Client Protection - Strength and Security
STRENGTH AND SECURITY
Client Protection
Client Protection at Interactive Brokers Central Europe
Interactive Brokers Central Europe ("IBCE") takes a proactive approach to customer protection. IBCE determines the amount of cash and securities owed to customers daily and segregates funds for the exclusive benefit of customers in bank accounts correctly identified as client segregated accounts.
IBCE performs a reconciliation of customer money at least daily to ensure that customer monies are properly segregated from the IBCE’s own funds. Customer-owned, fully-paid securities are protected in accounts at depositories and custodians that are specifically identified for the exclusive benefit of customers. IBCE reconciles positions in securities owned by customers daily to ensure that these securities have been received at the depositories and custodians.
IBCE applies real-time risk margin requirements to customer accounts. If a customer is deemed to have insufficient assets to cover the risk of their open positions, IBCE typically will perform real-time liquidations of their positions to return the account to margin compliance.
IBCE's real-time risk margin requirement and protective liquidations minimise customers’ exposure to losses attributable to other customers’ trading, and the risk that customer losses pose to IBCE.
Another major benefit of doing business with IBCE is that it does not carry any proprietary inventory. IBCE solely acts as a facilitator for customer trading and does not make any directional bets. Two of the most significant bankruptcies of the past decade (Lehman Brothers and MF Global) were caused by the risk generated from proprietary holdings.
Since IBCE does not make proprietary bets, the risk of IBCE going bankrupt and customer funds being tied up in a liquidation is significantly reduced.
Finally, IBCE is not affiliated with a bank. This provides IBCE with a more stable platform for its customers should a market-wide crisis arise.
Since IBCE is not a bank, it is likely that customers' assets would be returned in a more timely fashion than for bank-owned entities..
Account Protection
Certain clients of Interactive Brokers Central Europe Zrt. are protected by the Hungarian Investor Protection Fund (“IPF”).
The IPF coverage may not be granted to certain legal entities (e.g. institutional investors, local governments, business organisations permanently and fully owned by the state); and private individuals, particularly proprietors of an IPF insured investment service provider, as well as their immediate relatives. All investors (legal entities, companies without legal entity and natural persons), other than the persons excluded under law, are eligible for compensation.
Compensation under the IPF is limited to a maximum of €100,000 to each investor where the IPF will pay 100% of the value up to HUF 1 million and then 90% of the claim over HUF 1 million. The coverage provides protection against the failure of the investment firm, not against loss of market value of financial products.
The IPF operates pursuant to and in compliance with the provisions of Act CXX of 2001 on the Capital Market, effective as of 1 January 2020, governing the Investor Protection Fund, subject to the amendments provided for in Act CXVIII of 2019. For more information about the IPF and answers to frequently asked questions (such as how IPF works, what is protected, how to file a claim, etc.), please refer to the following website:
Hungarian Investor Protection Fund
Or contact the IPF at:
The Investor Protection Fund
1476 Budapest, Pf.: 495
Hungary
Email: beva@bva.hu
Phone: +(36-1) 216-7130, 216-7131
Interactive Brokers Central Europe Zrt. custodies certain of your securities positions with its US affiliate, Interactive Brokers LLC ("IBLLC"), which is licensed by the US Securities & Exchange Commission and a member of the US Securities Investor Protection Corporation ("SIPC'). To the extent that your securities (or cash balances, to the extent they are acting as margin in support of a short stock or option position carried by IBLLC) are custodied at IBLLC, they are protected by SIPC for a maximum coverage of $500,000 (with a cash sublimit of $250,000) and under Interactive Brokers LLC's excess SIPC policy with certain underwriters at Lloyd's of London for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. This coverage provides protection against failure of a broker-dealer, not against loss of market value of securities. In the unlikely event it should ever become necessary to assert a claim in a SIPC insolvency proceeding as a result of a failure of IBLLC, Interactive Brokers Central Europe Zrt. will make the claim on your behalf.
Interactive Brokers Business Continuity Plan
In accordance with applicable regulations, Interactive Brokers ("IBKR") has developed a Business Continuity Plan ("BCP") to assist the firm in promptly addressing and responding to the possibility of a future Significant Business Disruption ("SBD"). This plan is designed to mitigate or eliminate the impacts of SBDs of varying scope.
IBKR's BCP was developed using a risk-based approach to identify critical systems and functions and determine the means by which clients will be provided prompt access to their funds and accounts in the event of an SBD. Additionally, the plan describes resiliency and redundancy controls implemented within the systems infrastructure to minimize the potential adverse effects of a disruption.
IBKR's BCP is designed to restore client access to the systems which service funds and positions within 24 hours of a disruption, although recovery time can vary depending on the nature of the disruption, the specific services that have been disrupted or factors outside of IBKR's control.
To review key elements of IBKR’s BCP, please read our BCP Disclosure.