Thanks. It really was not a hard one to call. It was right there in the regulatory description of segregation and required a few -- very few -- paragraphs of reading. Many feel a need to feel safe rather than be safe.
+1. I remembered reading this thread and thinking... what a pointless theoretical debate. Turns out to be not so theoretical after all.
Good thread! I'm just geting back to the futures side after a ~4 month layoff, and it reinforces my idea to keep a minimal amount that I can afford to lose in my account. I enjoy the day leverage available, but have never taken full advantage of what some firms offer. I am a believer that the execs would think twice if their money was at risk to support the accounts they accept, and we made chumps like Corzine personally liable. Cry me a river, but I think the result would be positive for the system. At the same time I get there are lawyers who would file a claim for every moron who loses money. No one said it would simple.
If it turns out that Corzine was responsible for the theft of segregated funds he will be held personally liable and I suspect will do some time. They have been looking for a "poster boy" and my guess is he's it.
Yes, absolutely amazing call Swan... I too had considered this thread to be pointless theoretical discussion until now. This has made me do a bit more investigation into Interactive Brokers, just to double check things. Just in case anyone was wondering, here are some highlights contrasting MF Global and Interactive Brokers. 1) Interactive Brokers LLC is an agency broker for its customers. It does not maintain a proprietary trading desk or sales trading desk and does not trade for its own account. 2) We are part of IB Group, which has US $4.8 billion in equity capital.......Interactive Brokers LLC has over US $1.1 billion in regulatory net capital, which is $850 million in excess of regulatory requirements. 3) Funds that customers deposit for futures trading are not covered by SIPC, but IB addresses this by periodically sweeping excess margin funds throughout the day from the customer's futures trading account into the customer's securities account as needed, where the funds are eligible for SIPC coverage 4) IB has purchased excess SIPC coverage from Lloyd's of London insurers... up to an additional $29.5 million (including $900,000 for cash) 5) IB utilizes auto liquidation if an account is subject to margin call. Many people don't like this, but IMO it is absolutely essential. I generally only utilize about 5-15% of available margin. The idea that anyone would be complaining about auto liquidation means that they are running their account on the razor's edge. Like IB management I do not extend "good faith" credit to customers overnight or for one day or two days or three days I took a bit of comfort in the fact that these practices contrast sharply with the setup at MF Global. I feel blessed in that approx three months ago a potential partner was making a case as to why I should switch to MF Global as a FCM, but I told him that for now I would just rather stick with IB. Whewww!!
I also deal with IB, Epic. Counterpart risk is always theoretical until it is not. At that moment it trumps everything else and is too late to fix. If you put your $$ somewhere the time to figure out if you will get it back is upfront.
What does everyone here think - where are the best places to clear at this time - which firms? We should get a list going after input from posters.
I agree that IB is safe at the present time. It is really hard to draw conclusions about who else is, apart from the too-big-to-fail banks. Perhaps one could argue that some of the firms that have substantial non-trading revenue at least have some diversification and cash flow that could keep them in business even if others go under. Examples I can think of are: Cunningham Commodities, LLC / Cunningham Clearing - they have all of the stable licencing revenue from CTS T4 to many brokers and banks. PFG Best - they have large fee revenue from marketing numerous CTA's trading programs (I do trade at IB and Cunningham and am thinking of adding PFG Best also). Does anyone know of any discount futures introducing brokers that clear through any of the too-big-to-fail banks or even through major European banks?