter of fact, that is really the stark contrast between the retail and the professional trader.
The professional is always betting that nothing unusual will happen, and the little retail trader is always betting that this time it will be different.
It is based on the fact that most people don't die.
But the little guy still worries that he might die so he buys it.
Most people don't make money buying insurance, but there's always the anecdotal story floating around out there about the widow who made out like a bandit because her husband (G-d rest his soul) had the foresight to buy a life insurance policy.
Quote from oldtime:
for instance, they will sell you an insurance policy which is nothing more than a bet you won't die.
It is based on the fact that most people don't die.
But the little guy still worries that he might die so he buys it.
Most people don't make money buying insurance, but there's always the anecdotal story floating around out there about the widow who made out like a bandit because her husband (G-d rest his soul) had the foresight to buy a life insurance policy.
Post MF-Global it seems that the retail trader HAS to consider the risk that next time might be different.
Regarding Lloyd's coverage mentioned in an earlier post, remember that firms like IB have policies with maximum aggregate amounts. I think IB's aggregate is $300 million. I mention this only because in the case of MF Global, a Lloyd's policy of this amount would only have covered 25% of the missing money.
The big question with respect to IB customer coverage still seems to be how the SIPC would view cash from commodities accounts or forex trading that is held in the securities sub-account of a customer's Universal account.
yep, I agree, hard to know where to start when no one knows what SIPC's position is and it sounds like they're not sure what the deal is either.Quote from Options12:
Post MF-Global it seems that the retail trader HAS to consider the risk that next time might be different.
Regarding Lloyd's coverage mentioned in an earlier post, remember that firms like IB have policies with maximum aggregate amounts. I think IB's aggregate is $300 million. I mention this only because in the case of MF Global, a Lloyd's policy of this amount would only have covered 25% of the missing money.
The big question with respect to IB customer coverage still seems to be how the SIPC would view cash from commodities accounts or forex trading that is held in the securities sub-account of a customer's Universal account.
Quote from oldtime:
yep, I agree, hard to know where to start when no one knows what SIPC's position is and it sounds like they're not sure what the deal is either.
Well, I'll never be sure either, but like I said in a similar thread, if your distrust of SIPC and pretty much all U.S. institutions reached the point where you think they might get away from insuring your account with these kind of tricks, it's time to consider a different jurisdiction and avoid the U.S. alltogether.
Remember Allen Stanford? SIPC proposed 250k/account covered for this Maddoff-like broker-dealer. And that is a pure fraud case, the guy is in jail.
Quote from oldtime:
yep, I agree, hard to know where to start when no one knows what SIPC's position is and it sounds like they're not sure what the deal is either.
oldtime, I disagree that we don't know what SIPC's position is. They have published their definition of "cash" eligible for coverage. And I think they will answer questions specific to your situation if you e-mail them.
velosandre, under which jurisdiction do you trade in order to enjoy better protection of your portfolio than the U.S. provides?
Quote from Options12:
oldtime, I disagree that we don't know what SIPC's position is. They have published their definition of "cash" eligible for coverage. And I think they will answer questions specific to your situation if you e-mail them.
velosandre, under which jurisdiction do you trade in order to enjoy better protection of your portfolio than the U.S. provides?
Any that gives you the same protection as a bank depositor, relying on the same insurance scheme no matter what product you use or what kind of "account" you have. Germany, Switzerland, for instance. Actually, other than the UK, every european jurisdiction treats you the same as a bank depositor, provide you trade all the products from a bank account.
Having said that, I personally still rely partially on the U.S. using IB-UK, the only thing is that I of course still believe - kinda - the SIPC is as good as the FDIC, but nevertheless I keep some of my money in FDIC, some in a broker, some even in different countries. And that's what everybody should do no matter what the law says.
But again, my point is that if YOU (because i'm fine with SIPC protection) suspect that much about SIPC that's because probably any country is better. Let's face it, even Iceland is on track to pay its foreign currency depositors, Allen Stanford's fraud was partially covered by SIPC, and all MF Global's subsidiaries apparently don't have any missing money. So why bother with the US?