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Reassuring - Tradestation/RJ Obrien
- Thread starter bandit77
- Start date
So, what precautions should one take?Quote from cstfx:
To rockford, since I know he is big on IB:
IB's universal account protection of up to 30MM, that means all funds swept into the universal account from whatever you trade is covered by their SIPC insurance coverage, right?
BTW
What were the chances of a large firm like Refco going under in a good market?
Quote from cstfx:
To rockford, since I know he is big on IB:
IB's universal account protection of up to 30MM, that means all funds swept into the universal account from whatever you trade is covered by their SIPC insurance coverage, right?
BTW
What were the chances of a large firm like Refco going under in a good market?
1) No. Universal account consists of a securities subaccount and a futures subaccount. Futures subaccount is not insured. Securities subaccount is protected by SIPC up to limits of $100,000 for cash, $500,000 in securities, and SIPC also helps protect customer property beyond these limits in certain situations. IB's private insurance also protects securities subaccount up to $900,000 for cash and $29.5M for securities, with an aggegate limit of $150M for all accounts combined.
2) Refco's collapse was inevitable, but fraudulent schemes of all varieties, not just crooked brokers, are less likely to collapse in good markets, and more likely to collapse during times of tightened credit or elevated market volatility.
Quote from jimrockford:
1) No. Universal account consists of a securities subaccount and a futures subaccount. Futures subaccount is not insured. Securities subaccount is protected by SIPC up to limits of $100,000 for cash, $500,000 in securities, and SIPC also helps protect customer property beyond these limits in certain situations. IB's private insurance also protects securities subaccount up to $900,000 for cash and $29.5M for securities, with an aggegate limit of $150M for all accounts combined.
OK I knew that futures were not insured. But (A) isn't the free cash (proceeds from futures transactions) swept into securities account so that the only time you would be at risk trading futures would be when you actually had a trade on? And if not, (B) is it that monies are only transferred back and forth between futures/sec accounts when there is a need to cover trades/margins? I always thought (A) was how IB did it
Quote from cstfx:
OK I knew that futures were not insured. But (A) isn't the free cash (proceeds from futures transactions) swept into securities account so that the only time you would be at risk trading futures would be when you actually had a trade on? And if not, (B) is it that monies are only transferred back and forth between futures/sec accounts when there is a need to cover trades/margins? I always thought (A) was how IB did it
Funds are transferred from the insured securities subaccount to the uninsured futures subaccount, when needed to meet performance bond requirements for futures positions. Excess cash is swept nightly from the futures subaccount back to the securities subaccount. Sorry I left out the part about the sweeping.
HI, thanks for the useful info, questions?Quote from jimrockford:
Funds are transferred from the insured securities subaccount to the uninsured futures subaccount, when needed to meet performance bond requirements for futures positions. Excess cash is swept nightly from the futures subaccount back to the securities subaccount. Sorry I left out the part about the sweeping.
1 - By universal account, you mean having both equities & future's account with the same broker?
2 - If so please name a couple of brokers who do that and have the best rates and reputation.
3 - Regarding sweeping, what if you're scalping in the futures and or hold overnight every now and then, would they still sweep the funds into security account.
4 - In case of universal accounts, you can freely trade futures and equities without worrying about transferring funds to different accounts as long as one universally stays within margin?
thanks
Quote from Cy_M:
HI, thanks for the useful info, questions?
1 - By universal account, you mean having both equities & future's account with the same broker?
2 - If so please name a couple of brokers who do that and have the best rates and reputation.
3 - Regarding sweeping, what if you're scalping in the futures and or hold overnight every now and then, would they still sweep the funds into security account.
4 - In case of universal accounts, you can freely trade futures and equities without worrying about transferring funds to different accounts as long as one universally stays within margin?
thanks
1. yes
2. IB seems to be the most popular
3. if holding futures overnight, then the cash remains in the uninsured futures account
4. yes
Quote from bandit77:
3. if holding futures overnight, then the cash remains in the uninsured futures account
Yes, but the only cash that remains in the uninsured futures subaccount, and which is not swept into the insured securities subaccount each night, is the bare minimum cash needed to satisfy performance bond (margin) requirements for your futures positions.