Interactive Brokers: Brexit account migration = insurance drops from 500k USD to 20k EUR

Reddit info:
https://www.reddit.com/r/eupersonalfinance/comments/ixti09/interactive_brokers_brexit_account_migration/

Interactive Brokers FAQS:
https://ibkr.info/node/3515

Hi Mustachians, what do you think about that?

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Q: Which clients are affected by this migration plan?

A: Affected clients include individuals residing in the European Union or entity accounts formed within a European Union country. The majority of these accounts are currently serviced by Interactive Brokers (U.K.) Limited (“IBUK”).


Is it relevant at all?

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Switzerland doesn’t care about people using foreign brokers, right? (so if IB does their job correctly, it shouldn’t impact people here)

Why not ask customer support?

I’m literally on the phone with an Indian guy who told me that swiss account will also be moved over one of the European entities - fuck!

I don’t take this as a fact for now. I’m sure if you ask the same question to 10 different customer center operators they’ll give you 10 different answer. Has anyone else called the customer center? What answers did you get?

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Let’s not forget they are talking about cash only.

No that’s on equity afaik. That said keep in mind you’d simply get the same deal as any european broker. So it’s a downgrade, but unless you use an us broker directly you won’t get better anywhere else (what is the guarantee for swiss brokers?)

I believe is until 100k swiss francs for cash.

Source: https://www.moneyland.ch/en/depositor-protection-definition

Securities are segregated assets

Securities like shares and bonds which are held in custody by a custodian bank are not bank account balances and are neither preferential deposits nor protected deposits. Securities are your property which are simply held by the bank for safekeeping. They remain your property after the bank goes bankrupt and can be transferred to a different custodian bank.

Exception: Structured products may become worthless in the event of a bank failure. The same applies to securities issued by the bankrupt bank (the bank’s shares or participation certificates, for example). If your custody agreement allows for securities lending, it is possible that you may lose your securities when the custodian bank goes bankrupt. In securities lending, the custodian bank lends out your securities to third parties.

Shares in investment funds and ETFs are segregated assets. Like other securities, they are not considered bank assets. But here too, there are exceptions. Funds which make up part of structured products like swaps, they may be lost when the bank goes bankrupt.

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I just talked with a customer service support from regulatory and they said my account will be migrated to IB-EU. Also, the insurance degradation is towards assets on the entire account. Not just cash on hand.

I don’t feel comfortable at all anymore.

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Does this migration to IB EU imply restrictions on buying US-listed ETFs?

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I have no idea what other implications this has. I can feel my entire investment strategy crumbling in front of my eyes with no alternatives. I will log out now and check this thread later with hopefully some new (and better) information.

Wait, were we even covered by the 500k SIPC protection till now?

So if the protection limit applies to all assets and is only 20k EUR, what does it mean effectively? If IB gets hacked and they “lose” my assets, I will not be reimbursed? What realistic bad scenarios are there?

Seriously, so dark? Is buying VWRL via PostFinance so bad after all? Btw was anybody able to reclaim withholding tax for VT via DA-1 using a Swiss broker? Which one?

Yes, so dark. I cannot open an account with PostFinance, SwissQuote, etc as I am a US citizen.

Whoops! Well it is the fault of USA that they enforce such strict rules on handling of their nationals. Your country is the World’s bully! Of course it’s not your personal fault. But I digress…

Thanks for your sympathy?

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Worst case just buy the Irish Vanguard All-World… Don’t panic.

Also your assets are segregated anyway, unless the broker is fraudulent and unregulated. So you probably don’t even need that high insurance…

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Not sure why everyone is panicking, it’s less guarantee but mostly because we were lucky enough to be under US SIPC protection. Now you might get the same as all european brokers (limited protection on securities), but I’m not sure why it should make people invest somehow differently.

The 100k protection in switzerland is for bank accounts, I doubt UBS or Swissquote provide SIPC like insurance for your stocks.

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Damn, I hope we keep access to US ETFs. Don’t want to buy inferior ETFs.

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Nope - worst case would be, he/she doesn’t find a broker that will enable him/her to buy the Irish Vanguard ETFs - as they won’t even open an account for US citizens.

They already have an account at IB… which already gives them access to European markets too.

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