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Stock broker for US stocks - what if they go bankrupt? HK laws?

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  1. #11

    For discussion purpose, I did my research sometime ago.

    單親爸爸撞牆記@懶系投資法: IB的資產保障
    A HK blogger did his research in 2017
    From what I perceive: IB LLC is a US entity while IB HK is a HK Entity.
    And if you open your IB acc in HK, your asset is under IB HK. So there is no protection under SIPC.

    Please refer to: https://www.interactivebrokers.com.h...p?f=2334&p=acc

    Several years ago, IB forced clients based in HK to transfer their asset to IB HK. It had already stirred up a fear of no SIPC protection in the traders' community.
    Refer to: https://www.elitetrader.com/et/threa...-ib-hk.296054/


    Some of my friends in HK understand that there is no SIPC protection for their assets.
    So they use skype to setup a truly american Charles Schwab account in order to enjoy the SIPC.
    If anyone is bother about the SIPC, please make sure you setup your account via "America's channel".

    Personally, I don't setup such account in US broker as I am concerned about the estate tax in case of any unexpected death...(no such tax in HK)

    I will prefer to use utilise my voluntary MPF contribution to access US/international market.

    Sorry for my poor English. Hope it helps.

    Drunken Master, shri and Gevening like this.

  2. #12

    Just to understand perspectives of investors probably more experienced than I, how do you reconcile the lack of investor protection with your strategy to grow wealth in the long-term? Put another way, we must consider market risk, currency risk, interest rate risk and many others associated with our actual investments, then on top of that there is the risk of the broker going bust and losing a great deal. Is this just a risk we have to “put up with” and consider it part of the whole bargain of investing? Do you do anything to reduce / mitigate / avoid / defer the risk? I recently started investing in ETFs using IB and plan to use this as the main vehicle for growing wealth over the next 20+ years. Am I unwise to build such a dependency on IB?


  3. #13

    This is why I either use large banks (HSBC etc) and only use smaller brokers in places like Australia and New Zealand where the shares I purchase are in my own name and are not held by the broker. It costs a little more in transaction fees but the security more than offsets those costs (note: I am not an active trader so YMMV).


  4. #14

    Join Date
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    I guess I have taken the solvency of the brokers for granted. Is this really a real risk? I have a fair amount of my equity portfolio in IB, well above any sort of guaranteed amounts. Is there a % of equities held in a single institution that would be too much?

    I'd say a third of my net worth might be in equities held by IB, a third in HSBC a 5th citi, and the rest here and there.

    wharrison6 and Gevening like this.

  5. #15

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    We have basically spread out shares with a range of brokers and banks.


  6. #16

    Join Date
    Jul 2015
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    I also use HSBC for this very reason. My investment strategy is holding mid-long term. Although the fee is high (relatively), i sleep better at night. Securities broker only go busted when the economy is bad (and credit is tightened). It can cause us a lot of stress.

    traineeinvestor likes this.

  7. #17

    Join Date
    May 2009
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    I agree that the online brokers have a higher risk compared to the big banks but for most of us living in HK we don’t have much choice.
    If you want to invest in any market outside of HK, China and US (US has estate tax above a relatively low threshold) your only option is an online broker.
    Unless you can use a big bank in your home country but even this could mean you taking some other risks (e.g. currency)


  8. #18

    Join Date
    Oct 2011
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    What US stocks would you recommend for mid-long term?


  9. #19

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    Original Post Deleted
    I kind of agree with @Sith on this, but to say the options are very very limited.

    I have found only one option realistically to be used for foreign shares via a bank.

  10. #20

    Join Date
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    Hsbc and BoC for buying US stocks commission is usd18 for first 1000 shares.


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