What happens if.....?

[achilles28]

What happens to my portfolio if my broker goes bankrupt? Over and above any Government depositor protection?

What happens to my portfolio if my brokers custodial bank goes bankrupt? But my broker is still solvent?

If a broker fails to execute a stop order, and the result of that failure creates a large loss, will I be on the hook for that loss? Who protects me, in this case?

How is it possible for me to lose more then my account capital? Do brokers not have risk controls in place, to prevent losses beyond account thresholds?

What happens if a hacker breaks into my account and makes illegitimate buy/sell transactions on my behalf, or wires money out of the account? Who bears that loss and will I be made whole?

 

[JMorphew]

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If a broker fails to execute a stop order, and the result of that failure creates a large loss, will I be on the hook for that loss? Who protects me, in this case?

Yes, you are on the hook. You are also on the hook if computers fail, or anything else you can think of that would cause your order to not go through.

How is it possible for me to lose more then my account capital? Do brokers not have risk controls in place, to prevent losses beyond account thresholds?

Margin, aka Leverage is one way to lose more then you have. Or if you short a stock, however in both these cases your broker will close your position when you run out of capital and give you a margin call.

What happens if a hacker breaks into my account and makes illegitimate buy/sell transactions on my behalf, or wires money out of the account? Who bears that loss and will I be made whole?

If true and there is proof, you are covered. If you claim that without proof, dont expect them to listen.

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[achilles28]

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If a broker fails to execute a stop order, and the result of that failure creates a large loss, will I be on the hook for that loss? Who protects me, in this case?

Yes, you are on the hook. You are also on the hook if computers fail, or anything else you can think of that would cause your order to not go through.

How is it possible for me to lose more then my account capital? Do brokers not have risk controls in place, to prevent losses beyond account thresholds?

Margin, aka Leverage is one way to lose more then you have. Or if you short a stock, however in both these cases your broker will close your position when you run out of capital and give you a margin call.

What happens if a hacker breaks into my account and makes illegitimate buy/sell transactions on my behalf, or wires money out of the account? Who bears that loss and will I be made whole?

If true and there is proof, you are covered. If you claim that without proof, dont expect them to listen.

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Thanks for the reply. How is it a trader is responsible for a broker not executing their order? Seems unfair, as that's the brokers responsibility and job?

Any other ideas?

 

[Martinghoul]

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What happens to my portfolio if my broker goes bankrupt? Over and above any Government depositor protection?

What happens to my portfolio if my brokers custodial bank goes bankrupt? But my broker is still solvent?

If a broker fails to execute a stop order, and the result of that failure creates a large loss, will I be on the hook for that loss? Who protects me, in this case?

How is it possible for me to lose more then my account capital? Do brokers not have risk controls in place, to prevent losses beyond account thresholds?

What happens if a hacker breaks into my account and makes illegitimate buy/sell transactions on my behalf, or wires money out of the account? Who bears that loss and will I be made whole?

If I am not mistaken, the answer to all of the above is "it depends". It's all in the fine print in the customer agreement that frames the relationship between yourself and your broker. I explicitly asked my broker to provide me answers to the questions like yours above in writing.

 

[achilles28]

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If I am not mistaken, the answer to all of the above is "it depends". It's all in the fine print in the customer agreement that frames the relationship between yourself and your broker. I explicitly asked my broker to provide me answers to the questions like yours above in writing.

That's a good idea. I thought I should do the same this morning. Thanks.

What kind of reply did you get, if you dont mind me asking?

 

[Martinghoul]

That's a good idea. I thought I should do the same this morning. Thanks.

What kind of reply did you get, if you dont mind me asking?

Well, they were pretty honest with me... The answer to some of the questions was that there's no protection (other than the actual deposit) and that I am fundamentally running the counterparty risk. If I were unhappy with it, they told me that I could take my business elsewhere.

TBH, my view is that it's not the specific answers that matter, as much as the transparency and the management of my expectations. If I were uncomfortable with their arrangements, for instance, I could do all my trades in smaller size.

In fact, I had a run in with them when they sent me a margin call that I missed (it was night time) and they stopped me out of a couple of trades. To be fair to them, this was, in fact, part of standard operating procedure designed to mitigate their risk. The problem was that, due to some random "anti-gambling" provisions, they didn't let me post additional margin for a couple of days. That was a proper bummer, since I had to reinstate my trade at worse levels. Still, my only issue there wasn't the stop, but rather the stupid rules that didn't allow me to transfer additional margin.

 

[JMorphew]

Thanks for the reply. How is it a trader is responsible for a broker not executing their order? Seems unfair, as that's the brokers responsibility and job?

Any other ideas?

No broker is going to assume any risk, they let that fall on the customer. Read the fine print and you will always find disclaimers about how if they mess up they are not responsilbe. Fair or not, no one is making you use their service and by doing so you agree to their terms.

 

[ammo]

What happens to my portfolio if my broker goes bankrupt? Over and above any Government depositor protection?

What happens to my portfolio if my brokers custodial bank goes bankrupt? But my broker is still solvent?

If a broker fails to execute a stop order, and the result of that failure creates a large loss, will I be on the hook for that loss? Who protects me, in this case?

How is it possible for me to lose more then my account capital? Do brokers not have risk controls in place, to prevent losses beyond account thresholds?

What happens if a hacker breaks into my account and makes illegitimate buy/sell transactions on my behalf, or wires money out of the account? Who bears that loss and will I be made whole?

there is a set og switchbacks from flagstaff down to phoenix, i believe when doing 70mph on the way down, that i won't blow a tire. believing it just couldn't happen is all you get ,they won't be sending out memo's the week before