Technically your account is "safe" as it would be covered by SIPC insurance for equities, although as others here have pointed out you would probably be safer trading with one of the "too big to fail" entities like JPM, GS, etc., because sad as it is to say they will be saved from failure by the government every time, whereas a relatively small operator like IB will not (the moral hazard implications of which are another whole discussion). And even though it's insured with the SIPC, it's no fun to have to go through the process of getting your money back from the regulator when your brokerage fails. As for the safest place to keep cash in a crisis, obviously that would be in physical cash you keep stashed in your home somewhere. After that, the safest would be short term T-bills through the government's Treasury Direct program. If/when we see massive bank runs and collapses (very likely IMO), we'll likely see the same happen with brokers as well. And if they're engaging in re-hypothecation and a large number of their clients pull their money at the same time, boom, now you've got a liquidity crunch for the broker and a likely failure event.
Tell us more about Crossland. Never heard about them before. How do they compare with IB in comms, worldwide reach and trading platform?
I did not just tell you about the ratings I gave you a heads up on them being totally without exposure to the world wide financial plague -- Europe. Take a look at the bank's financial and competitive position -- impressive!
Does anyone know if this is the formula that brokers use to calculate reserve requirements each week (apparently on Fridays)? http://taft.law.uc.edu/CCL/34ActRls/rule15c3-3a.html
See the comments and ratings here on ET for DeepDiscount they are a Crossland guaranteed IB. I use Crossland to trade ES with a Sierra Charts platform and a Rithmic feed. They in no way compare to IB. But, given their inexpensive and totally transparent rate structure and low margins, I can leave a small amount in the account yet trade my max number of contracts. You don't replace IB with DeepDiscount/Crossland you add them to the mix. Go to broker reviews here and click through to the DeepDiscount website. You'll hate the site -- ugly -- but you will like the rates, the margins and the platform/data feed choices.
Twenty years ago I was retained by a an independent trader to negotiate a separate insurance policy for his account. The trader -- who had started with $100,000 ten years earlier -- ultimately moved $30,000,000 to the new firm but only after a major insurer wrote the policy to his specs. If memory serves Aetna wrote the excess line. BTW -- the broker paid my fee as well as the insurance premium and added some bells and whistles to the account that turned out to indescribably lucrative for my client. Those bells and whistles pushed right up against some NYSE regulations so I won't describe them but the point here is if you show up at a firm's door with a big basket of $$ do not be timid in your negotiation. I ended up delivering a package of perks for this client I did not even know existed when he retained me. I'm not sure if $10 mil is quite enough to get their attention today. The $30 mil then equates to maybe $100 mil today.
Nobody has (as of yet) lost a dime under SIPC protection or beyond it (250/500k). Nobody US FCM client has lost a dime to date, but MFG may be the first.
I seriously doubt that there is a Corzine-style nutjob at IB trying to turn the company into a Goldman Sachs, Jr. overnight by making 40:1 leveraged bets. All the important questions raised here are for the brokerage business in general. I have no idea why all of a sudden IB gets singled out unless the thread starter is choosing them simply because that's where his money is at-risk. Some new rules are likely to come out of this MF mess. It will probably raise transaction costs though, no matter where you go.