Hi everyone!
SITUATION
I'm looking to invest my money into low-cost ETFs on the HKEX.
I was advised to open a brokerage account with Interactive Brokers Hong Kong (IBHK) who seem to have very low fees.
PROBLEM
What happens if your broker (in this case, Interactive Broker) goes bust?
Based on IBHK's website "client accounts at IBHK are protected by the Investor Compensation Fund" and "the maximum amount of compensation is HK$150,000 per investor".
This is a relatively small amount (compared to Interactive Brokers US, who offers protection of up to USD 500,000).
QUESTIONS:
1. How do you minimize broker risk, given that protection for investors in HK is so small? Would you advise me to buy my ETFs from a bank (e.g. Hang Seng / HSBC)? Any recommendations? I'm looking to buy-and-hold for a long time, and investing the bulk of my money into low cost ETFs.
2. Someone else on this forum mentioned "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." How does this work? This sounds like a viable solution, but I'm not exactly clear on how it works and wasn't able to locate more information on this. Can you help shed more light on this?
3. In an old thread from 2008, someone mentioned you can take physical delivery of your shares. How does this work in HK?
Thanks!