I have sent an email to the CFO, and if I get a response I will share it here.
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Securities accounts - Held at TradeStation Securities, Inc.
Brokerage firms are required to follow certain rules that are designed to minimize the chances of financial failure and, more importantly, to protect customer assets if they do fail. For example, the SEC's Rule 15c3-1 — the "Net Capital Rule"— requires brokerage firms lo maintain certain levels of their own liquid assets. The minimum net capital a firm must have on hand depends on its size and business. As of December 31, 2011, TradeStation Securities, Inc. had net capital of approximately $54.7 million, which was approximately $52.2 million in excess of its required net capital of approximately $2.5 million.
In addition, the SEC's Rule 15c3-3 — the "Customer Protection Rule" — requires brokerage firms that have custody of customer assets to keep those assets separate from their own accounts. In other words, customers' cash must be placed in a special, separate "reserve" account; and fully paid customer securities must be kept separate from firm and customer margin securities. As of December 31, 2011, TradeStation Securities, Inc. had approximately $1.02 billion of customer funds reserved and segregated in bank accounts clearly identified as customer funds in accordance with Rule 15c3-3. The amount required to be segregated is computed every week and any shortage needs to be deposited before 10:00 a.m. of the following business day. As an additional safety, TradeStation maintains approximately $10 million in excess of the required amount to be segregated from its own proprietary funds.
Your TradeStation equities accounts are further protected with SIPC insurance. SIPC insures your equities accounts up to $500,000, including $250,000 for cash. Beyond this, TradeStation has arranged for additional protection through Lloyd's of London, insuring all accounts up to an aggregate limit of $300 million. For more information on SIPC coverage, we encourage you to visit the SIPC website.
Everything in the above section refers to equities.
Everything in the below section refers to Futures.
Futures accounts - Held at TradeStation Securities, Inc
TradeStation Securities Inc., as a Futures Commission Merchant (FCM) that carries customer accounts, is subject to the Customer Protection Rule requirements of the Commodity Futures Trading Commission (CFTC) Rules 1.20 and 30.7. These rules state that the company is required to maintain enough cash and cash equivalents in special reserve accounts, and identified as such, to cover at all times the required segregation reserve amounts. The reserve requirement must be calculated daily and filed electronically through the National Futures Association's (NFA) web based WinJammer system. Additionally, the company must also properly segregate these funds from any other proprietary bank account of the company. As of December 31,2011 TradeStation had $451.3 million segregated in accordance with the above CFTC requirements.
Let's hope no Tradestation customer has to find out the hard way
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
However, on that site as well as in the aforementioned paragraph which I've quoted initially from your website regarding Account Security, it is not clearly phrased that "futures accounts" are covered by that excess SIPC insurance as well.
Given the current situation in the futures industry, it should be of high interest for TradeStation's future/futures business, to be clear in this regard or otherwise one can only suspect that futures accounts are not secure at TradeStation.
Hence, I suggest to change such official statement and include a sentence that explicitly states that futures accounts are protected by the excess SIPC insurance, i.e. mention the words "futures account" in that sentence and do not use any wishy-washy phrasing which leave room for interpretation.
I wonder what Lloyds of London believe they are insuring?
Tradestation Customer Service and even the CFO (if Mike gets a response) might believe one thing, but as anyone who has ever dealt with an insurance company knows, what a policyholder believes/thinks is never the same as what a policywriter believes/thinks!
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Kevindog is right about that. I worked for John Hancock and Prudential back in the 80's and 90's and you would have no idea how many claims were escalated because of misunderstandings of all types of policies from auto, life and annuities.