Is IBKR tanking because Citibank is going under?

Another interesting note from that link I posted is that futures accounts are not covered by either SIPC or Lloyd's (you all take a look at it, make sure I'm reading it right). It seems, though, that IB only keeps enough in a "futures" account to cover the margin for whatever futures instruments you currently have in play (this is just from noticing what gets put under the "futures" category while I trade).

Makes me think long and hard about doing anything but daytrading with futures for a while.
 
1) SPIC cash coverage is not as automatic as FDIC coverage. You have to make a claim first.

2) For anything above 100,000 USD you have to go through Lloyd's of London (assume that at least a year of your life is gone. Insurers don't make money by paying out).

3) IB's S&P500 credit rating is a BBB (one level away from junk bond status). Ratings are usually a bit inflated, so assume one grade lower.
http://www.interactivebrokers.com/download/sp_rating.pdf

4) CDS could put IB's principle at risk. Something that the CEO might not be able to have any control over.
http://www.bloomberg.com/apps/news?pid=20601110&sid=a2pK9HrK58_Y

5) IB states that client's funds are spread across banks and that is true and proctects IB in general, however, this diversification does not help an individual client since his/her funds are still concentrated in one bank.

I have the utmost respect for IB and their approach to business, however, in these times nothing is safe. To think differently is dangerous and beyond naive.
 
Quote from Susannah:

Another interesting note from that link I posted is that futures accounts are not covered by either SIPC or Lloyd's (you all take a look at it, make sure I'm reading it right). It seems, though, that IB only keeps enough in a "futures" account to cover the margin for whatever futures instruments you currently have in play (this is just from noticing what gets put under the "futures" category while I trade).

Makes me think long and hard about doing anything but daytrading with futures for a while.
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I believe they sweep the futures account into a cash account every night, if I'm not mistaken.

To short&naked, - IB claims to not have any CDS exposure or other such "risky" assets ... whether or not that's what you meant, I don't know.
 
tomahawk, what short&naked is referring to is if the CME starts handling CDSs as part of its clearinghouse, then IB and the members of the clearinghouse would be on the hook if a counterparty defaulted, and it seems this means futures accounts that are under IB are too. IB doesn't want the CME to start doing this.

The CME hasn't started handling these yet, so this isn't an immediate concern, just something to keep on your horizon.

Citibank seems more of an immediate concern.
 
Quote from Port1385:

All the money at IB is held at Citibank. Is IBKR tanking because Citibank is going under? What will happen to IBKR if Citibank is no longer in existence? Obama said he just wants to see the banks go under and disagrees with how Bush handled the situation with bailouts.
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IB is tanking because the outlook for retail trading may plummet in a worst case scenario.
 
Thanks Susannah.

Currently we have:



IBKR 14.75 (P/E 6.61)
AMTD 10.58 (P/E 7.95)
ETFC 0.90 (P/E n/a)
SWIM 5.20 (P/E 5.20)
SCHW 16.69 (P/E 15.75)


Not that price is everything, but IB doesn't look all that bad to me just yet.
 
Quote from tomahawk:

Also for the record FDIC is now $250k I believe.
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Yes, and it's per person, so a joint account is covered up to $500k. So, that's for a bank, not for an IB account.

SIPC still has the same limits as before, though, which is $100k on your cash in an investment account and from my understand it doesn't matter if it's an individual or a joint account.

A possibility if things really hit the fan quickly is to find a stock or ETF you are willing to buy into quickly if need be so that you're not in cash as much. I'm thinking that's what I'll do. I'd really rather have more than $100k available to me to trade with and in the same account for convenience.
 
Quote from Susannah:

Yes, and it's per person, so a joint account is covered up to $500k. So, that's for a bank, not for an IB account.

SIPC still has the same limits as before, though, which is $100k on your cash in an investment account and from my understand it doesn't matter if it's an individual or a joint account.

A possibility if things really hit the fan quickly is to find a stock or ETF you are willing to buy into quickly if need be so that you're not in cash as much. I'm thinking that's what I'll do. I'd really rather have more than $100k available to me to trade with and in the same account for convenience.
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That's a good idea, but how do you trade intraday if you're tied up in something? I agree with you 100% about having (needing) more than $100k to trade successfully with ... which is why I'm very interested in how this Lloyd's of London additional coverage would work.
 
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