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Anonymous

10 Feb 2021

General Investing

Is it a good idea to split into two brokers to reduce platform risk?

E.g ETFs on IBKR and Individual stocks on tiger? Or stick everything into 1 broker probably tiger?

Discussion (5)

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For me, I am also using different brokers to diversify the platform risks (especially for overseas/custodian acc) as well as to get the lowest fee for different markets. If you choose to own SG stocks in CDP account, I would say the platform risk is minimal as you can sell them via other brokers.

Nicholas Beh

05 Feb 2021

Student Ambassador 2020/21 at Seedly

By platform risk, do you mean the reliability of the platform, or the possibility of a broker going bust?

If you are referring to the reliability of the platform, then going for Tiger and IBKR will do little to reduce your risk because IBKR is the clearing agent and custodian for Tiger. When IBKR famously went down sometime in December last year, Tiger was similarly affected as well.

Having multiple brokerage accounts can help with this, but it can be a hassle to keep track and move funds around. Ideally you would seek brokers with minimal to no recurring fees, because with multiple brokers, it can really add up. For US markets, TD Ameritrade is a good option.

If you are worried about your broker going bust, rest assured that your holdings will be protected, since it is segregrated from the broker's own accounts. In the case of MF Global, all customers eventually got back their holdings in whole, albeit after several years. This should not be an issue if you are investing long-term.

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thefrugalstudent

05 Feb 2021

Founder at thefrugalstudent.com

Hi Anon,

There's nothing wrong with using different brokers, although I wouldn't say that reducing ...

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