In HK, investors, including retail investors, can open a custody account with the exchange directly (HKEx), and it is extremely cheap. This removes the risk on the custodian completely.
Perhaps the LSE allows something similar, I haven't checked.
Last edited by jrkob; 11-04-2019 at 03:03 PM.
they took over a week to get back to me on the ones I asked too. at least you're cutting your losses early.
@HKthe, the first reply to this thread said that the protection if HK Interacrtive Brokers goes bankrupt goes only up to 150k. If you consider that a humble brag then whatever.
I've pretty much pumped all my savings into my brokerage forever so of course I'm worried with a disproportionate amount of net worth held in equities.
I'm just asking if people are mitigating counter-party risk by spreading out across different banks / brokerage. I was of the mind of having most of my savings in equities and it just ended up that it all flowed to the lowest cost brokerage I could find.
Not if it was this discussion or another where someone was asking about Ameritrade and Charles Schwab. I emailed the SIPC below and got this response:
SIPC protection extends only to cash and securities held in a customer securities account at a SIPC-member securities broker-dealer placed in liquidation under the Securities Investor Protection Act (“SIPA”). Charles Schwab, Hong Kong, Ltd. (“CSHK”) and TD Ameritrade Hong Kong (“TDHK”) are not SIPC members, but clear, respectively, through Charles Schwab & Co. (“CSC”) and TD Ameritrade Clearing, Inc. (“TD Clearing”), which are SIPC members. Accordingly, SIPC protection would be available with respect to cash and securities held in customer accounts introduced by CSHK to CSC, or by TDHK to TD Clearing, only if CSC or TD Clearing, respectively, were to be placed in liquidation under SIPA.
If CSC/TD Clearing are in full compliance with the law, including the laws governing the custody of customer assets, then you’re account assets would remain safe. In a domestic situation of this kind, upon failure of an introducing broker, the failed broker’s clearing correspondent generally notifies customers of the failure and indicates that, as of a specified date, absent contrary direction from a customer, it will assign that customer’s accounts to another introducing broker for whom the clearing broker provides clearing services. It is likely that a similar procedure would be followed in the scenario that you describe.
I was satisfied with the two responses, and have decided to open an Ameritrade account off the back of the information (armed with the info posted elsewhere, about dividend WHT and estate tax, I can hopefully make some sensible investments).