FSCS How does that work for us traders?

John26 · Feb 15, 2016

I just pulled my head out of the sand and for some reason, I am having concerns with regards to the economy :-0...

About 2 months ago, I asked my broker with which bank the cash they hold on my behalf is kept.
My thinking is: If I have, say 75k with HSBC, this is covered (I hope) by FSCS should the bank default/bail in.
Now, if my broker is keeping my cash with HSBC, would that mean I will be losing in excess of what is kept in brokers account should the ***t hit the fan?
I have asked them and they could not give me a straight answer, only that the money is deposited in various banks. But they could not tell me which banks.

I am a little concerned obviously, I try to stay positive but I think even my cat has worked out that something is not right re world economy. So I just want to cover every possibility.

Would anyone know?

Cheers.

malaguti · Feb 15, 2016

John26 said:
I just pulled my head out of the sand and for some reason, I am having concerns with regards to the economy :-0...

About 2 months ago, I asked my broker with which bank the cash they hold on my behalf is kept.
My thinking is: If I have, say 75k with HSBC, this is covered (I hope) by FSCS should the bank default/bail in.
Now, if my broker is keeping my cash with HSBC, would that mean I will be losing in excess of what is kept in brokers account should the ***t hit the fan?
I have asked them and they could not give me a straight answer, only that the money is deposited in various banks. But they could not tell me which banks.

I am a little concerned obviously, I try to stay positive but I think even my cat has worked out that something is not right re world economy. So I just want to cover every possibility.

Would anyone know?

Cheers.

your broker is the one who is/should be covered within the FSCS compensation scheme...not where they then deposit that money. the FSCS looks at accounts in your name, regardless of how many accounts (unless its joint)
You should check to make sure they are covered firstly (im sure they will be). where they then deposit your money, will not be held in your name in which case if they deposit their money with HSBC, you should be covered with HSBC and seperately with the broker (again, as long as they themselves come under the scheme)

John26 · Feb 15, 2016

malaguti said:
your broker is the one who is/should be covered within the FSCS compensation scheme...not where they then deposit that money. the FSCS looks at accounts in your name, regardless of how many accounts (unless its joint)
You should check to make sure they are covered firstly (im sure they will be). where they then deposit your money, will not be held in your name in which case if they deposit their money with HSBC, you should be covered with HSBC and seperately with the broker (again, as long as they themselves come under the scheme)

Ok, thanks Malaguti

Another question (I'm happy to open separate thread) - I have savings with lloyds on a savings account in the name of "bond" - I presume these are not bonds as such that would be at risk in case of a bail-in?

Cheers.

malaguti · Feb 15, 2016

John26 said:
Ok, thanks Malaguti

Another question (I'm happy to open separate thread) - I have savings with lloyds on a savings account in the name of "bond" - I presume these are not bonds as such that would be at risk in case of a bail-in?

Cheers.

lloyds do have savings accounts as fixed bonds..and i suspect they are indeed bonds in the true sense. It depends over what term your "bond" (if it really is only they could tell you) should you worry about a bail in. but from Lloyds...that would be an extreme

John26 · Feb 15, 2016

malaguti said:
...should you worry about a bail in. but from Lloyds...that would be an extreme

Why do you think that Lloyds are in a better position than say Barc, RBS or HSBA?

malaguti · Feb 15, 2016

John26 said:
Why do you think that Lloyds are in a better position than say Barc, RBS or HSBA?

I'm not sure I understand, you mentioned Lloyds and Bail in..I never said anything about them being better.
and when was the last time one of these requested a bail in?
(which wasn't already part of the offer of the bond)

John26 · Feb 15, 2016

Oh, it's when you said "...but from Lloyds... that would be an extreme"
Sorry, I misread you then. I thought you meant it is unlikely

They might never have requested a bail in Malaguti, but I am personally concerned about the state of the economy and the depth of banks right now, and I want to be prepared. I feel things might just go pop overnight. Perhaps I'm a little paranoid or over cautious.

malaguti · Feb 15, 2016

John26 said:
Oh, it's when you said "...but from Lloyds... that would be an extreme"
Sorry, I misread you then. I thought you meant it is unlikely

They might never have requested a bail in Malaguti, but I am personally concerned about the state of the economy and the depth of banks right now, and I want to be prepared. I feel things might just go pop overnight. Perhaps I'm a little paranoid or over cautious.

I would say it is unlikely. Unlikely from any of them in all honesty. if i was going to try a bond, i would have gone Bank rather than other corporate although rates are awful. Equity is far easier to outperform than a bank bond
that said, nothing wrong with caution

zaysev36 · Feb 15, 2016

John26 said:
Perhaps I'm a little paranoid or over cautious.

Better being paranoid than living on the street

It's an important and expected trait for anyone willing to avoid what happened to many traders and brokers in 2008. So I'd say should keep on with the same pace.

FSCS How does that work for us traders?

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