Re: [amibroker] Re: Broker and bank reliability: leave trading?

["Steve Dugas" <sjdugas@xxxxxxxxxxx>]

Hi - I was really worried about this stuff a few months ago when the whole world started collapsing and did a bit of research.  I ended up distributing my funds better, I have it divided between 4 brokers now, a real PITA for trading but at least only 25% of the funds are at risk with any one broker.  Also ( for US traders ),  I looked for brokers with cash sweeps because in response to an email from me, SIPC told me that they consider money in a MMF to be "invested", and as such covered up to $500K, whereas straight cash is only covered up to $100K.  I am thinking that hopefully the MMF crisis is over now, it seems people have stopped the run on them and we have some gov't guarantees now...    Also all brokers will point out that they have purchased supplemental insurance that will cover you up to $10M or whatever, but in the fine print this is subject to an aggregate limit and it looks to me like that limit is much less than their total deposits.  Also I learned that the $100K coverage for cash is only for cash which the evidence shows is intended for *investing*,  i.e. if you have been sitting in cash for a while, or if you have funded a new account but haven't done any trading yet,  they might say that the evidence indicates that your main purpose is just to earn interest, in which case your cash may not be covered at all.  I am definately no authority here but this is what I was told by my brokers and by SIPC themselves, if anyone has a different understanding I would love to hear it. Thanks!

 

Steve

----- Original Message -----

From: Carl Vanhaesendonck

To: amibroker@xxxxxxxxxxxxxxx

Sent: Monday, February 09, 2009 9:56 AM

Subject: [amibroker] Re: Broker and bank reliability: leave trading?

Guys,

 

I appreciate your time and suggestions responding to my post - it is a bit clearer to me now that the real risk is (was?) in banks, not in brokers.

When I mentioned 1 M° USD insurance I was speaking of IB, not the bankers. In France indeed it is up to 70,000 EUR, and in Belgium 100,000.

Re my parent who lost his deposit: it was in Belgium, and at Citibank. He is suing them because for unknown there the 100,000 USD didn't apply? he is suying them with hundreds of other investors, it is a grouped action.

Nevertheless to come back to the risk being in banks, notbrokers: what if the bank used by the broker goes bankrupt? Will it really be indemnised when you see the billions of dollars of their client deposit??

 

Risky time, and you were right stating gold lingot in the safebox of the bank is NOT insured :-(

 

Thanks again,

Carl

 

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