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

  1. #1
    If broker XXXX has their client funds money in bank YYYY and bank YYYY fails, are these funds protected under FDIC or any other matter?

    Sorry if this is a repeat.

  2. #2

  3. #3
    FDIC guarantees only up to $250K - not enough by a mile for most brokers.

    Also, it is going to require quite some time for FDIC to really deliver the guaranteed capital - if during this time the broker can not meet its financial obligations, a customer can file a bankruptcy claim against the broker at any moment.

  4. #4
    FDIC will guarantee just as much as $250K per account.

    Really, when you start an account with Broker X, will Broker X open a Bank Account just for you? Hell No! IT is all deposited in a single FAT ACCOUNT! And if Broker doesn't even actually deposit/place them segregated account, it would be sitting in a single account with the Broker's!

    Look at FXCM; they claim to have exactly what, $200M of customer's finance? If their bank tummy up, expect to get $250K out of that 200M. . An depreciation of your cash!

    And in the event the Broker itself bellies up, dont expect to get a cent from your Client Segregated Account.

    Always remember, Traders are egorized as Investors. In the event of Broker Bankruptcy, Creditors and Government gets the 1st hand on these funds! Last would be the Investors. When a broker declares bankruptcy, you can kiss your $250K good bye!

  5. #5
    I'm pretty sure most have bought private insurance to cover their residue, or have them someplace secure.

    For retail clients, our cash is not protected at any point w/ forex brokers.

  6. #6
    I discovered that Hotspot accounts are government insured.

    I don't know the specifics.

  7. #7
    IB offers $1 million of cash coverage for client accounts via SIPC and Llyods. I don't know of any other retail FX firm that offers similar insurance coverage. I want to hear about it if anyone does.

    As said, client deposits are deemed firm assets. Thus in the event of default, senior creditors possess recovery rights against client funds. Watch Refco for details.

  8. #8
    Quote Originally Posted by ;
    IB offers $1 million of money coverage for client accounts through SIPC and Llyods. I really don't know of any other retail FX firm that offers similar insurance policy. If anybody does, I want to hear about it.
    The SIPC specifically does not insure Forex or Futures transactions. If you're trading forex, you will need to verify your broker offers private insurance, and to what extent you're insured.

    Link:
    http://sipc.org/how/covers.cfm

    The SIPC does not work the same way as the FDIC, it's harder to be eligible for repayment and several other constraints will apply.

    You always have the option to buy insurance separately, nonetheless. If it's not through your broker. If you're relying upon a policy held by the broker, you should probably check out that coverage and see how the policy is handled. You may find it's not what you think.

    Quote Originally Posted by ;
    As said, client deposits are deemed firm assets. Thus in the event of default, senior creditors possess recovery rights against client funds. Watch Refco for more details.
    Depositors needs to be given creditor taste up to the value of their account.

  9. #9
    Quote Originally Posted by ;
    The SIPC specifically doesn't insure Forex or Futures trades. If you're trading forex, you will need to confirm your broker offers private insurance, and also to what extent you're insured.

    Link:
    http://sipc.org/how/covers.cfm

    The SIPC doesn't work exactly the exact same manner as the FDIC, it is harder to be eligible for repayment and some other constraints will apply.

    You can always buy insurance separately, however. Even if it is not via your broker. If you're relying on a policy held by the broker, you should probably check out that coverage and find out how the policy is handled. You might find it is not what you think.



    Depositors should be given creditor preference up to the value of the account.
    Well wait a minute. What about having multiple cash currencies in an account at IB? You are sure they're not covered? What if you have to trade EUR to USD to invest in a stock listed on the NYSE? That is fundamentally a stock trade that needs a currency conversion.

  10. #10
    As far as I know at IB acc. Are protected against fraud

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