brokerage risk?? what would you do?

spin758

Newbie
1 0
Hi

with brokerages going out of biz ie MF Global and prime brokers Lehman how do folks manage large cash positions in their accounts since you're technically covered for only 250,000 in cash, with max coverage of 500,000?

considering a mad max scenario..

1. if you were to wire transfer to a bank (that's only covered up to 250k too?)

2. treasurydirect does not allow large transactions 100k at a time. you have to wait for an auction to buy treasuries while your money sits exposed in a bank account?

3. or do you just buy treasury futures/etf (counter-party risk with etf) in your account so even if the brokerage goes out you have your money converted into a segregated equity and not cash - cash would be taken from your account in the event of a brokerage bankruptcy.

what are people's thoughts on this/and or strategies to cope for such an event?

thanks in advance
 
M

member275544

0 0
Hi

with brokerages going out of biz ie MF Global and prime brokers Lehman how do folks manage large cash positions in their accounts since you're technically covered for only 250,000 in cash, with max coverage of 500,000?

considering a mad max scenario..

1. if you were to wire transfer to a bank (that's only covered up to 250k too?)

2. treasurydirect does not allow large transactions 100k at a time. you have to wait for an auction to buy treasuries while your money sits exposed in a bank account?

3. or do you just buy treasury futures/etf (counter-party risk with etf) in your account so even if the brokerage goes out you have your money converted into a segregated equity and not cash - cash would be taken from your account in the event of a brokerage bankruptcy.

what are people's thoughts on this/and or strategies to cope for such an event?

thanks in advance

well call me prudent, but I take money out as often as I can. I'm happy to play off smaller account sizes and keep on working my way up. Far better than all of a sudden its just taken from you. I don't trust any broker, client account or not with the safety of my hard earned cash. Also I don't use one broker, spreading that risk across a few of them
 
 
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