Account Security

Security

 

All accounts are held with Interactive Brokers who have $5bn under management and handle over 600,000 trades per day.

Securities in client accounts are protected for up to $500,000 by the SIPC (Securities Investor Protection Corporation) and for up to $30 million by Lloyd's of London.

Interactive Brokers was founded in 1977 by Thomas Peterffy.

Thomas Peterffy founded the Bostons Options Exchange and is a computer programmer who played a key role in the development of the electronic trading of securities in the U.S.

Interactive Brokers have always been at the forefront of trading innovation, starting with the invention of the first floor-based handheld computer in 1983. 

Interactive Brokers is a discount online brokerage and has held the ranking as the lowest cost broker for five straight years from Barron's, one of the most respected and read financial journals in the U.S.  They have also won best online broker three years in a row.

Interactive Brokers has been awarded the highest star ratings from Barron’s: 4.5 stars for lowest cost brokerage and 4.5 stars overall. Interactive Brokers are members of over 100 exchanges, market destinations, and clearing corporations worldwide. 

Strength

 

Interactive Brokers LLC is rated 'A-/A-2'; Outlook Stable by Standard & Poor's.

Interactive Brokers do not hold CDOs, Subprime Debt, or Credit Default Swaps unlike most major banks who are exposed to mortgage failure and housing crises. With the exception of foreign exchange, Interactive Brokers trade only exchange listed products that are cleared through central clearing houses and are marked daily to external closing prices disseminated by the exchanges. We think this is the key reason an account with Interactive Brokers can be safer than many bank accounts.

Interactive Brokers have a real-time margin system continuously enforces limits for each account, and automatically liquidates positions if any individual account violates its limits at any time. All orders are automatically vetted on a pre-trade basis. 

Positions and resulting payables/receivables are automatically reconciled against external sources daily.

Investment Policy

 

As a regulated broker, Interactive Brokers is subject to SEC and CFTC regulations on investment of customer funds. Permissible investment vehicles include bank deposits and a variety of top-rated government securities and related instruments. Interactive Brokers' effective investment policy is more stringent than this, reflecting their risk-averse philosophy.

Interactive Brokers invest customer funds only in government securities and repos, cash deposits in bank accounts at the largest banks and triple A-rated Money Market Funds (in which they invest less than 2% of customer assets).

Additionally, Interactive Brokers limit customer exposure through the following credit policies: keeping investments in highly liquid, short-term instruments; distributing client funds among a variety of banks and counterparties to avoid concentrated exposure to any single counterparty.

Interactive Brokers reduce risk through their rigorous analysis via their 'Credit Committee of Counterparty Financial Conditions'. They also review risk factors prior to permitting investment activity with or via any counterparty. Interactive Brokers' investment policy is very conservative. 

Regulation

 

Interactive Brokers sought and received approval from FINRA (the Financial Industry Regulatory Authority), to perform and report the reserve computation on a daily basis, instead of once per week. Interactive Brokers' headquarters are in Greenwich Connecticut, and it has about 880 employees in its offices in the USA, Switzerland, Canada, Hong Kong, UK, Australia, Japan, Hungary, Russia, India, China and Estonia. IB is regulated by the SEC, FINRA, NYSE, SFA and other regulatory agencies around the world. Conclusion

Interactive Brokers have strict policies when investing client monies which helps minimize their risk and reduces your exposure to uncertain credit environments.

We believe Interactive Brokers to be one of the least risky places to hold monies and assets, whilst many major banks have higher credit risk due to the large mortgage exposure and credit default risk that they carry.