Right. To share among all customers are 150 million worth of coverage.
Ohh, now I get it. Is this a joke? If their AUM is over 100 billion and the insurance covers 150 million, then I don’t see another reason for its existence than to mislead people. Like how does it work that the insurance covers 30 million per client, but 150 for all clients? This is maybe per case?
And the SIPC? You think our stocks are held under custody of IB LLC or IB UK? I read somewhere that it can actually take years until all the lawyers have done their job and they pay out this insurance.
Does this apply to US brokers as well?
And finally: what’s the best approach then? This particular broker going bust while committing fraud is a “black swan” event, but it could be pretty devastating for your life. How much is safe to be kept at a single broker? At which point should you start splitting your portfolio and over how many brokers? I guess 3 brokers should be enough? If one goes bust, you still have 2/3 of your wealth, and you should be able to recover the most of the last 1/3.
One reason for having a Swiss broker is that it may be easier to pledge your etf in exchange for a loan/less cash upfront for mortgages. That means you won’t have to sell stocks. I think a typical scenario is that you have 100k stock and they can be used as 30-40k equivalent own cash for a home purchase. You could pledge stock for an emergency loan, if you don’t want to have an emergency fund sitting somewhere idle.
As far as i know with IB you cannot do that. But again it is a very particular case.
up to $30 million (including up to $1 million for cash)
I don’t get it. Aren’t shares under our names already? Why would we need insurance in that case? Is it in case they aren’t really under our names or they’re stolen somehow? Or maybe in case the broker sells them without our consent?
BTW, any idea what the procedure is to get your shares transferred from a fail broker?
(mods, maybe we need to split this topic…)
I got my answers, thank you all for your help.
- IB is a “qualified intermediary” so you pay only half the tax of the dividends (15% instead of 30%)
- All other criterias are not a game changer for me
- Having different broker accounts to manage the risk of loss through broker fail seems a good idea.
For now I will setup the CT account with the dollar-account to avoid USD-CHF conversion costs for VT dividends. In the future I will add an IB account and split the shares over this two brokers.
Under IB LLC is what they’re telling
Yes, segregation is also of course required in the US. And there’s the SIPC insurance, a concept most countries don’t have
No, under broker’s - in the electronic records in the computers of a central depository like DTCC or SIX, and then broker has its own electronic records that you’re the ultimate owner, that’s how it works
Unless you’re rich enough to afford to buy yourself a small bank and deal with a CSD directly…
(Or another alternative for cash strapped and truly paranoid is DTC’s Direct Registration System)
Well, I personally consider the forex (0.5+% savings) and lack of stamp duty (0.15%, times 2 for when you sell) to be also quite big advantages of IB. Let’s say you want to be investing 100k every year - you’re looking at spending 800+ Fr in these two charges alone at swiss brokers. On top of already draconian broker fees
Interactive Brokers - all eggs in one basket?
Eh, don’t get your hopes up. The bank would tell you to move the stocks over to them for custody and probably bill you around 0.3-0.4% for safekeeping. You can loan the money also from IB on margin.
Ok, good point - but I don’t understand it thoroughly:
- Forex (0.5+ savings), what you mean by that, higher exchange fees with swiss brokers?
- stamp duty is a swiss thing, but don’t you have to pay it at one point anyway? Is this legal with IB?
@hedgehog - thanks for all the good inputs!
Yes, exchanges rates are pretty much universally marked up by 0.5-2% or even more at the banks. You’re getting robbed when you exchange currency without even knowing it.
IB gives you access to fair interbank rates for a very modest commission. For some people I know this alone is worth it to pay 120 Fr/year for an account at IB.
Perfectly legal, it’s what the law pretty much explicitly says - only domestic brokers have to pay it.
I think that’s where the combination with corner bank could be an advantage for CT. You can already deposit gold on corner bank and use it as collateral for ct. I imagine you can work out a deal with corner trader and corner bank for mortgages and pledging etf
But according to the table by MP Best broker with cheapest fees for an ETF portfolio as a Swiss investor CornerTrader is cheaper than IB (80 vs 126.4/year) or slightly more expensive (max. 72 vs 40/year). Am I missing something?
And, with the Brexit chaos an account in England, doesn’t make you feel uncomfortable?
100k initial deposit
IB is hands down the best retail broker on the market.
For the cash strapped, there’s also lynx, captrader and some other IB resellers who’ll onboard you starting from some lousy 10k
Also only 1 transaction per quarter. If you trade more, CT becomes more expensive
Regarding Brexit - I am not sure but somehow it makes me feel even more comfortable
has anyone done a USD transfer from IB to CT? IIUC 1 cash transfer on IB per month is free - so the question would be, how much would it still cost for ‘in-between’ banks and on the CT-incoming side…