Brokers regulations | Reviews of Brokers and Data Feeds


futures.io - futures trading strategies, market news, trading charts and platforms


Reviews of Brokers and Data Feeds


Review and discuss futures brokers, their requirements and features, or ask questions about brokers and data feeds




 

Brokers regulations

  #6 (permalink)

Super Moderator
London UK
 
Trading Experience: Beginner
Platform: CQG
Broker/Data: S5
Favorite Futures: Futures
 
xplorer's Avatar
 
Posts: 4,872 since Sep 2015
Thanks: 12,109 given, 10,736 received


grausch View Post
Well, the broker / financial institution is free to place your cash with whichever counterparty it chooses. For instance, if you have a USD cash account with your bank, the bank will most likely place that USD with a financial institution in the US. Same thing goes for EUR accounts and same thing for GBP or JPY or any other currency really. It is highly unusual to see a bank hold EUR in a non-EU country bank account, and even if that happens, somewhere in the chain, this money will be sitting in an EU bank account.

If you trade US futures, then the margin must settle in the US, and any gains or losses will settle against a US brokerage account. For IB UK to allow me to trade US securities, they must transfer USD to the US. Since all of my holdings are in USD, I suspect that all of my securities / funds are physically custodied in the US. However, my account is with IB UK and should IB UK go bankrupt, then the account is covered by the UK protection.

Should IB US go bankrupt, then IB UK will most likely also go bankrupt and in that case the UK protection will also kick in. I do not think that I would have a claim with SIPC since legally my account is in the UK.

Interesting, thanks. Since my interaction with RJO was about 2 years ago I have forgotten the details but you're right, given the aim was trading US futures any margin would have been settled in the US but I can't quite remember why they would talk about US regulation protections given my relationship and (presumably) my account would have been in the UK.

Reply With Quote