I was wondering what would happen to my securities (mainly ETFs) if Swissquote (my broker / bank) goes bankrupt.
As I understand (maybe wrongly) Swissquote operates also as custodian bank for client securities. Is this correct? and if so who guarantees me that Swissquote does not mix client securities with own bank assets / operations etc.?
FINMA did not prove to do a good job at all in the very recent events and this makes me worry a bit. Does anybody have more info on how protected (and untouchable) are client securities at Swissquote?
You are not protected against fraud; except that you could take Swissquote to court, should that really happen. But what is the likelihood of that? And doesn’t that apply to every aspect of life? That’s where a certain quantity of trust comes into play, without which our world couldn’t function.
As for a bankruptcy, it is as you say. Given the size and profitability of Swissquote’s business though, it wouldn’t take long for a competitor to take over that slice of the cake.
Like it was said, unless there is a fraud involved, nothing particular. You might have to wait some time to get access to them, though. Swissquote should be even safer in this aspect because they, according to their claims, keep securities in customer’s name at the corresponding Central Securities Depository, while most (cheap) brokers keep all customer’s securities in their own name (omnibus account). This is what Swissquote is charging a premium in comparison with other brokers for, although I don’t know yet how to verify this claim.
I will try to collect my notes about custody of securities and post as a wiki article.
Just recently read a well written article about that topic:
My takeway: In Switzerland we are not very well protected, if you compare it to other countries. In US you are covered up to 500‘000$ by SIPC, if the broker files bankruptcy and doesnt have sufficient captial (fraud, hack, etc) to repay you your assets. In Switzerland you get 0 Fr. from FINMA