If bank savings become at risk, how safe are clients funds in a trading account?
JTrader
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Government moves to calm consumers by protecting savings up to £50,000 | Money | The Guardian
Govts/ are saying they will guarantee up to £/$50,000. What if you have a lot more?
Govts/ are saying they will guarantee up to £/$50,000. What if you have a lot more?
rols
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I received a missive from Interactive Brokers the other day assuring that funds were 100%
safe. I wouldn't know about some of the buckets out there.
At the moment nowhere seems particularly safe apart from down my Y-Fronts.
I've never been that confident in companies promising guarantees.
My Uncle Harry always used to say, "If you want a guarantee, buy a toaster."
JTrader
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Never stick a knife in a toaster. Worldwide, toaster electrocutions kill more people every year than sharks :!:
Also -
Never believe anything until it is officially denied. Think of the premiership managers vote of confidence from the board of directors, followed closely by a P45 - as an example.......
The SIPC scheme for member US brokers covers you for $100,000 cash and $500,000 in securities (excluding futures amongst other things). Some brokers like IB have purchased extra insurance from places like Lloyds of London.
What I can't find out is whether a foreign investor with funds placed with one of these brokers is covered.
Does anyone know?
SIPC - Securities Investor Protection Corporation
What I can't find out is whether a foreign investor with funds placed with one of these brokers is covered.
Does anyone know?
SIPC - Securities Investor Protection Corporation
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fifty2aces
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I'd rather put my money in Northern Rock than in a toaster.
shadowninja
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£££ who'll accept it anyway. I'm lead to believe the USA is leading us all to hyperinflation, this $700,000,000,000 isn't amounting to much on the markets, so they'll have to pump more in, amounting to even less. And whether you've $$$ in trading accounts, banks or under the bed it'll be worth less each moment it isn't exchanged. Gold, physical gold is a hedge: Why you should buy some physical gold - MoneyWeek
Risk at your own peril.
Risk at your own peril.
martinsvenssonlindom
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I found this likn regarding MF Global and Refco
Is your futures account safe with MF Global stock slide today? | Attain Capital Management
Is your futures account safe with MF Global stock slide today? | Attain Capital Management
No. The £50K guarantee is only for personnel BANK deposits.
If your broker goes bust and the administrators are brought in, things like weather your account is segregated or not and weather you allowed your broker to lend out you assets comes into question. It's a very complicated procedure and takes a long time, years in some cases, to be resolved - there's no hard and fast rules.
As a recent example, here's a link to a website of an action group set up by former clients of Global Trader Europe that went bust on 15th Feb 2008. It's quite sad because if you read the forums it looks like they'll be getting nothing at all.
Global Trader Europe Client Discussion Site : HomePage
Global Trader Europe clients 'set to lose £20m' - Telegraph
So be careful who you trade with......
new_trader
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JTrader
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Cheers.
I guess this is a lesson the. Keep the minimum amount needed in a trading account, necessary to cover your margin levels etc. Put the rest in a govt. backed bank account perhaps.
BSD
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Very interesting that Ninja !
From your link:
"Do any banks offer 100% safety?
A. Yes, two; simply because they're both currently owned by HM government! All savings in Northern Rock and National Savings & Investments are 100% guaranteed. This does mean, if you've a lot of cash (well over the £35,000 amount) and the safety factor worries you, to put a portion of your cash in there for ultra safety is a reasonable, cautious strategy. Yet as the rates don't tend to be that good, be aware that by hedging for safety you're sacrificing interest.
Northern Rock.
Northern Rock was nationalised in February 2008 following its brush with the Credit Crunch
This is the name given to the current phenomena that banks and other big financial institutions are struggling to find money to borrow. As they can’t find money to borrow they’ve less to lend out, which means the cost of debt is increasing, and its availability is decreasing. In other words it’s getting more difficult and more expensive to borrow.
Close Following that crisis, the Government stepped in to give a 100% guarantee on all ‘existing savings’ there, then extended it to new deposits too.
In practice, this means anyone saving with Northern Rock, whether from before the crisis, since it, or even if you took your money out and now re-deposit it, will get back your whole balance, plus interest that you’re owed and any money that you subsequently deposit there in the future.
The best paying Northern Rock account is the e-Saver which pays 5.75% AER. See how this compares to the Top Savings Accounts.
National Savings and Investments (NS&I).
NS&I has always been a state-owned financial institution, meaning the Government has fully backed up any money in it. Whilst premium bonds are its most popular product, the average returns on them are quite poor and represent rubbish value for money (read Premium Bonds: Are they worth it?); its Direct ISA and Index-linked Savings are much better payers.
Buy a tax certificate.
For those who are self employed, one place to put money safely is to pay your tax early. You can do this by buying a tax-certificate and you earn taxable interest on it (see interest rates list). This system is best for those with larger tax bills, putting money aside that is likely to be due within the next year, by doing this you're effectively saving your cash with the governement ."
I wrote to IG and say that they bank with Llyods - " the secure bank" and they say that the clients money is in segregated account and also that i could have a recourse under FSA rules!
But what they dont tell me is what happens if Llyods go bust, will they get the client money???
Obviously the 50K is individual account, but I G is a business so what would happen?
Any idea?
But what they dont tell me is what happens if Llyods go bust, will they get the client money???
Obviously the 50K is individual account, but I G is a business so what would happen?
Any idea?
BSD
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JillyB
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Too right - especially when firms like Alpari have this as part of the Terms and Conditions that you have to agree to before opening an account.
"I consent to transfer or otherwise pass full title to, and ownership of, Non-segregated Funds (as defined in clause 6.2 of the Customer Agreement) to the Company for the purpose of securing or otherwise covering my present or future, actual or contingent or prospective obligations. I agree that I will no longer have a proprietary claim over this money until an equivalent transfer is made back to me if the provision of collateral by me is no longer necessary.
I consent that Non-segregated funds do not constitute and shall not at any time be deemed to constitute client money for purposes of the FSA Rules and agree that the Company can deal with this money in its own right and in the event of the Company’s insolvency I will rank as a general creditor of the Company."
Rossini
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I believe you could be right, We could see $5 to the £ in the not too far future
