SIPC Coverage on Short Sell Proceeds?

N

ndc24075

Does anyone know whether the insurance provided by SIPC covers short sell proceeds kept by a brokerage company such as IBKR? I know IBKR will pay some interest on the short sell proceeds kept in the brokerage account but I am not sure if it means it is counted as an asset covered by SIPC.

If anyone has insights or experience regarding SIPC's stance on short sell proceeds, sharing your knowledge would be greatly appreciated.
 
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https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp
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Investors must be clear about the protection provided by SIPC. There can be a misconception that the SIPC is to brokerage accounts what the Federal Deposit Insurance Cover (FDIC) is to bank accounts. But SIPC and FDIC differ. While FDIC protects the customer's cash in an account at an insured bank, SIPC does not safeguard the absolute value of the securities the customer holds, only the number of shares.
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I'm not sure, but it seems SIPC is for the number of shares only, not for their value, nor for the cash in the account. :)
For cash, FDIC protection seems to be the right one.
Maybe an expert can clarify.
 
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"What SIPC Protects

The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash."

Cash is cash. The SIPC doesn't care how the cash got into the account.

Why are you even concerned about this?

Investors with multi million dollar accounts don't waste their time even thinking about this sort of nonsense.
 
jeb9999 said:
"Investors with multi million dollar accounts don't waste their time even thinking about this sort of nonsense.
More...
It's legitimate to think about the safety of the own capital, especially if one is not yet a multimillionaire... :)
 
Quanto said:
It's legitimate to think about the safety of the own capital, especially if one is not yet a multimillionaire... :)
More...

If you are speculating in stocks, especially doing short sales, your capital is at risk.

If you use a well capitalized brokerage firm you don't worry about the SIPC.

Every day people put their money into ponzi schemes, penny stocks and 0DTE options. Don't think those people worry about the SIPC.
 
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