How Safe is Interactive Brokers?

a_gnome

Well-known member
434 15
I use IB for my forex trading: I like their platform & the tight spreads. However it's been pointed out to be that IB, along with many other brokerages, indulge in re-hypothecation (lending on of client assets) often multiple times. This means that should things all go pear-shaped it's not at all clear that your money would in fact be safe.

Here are a couple of links:
MF Global and the great Wall St re-hypothecation scandal

The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation | ZeroHedge

Should I be worried? I've got a fair chunk of money in my IB account but am now considering moving it. I'd be keen to hear what others think.

Gnome
 
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pboyles

Legendary member
8,072 1,302
I use IB for my forex trading: I like their platform & the tight spreads. However it's been pointed out to be that IB, along with many other brokerages, indulge in re-hypothecation (lending on of client assets) often multiple times. This means that should things all go pear-shaped it's not at all clear that your money would in fact be safe.

Here are a couple of links:
MF Global and the great Wall St re-hypothecation scandal

The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation | ZeroHedge

Should I be worried? I've got a fair chunk of money in my IB account but am now considering moving it. I'd be keen to hear what others think.

Gnome

They have recently been fined for some reporting irregularities. You'd be crazy to have a lot of money with any of these companies. Certainly no more than is legally guaranteed by your regulator.

Interactive Brokers fined $700,000 for reporting and supervision violations
 

Crassius

Junior member
23 3
Certainly no more than is legally guaranteed by your regulator.

This is wise advice. If things can go pear shaped in your dimension, you must be British... and therefor must be covered by the FSA insurance scheme.

If you have more than is covered by the FSA, you may be able to work out a scheme where you trade on a letter of credit from a bank, into which you deposit the funds into an insured account with a higher insurance limit.

I wouldn't leave any money that is not insured in any account anywhere... there is no need, so why take the risk, no matter how small.
 
 
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