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I taught that I was being smart and sim trading so I would not go bust when I went live. I had set aside my start up capital in a PFG account. So much for that plan.
Guys, this just confirms my suspicion of the futures industry being the wild wild west.
Bear in mind MF Global collapsed on the 31st October 2011. The question is what have the regulators been doing since then? They have done nothing to improve basic auditing processes to check client funds are appropriately segregated. They should have moved immediately to address this area. It is not difficult to organize controls with the banks. There are not many brokers to monitor. The regulators have been negligent and should reimburse all losses. Of course they won't. The other issue is most regulators are old time industry insiders and appear more interested in protecting the firms as opposed to client funds.
SIPC
As someone pointed out this only covers equities accounts up to $500k and $250k in cash and not futures or commodities. The problem is the total SIPC fund is only $1 billion so it doesn't take much to wipe it out. If you trade equities and futures then IB or TD Ameritrade are good choices although TD fills suck. Both have additional insurance which insures the cash to $900k, up from $250k SIPC. I have most of my funds at these two entities for this reason. 80% of my trading is equities swing trading. Both can be traded through a ninjatrader multi-broker license.
The caveat is if you only trade futures and they go under you will probably be out of luck as the cash would be deemed futures related cash and not covered by the SIPC. The other issue with IB is it appears they may also be commingling cash.
The cycling of cash to different brokers does not help as you could be playing Russian Roulette. You could be cycling at the wrong time just as the new one goes under.
I'm not sure how much this would help - aren't you increasing your risks in practice by spreading over a lot of brokerage firms? If you use this strategy, inadvertently you have to deposit money with smaller, privately held brokers (since there aren't that many brokers that work with each trading platform and cover the markets the trader is interested in).
This is a real issue, since, as you already said in another posts, it begs the question which broker is next? In other words, what if the NFA decides that verifying the data is a worthwhile undertaking and starts calling more broker's banks? Apparently, the American regulators didn't make it very hard for PFGBest and MF Global to defraud their customers - so which other brokers took advantage of the opportunity to be "creative"?
PFG and others are scrambling to earn money on accounts..In the past they used to earn it in the safe haven of interest on Treasuries and the like...What Ben Bernanke has done is push a lot of these companies into taking uncustomary risk in search for returns...See what you have done Ben?
How about placing another 100 phone calls for starters, and verify the bank balances match closely the most recent "audited" report. I mean, how is it possible that didn't need to actually prove the money was there?