True, nothing is entirely safe and the minimum balance idea is good. If you swing trade the overnights margins can be a little stiff so you can only go so far.
The MF Global situation and PFG are slightly different. Firstly, MF Global used customer funds for risky investments, whereas PFG was out and out theft by an officer. It would have been impossible for the CEO of MF Global to steal $200m out of the company and merely deposit it into his own personal account.
Secondly, the clients of MF Global will likely receive 100% payback of their funds. In the cases of single individual theft the payback to customers are near zero or not much more. One is misappropriation of segregated funds and the other is theft.
The question what to do right now?
Personally, I'm not going to do anything different after this.
If you have an equities account at IB then consider trading futures there. You will have individual account coverage of $900k of SIPC coverage at IB for cash held for equities OR futures provided you elect to the securities sweep option.
With my AMP futures account I have none of this protection. Is IB dipping into segregated funds? I will never know but by all accounts IB appears to be a better run organization than PFG or MF Global with better controls. I like the fact that I can read their annual report and find out audited trading volume and profits are growing with profit of $860k per employee. I don't like the fact that IB is nearly owned and controlled by one guy but I like the fact that they have a chief compliance officer who reports directly to the internal audit committee to combat this concern. Is it foolproof? No, but what is?
Given all of this PFG mess, I'm not going to swing trade overnight with AMP and although AMP makes up a small percentage of my overall account will look at reducing it to the minimum.
Earlier on in this thread, some were advocating having a/c's with different brokers to spread risk.
Quite some time ago I had done this and had a/c's at MFG and PFG. When MFG collapsed I figured I would just stick with PFG on the basis that lightning was most unlikely to strike twice!
So now like many others I am looking for another broker and wondering if the best form of risk management is to just walk away....
It occurs to me that this latest event has the potential to trigger others, as traders decide to sweep their a/c's back to minimum balances to manage 'broker failure risk'. Should this happen in large numbers, then any firms that are marginal may be pressed hard.
Slow redemption of funds could be an early sign of this - remain vigilant should you notice this happening.
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I can read PFG's report and find profits. I could read MF Global and find the same. PFG's CEO was on the NFA board. The CFO appears to have been directly involved as well.
Means nothing. Records can be, have been, and will continue to be falsified. The only true safety is insurance.
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My money was with PFG but I called up my introducing broker, Cannon Trading, and I don't want to spread rumours or give anybody false hope because there is too much unknown at this point, but he said that he heard that the money that vapourized was not from futures accounts but rather from PFG's forex accounts. He did not tell me how he heard this but he just passed on this info. He was kind of optimistic that once they start doing some forensic auditing, they wil find a paper trail and recover some of the money. Again this is not fact, just hearsay and I don't want anybody to get their hopes up.