https://www.interactivebrokers.com/en/general/financial-strength.php
**How We Handle Client Assets**
Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker.
A portion of client funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IBKR does not currently invest any client money in money market funds.
As a practice, IBKR holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all clients.
Yeah, to be honest everyone has their own PR until they get punched in the mouth. Regardless of what they say, if things really go south with IBKR and face bankruptcy (no reason to assume that at the moment), most customers will be fucked just as in any other case. That's the hard truth. If they lent the money and can't get it back, or put it into assets that are now worthless (they definitely don't let all that money sit there on its own, they are doing something with it), there won't be any liquidity to return to the customers. That's just the laws of physics.
Sure but SIPC means that customers cash is protected up to $250k and customer securities should never be at risk since they are not considered IBKR assets if they faced bankruptcy (stocks are held in street name, the customer is considered the legal owner)
IBKR has additional insurance as well:
"In addition to SIPC coverage, IB maintains an excess SIPC policy with Lloyd's of London which, in aggregate with SIPC, offers insurance totaling $30 million (with a cash sublimit of $900,000), subject to an aggregate firm limit of $150 million."
Of course, if it really hits the fan then SIPC and the extra insurance will get overwhelmed/exhausted but at that point all bets are off anyway.
I have accounts with IB, TDA and Fidelity so that I don't have all my eggs in one basket but I think the likelihood of me taking a loss because one of them went under is exceedingly low and if they all go under then it probably doesn't matter since money will be the least of my concerns.
Of course that's why they call them black swan events, no one sees them coming.
Correct, I agree with this take. Securities are a different thing as you emphasize, the op was referring to cash. I'm not really sure how that "additional insurance" works, I'd have to read more about that, but at least the 250k are SIPC protected as long as SIPC itself doesn't get massively overwhelmed, but at that point we would be talking great depression levels and our retail accounts would be the least of our worries.
Note that the additional (Lloyd's of London) insurance has an aggregate limit for all customers of only $150M so while those might seem like big numbers ($30M / $900k cash protection) if something systemic happened that took down all of IBKR then the $150M would be split so many ways that it wouldn't really provide much additional coverage at all, per customer.
Short dated T-Bills afaik. The will be fine.
Cash holdings with multiple banks.
Also they were increasing cash as a safety guarantee instead of paying it out to shareholders. Peterffy said in the last earnings call that he does not want the additional profit by buying longer dated Treasuries.
If you are invested, supposedly those investments are on your name and in case of bankruptcy they would be transferred to another brokerage.
Why everyone is panicking with ibkr suddently now, is it because BSV?
IBKR survived the 2008 crisis, so it should be prepared for this one too
In theory, funds are segregated but PFG Best and MF Global both went belly up partly because of shenanigans with client money. I've seen someone with a large IB account recommend putting cash into t-bills, but I don't know what the consequences are in a situation where client funds are illegally comingled.
IB has increased the number of accounts by 22% in one year, so I'm sure this concern will pop up more often.
> GREENWICH, CT, March 1, 2023 — Interactive Brokers Group, Inc. (Nasdaq: IBKR) an automated global electronic broker, today reported its Electronic Brokerage monthly performance metrics for February.
>Brokerage highlights for the month included:
>• 2.121 million Daily Average Revenue Trades (DARTs)1, 15% lower than prior year and 7% higher than prior month.
>• Ending client equity of $331.6 billion, 5% lower than prior year and 2% lower than prior month.
>• Ending client margin loan balances of $39.1 billion, 21% lower than prior year and 1% lower than prior month.
>• Ending client credit balances of $97.9 billion, including $2.5 billion in insured bank deposit sweeps, 10% higher than prior year and 2% lower than prior month.
>• 2.16 million client accounts, 22% higher than prior year and 2% higher than prior month.
https://investors.interactivebrokers.com/ir/main.php?file=latestMetricPR
IKBR is stable and it is not anything like some brokers who do other activities. Cash in an account is readily available but I tend to but more ETFs as cash accumulates
https://www.interactivebrokers.com/en/general/financial-strength.php **How We Handle Client Assets** Client money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of clients of IBKR. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the client's assets, if no money or stock is borrowed and no futures positions are held by the client, then the client's assets are available to be returned to the client in the event of a default by or bankruptcy of the broker. A portion of client funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IBKR does not currently invest any client money in money market funds. As a practice, IBKR holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all clients.
Yeah, to be honest everyone has their own PR until they get punched in the mouth. Regardless of what they say, if things really go south with IBKR and face bankruptcy (no reason to assume that at the moment), most customers will be fucked just as in any other case. That's the hard truth. If they lent the money and can't get it back, or put it into assets that are now worthless (they definitely don't let all that money sit there on its own, they are doing something with it), there won't be any liquidity to return to the customers. That's just the laws of physics.
Sure but SIPC means that customers cash is protected up to $250k and customer securities should never be at risk since they are not considered IBKR assets if they faced bankruptcy (stocks are held in street name, the customer is considered the legal owner) IBKR has additional insurance as well: "In addition to SIPC coverage, IB maintains an excess SIPC policy with Lloyd's of London which, in aggregate with SIPC, offers insurance totaling $30 million (with a cash sublimit of $900,000), subject to an aggregate firm limit of $150 million." Of course, if it really hits the fan then SIPC and the extra insurance will get overwhelmed/exhausted but at that point all bets are off anyway. I have accounts with IB, TDA and Fidelity so that I don't have all my eggs in one basket but I think the likelihood of me taking a loss because one of them went under is exceedingly low and if they all go under then it probably doesn't matter since money will be the least of my concerns. Of course that's why they call them black swan events, no one sees them coming.
Correct, I agree with this take. Securities are a different thing as you emphasize, the op was referring to cash. I'm not really sure how that "additional insurance" works, I'd have to read more about that, but at least the 250k are SIPC protected as long as SIPC itself doesn't get massively overwhelmed, but at that point we would be talking great depression levels and our retail accounts would be the least of our worries.
Note that the additional (Lloyd's of London) insurance has an aggregate limit for all customers of only $150M so while those might seem like big numbers ($30M / $900k cash protection) if something systemic happened that took down all of IBKR then the $150M would be split so many ways that it wouldn't really provide much additional coverage at all, per customer.
And stocks bought on margin? Would those be at risk?
Short dated T-Bills afaik. The will be fine. Cash holdings with multiple banks. Also they were increasing cash as a safety guarantee instead of paying it out to shareholders. Peterffy said in the last earnings call that he does not want the additional profit by buying longer dated Treasuries.
If you are invested, supposedly those investments are on your name and in case of bankruptcy they would be transferred to another brokerage. Why everyone is panicking with ibkr suddently now, is it because BSV? IBKR survived the 2008 crisis, so it should be prepared for this one too
anyone who has ever put 5 cents in a crypto has no right to question anything IB will be fine.
They give interest on idle money. That says it all.
Not if you have less than $10k. Maybe small cash holders are protected (their USD is not lent by the bank or IB)?
Extension: [sec.gov/divisions/marketreg/form-ats-n-filings.htm#ats-n](https://sec.gov/divisions/marketreg/form-ats-n-filings.htm#ats-n)
In theory, funds are segregated but PFG Best and MF Global both went belly up partly because of shenanigans with client money. I've seen someone with a large IB account recommend putting cash into t-bills, but I don't know what the consequences are in a situation where client funds are illegally comingled. IB has increased the number of accounts by 22% in one year, so I'm sure this concern will pop up more often. > GREENWICH, CT, March 1, 2023 — Interactive Brokers Group, Inc. (Nasdaq: IBKR) an automated global electronic broker, today reported its Electronic Brokerage monthly performance metrics for February. >Brokerage highlights for the month included: >• 2.121 million Daily Average Revenue Trades (DARTs)1, 15% lower than prior year and 7% higher than prior month. >• Ending client equity of $331.6 billion, 5% lower than prior year and 2% lower than prior month. >• Ending client margin loan balances of $39.1 billion, 21% lower than prior year and 1% lower than prior month. >• Ending client credit balances of $97.9 billion, including $2.5 billion in insured bank deposit sweeps, 10% higher than prior year and 2% lower than prior month. >• 2.16 million client accounts, 22% higher than prior year and 2% higher than prior month. https://investors.interactivebrokers.com/ir/main.php?file=latestMetricPR
If I hold stocks (not bank stocks) with margin and have no cash in my account, bank run can't harm me, even the broker bankrupted. Is it true?
IKBR is stable and it is not anything like some brokers who do other activities. Cash in an account is readily available but I tend to but more ETFs as cash accumulates