facebookDo you worry about your brokerage/trading platform going bankrupt? What happens to your investments in such events? How likely are such things to happen? - Seedly

Advertisement

Anonymous

16 Sep 2020

βˆ™

General Investing

Do you worry about your brokerage/trading platform going bankrupt? What happens to your investments in such events? How likely are such things to happen?

Thinking about how reliable the various platforms like fundsupermart, dollardex, saxo etc are as a place to park assets.

Discussion (2)

What are your thoughts?

Learn how to style your text

Justin Mok

16 Sep 2020

Bachelor of Business Management at Singapore Management University

Though chances are really slim, do ensure that your brokerage is under the SIPC list 'https://www.sipc.org/list-of-members/

It is sort of like an insurance company if your brokerage goes bust. Claims up to ($500,000 for securities and cash) or ($250,000 for cash only).

The good thing is SIPC covers non-US residents as well. A good practice is to ensure you have transaction documents/reports that can prove your holdings, making the claiming process easier.

In our current day and age, I think it's quite rare for brokerages to go bankrupt. Lots of regulations were made and implemented post-2008 GFC to prevent financial institutions from overleveraging. Even if there is a catalyst that may spark a domino effect within the finance sector, governments will probably step in before it really has tangible effects on our economy.​​​

Your investments are held in a separate entity to your broker. If a broker goes bust, they are still not allowed to touch your assets.

What typically happens is your assets gets transferred to another broker.

SIPC protection only applies to US listed institutions.

Write your thoughts

Advertisement