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Thread: Our brokers segreated customer accounts protected by FDIC or any other entity?

  1. #11
    Quote Originally Posted by ;
    wait a minute. What about having multiple money currencies in an account in IB? You are sure they're not covered? Imagine if you have to exchange EUR to USD to invest in a stock listed on the NYSE? That's essentially a stock exchange that necessitates a currency conversion.
    In the website...

    Quote Originally Posted by ;
    The money and securities #8211; such as stocks and bonds8211; held by a client at a financially troubled brokerage company are protected by SIPC. Among the investments which are ineligible for SIPC protection are commodity futures contracts and currency, in Addition to investment contracts (such as limited partnerships) and adjusted annuity contracts that Aren't filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
    Money holdings, or any securities which you are holding, are insured. But busy commodity futures currency contracts, in addition to investment contracts and fixed annuity contracts which are not filed with the SEC are not insured.

    How I read this (that might be wrong, consult w/ an attorney prior to taking actions based on any information you receive from the net) is...

    Lets say you have got a account w/ a brokerage that provides multiple trading avenues. You can exchange currencies and maintain those places, you can trade stocks and maintain those places, etc.. Any places you are holding in currency in the event the brokerage goes belly-up are effectively lost. Any places held in inventory would not be. Any money sitting in your account ought to be covered up to the limits.

    Unfortunately that brings up more questions than it actually answers. What exactly would be missing? What happens when you are investing on margin (would you eliminate the full price or just the margin safety)? What happens if you are trading intra-day along with the trade is both money and an uncovered transaction during the payoff interval?

    It becomes even more complied once you start reading thru broker agreements.

    I discovered this PDF here:
    http://www.pinnaclevaluefund.com/rep...t(26).indd.pdf

    In accore with it, securities (or other eligible transactions) may not be eligible if they're held in a margin account (versus a money account). Couple in the possibility that a major market move might also bring about a simultaneous margin call... along with the securities you would sell to balance the position might not be there, leaving you holding the whole bag. If true, you should always transfer long term holdings into a money account.

    The way that would effect a margin-based forex exchange... is a whole different story.

    As you can view this SIPC item becomes unbelievably complied, very fast. Add in limits, other insurers, their limits, contract and agreement particulars, etc, it is not entirely clear what you can really count on. Obviously an SIPC insured emblem should not blindly lead one to think you are safe unless you have done your homework.

    As for fraud...

    Quote Originally Posted by ;
    Insurance for investment fraud Doesn't exist in the U.S.. The Federal Trade Commission, Federal Bureau of Investigation, state securities regulators and other experts have estimated that investment fraud in the U.S. ranges from $10-$40 billion annually. In the case of microcap stock fraud, the cost on investors was estimated as $1-3 billion annually.
    With a reserve of slightly more than $1 billion, SIPC could not keep its doors open for extended if its goal was to compensate all victims in the event of loss due to investment fraud.
    It is very important to understand that SIPC is not the securities world equal of FDIC#8211;the Federal Deposit Insurance Corporation. Congress specifically considered establishing a Federal Broker-Dealer Insurance Corporation, but lawmakers sensibly concluded that such a designation would be equally ineffective and out of step in the risk-based investment marketplace that is so different from the world of banking
    Good luck.

  2. #12
    Quote Originally Posted by ;
    But busy commodity futures currency contracts aren't filed with the SEC aren't covered.
    Here is the tricky part. IB does not handle spot FX in the standard currency contract feeling, the actual currency is debited/credited to your account. Whether that affects anything in the eyes of the SIPC is questionable however. It's probably sensible to err on no coverage of FX unless shown otherwise.

  3. #13
    I don't know. There region. I did loe afew brokers that say in their ToS Currency Market is not covered by the SIPC but that may just be due to the way they're handling it.

    The wording is and currency ... no reference of currency contracts specifically, so it is difficult to know. It might indie all money is coated, but contracts are not. Or it might indie that just USD money positions are covered and all else is regarded as a currency transaction.

  4. #14
    So I believe that its safe to say that if you are a retail forex trader, the money which you send to your broker are at risk for:
    a: failure/bankruptcy of your broker, and,
    b: collapse of your brokers bank or liquidity supplier

    reevaluate what I was affraid of.

  5. #15
    FXCM-UK offers guaranteed segregated accounts if you're skeptical about the safety of your own funds.

  6. #16
    Our funds in America are Stored in the name of the broker, not in our Titles,,, as boston Currency Market said, if you Proceed the UK then you will get segregation of funds, similar to the way your funds are Redeemed with futures brokers,,,, most firms Today are in pretty decent financial shape, but it is still certainly a risk to consider

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