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Bank risk versus broker risk for traders.
In the US:
FIDC is the govt backed guarantee for bank deposits (recently
increased?).
SIPC is a voluntary brokers co-operative (I think) for 'protection'
if and when the broker acts fraudulently etc
IB's Lloyds insurance is voluntary on their part.
In all instances .... getting your money back, via claims to any
third party will not be fun, especially for, say, a non US citizen
appealing to a US company/regulator.
IMO - if the money goes off the table it is gone for good (any return
would be a miracle).
This is the first link I got with a google "broker account insurance"
search.
http://www.bankrate.com/brm/news/investing/20020605a.asp
As I said ... I can find ways to structure my affairs so I can trade
with at the levels I want without putting all of my money on table
(trade in IOU's or paper derivatives OR look for a broker with the
bank structure you like).
All brokers have 'business risk' i.e. they might go bankrupt.
With mine, theoretically, my stash is quarantined from their
creditors in the event of business failure AND I only electronically
send 10% margin, from my own account,to theirs, to open a trade.
At the end of the day all positions are settled (I pay them more or
they pay me .... I can transfer winnings out) so I only ever have the
days winnings exposed to the brokers risk.
Nice theory .... hope I never have to see it in action!
Citibank can't operate in Aus as a US company ... they have to
incorporate an Aussie subsidiary .... so local rules apply ... but
the US can pulll the money strings.
So Belgium rules must apply to your families account.
Jack Nicholson (who had a few divorces) said:
"Going to court is like going to hospital .... it is not until the
morning after when you wake up with tubes stuck up uncomfortable
places that you become aware of the reality of the operation".
--- In amibroker@xxxxxxxxxxxxxxx, "Carl Vanhaesendonck"
<carl.van@xxx> wrote:
>
> 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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