Over the past two years, as banks and brokerages of all sizes spar with economic volatility, investors have become increasingly curious about what measures are in place to guard their funds against any unexpected tumult at their financial institutions. Thankfully, there are federal measures in place for both banking and brokerage firms.
The Securities Investor Protection Corporation (SIPC) insures investment accounts in the event that a brokerage closes due to bankruptcy or other financial difficulties and customer assets are missing. SIPC will replace said funds, up to $500,000 per customer (including up to $100,000 in cash) for eligible customer accounts. (Note: The cash amount of SIPC insurance increased to $250,000 from $100,000 in September 2010).
OptionHouse’s clearing firm, Penson Financial Services, Inc. (“PFSI” or “Penson”), offers additional account protection through something called “Excess SIPC Insurance.” While OptionsHouse is confident we will be around to serve your investing needs for many, many years, we also recognize that it is important that our customers are as confident and secure as they can be. Penson recently increased this level of “excess SIPC insurance” coverage. OptionsHouse customer accounts are now protected (up to their net equity) for loss of securities and cash held at PFSI up to an overall firm aggregate of $600,000,000 across all Penson customer accounts. This is subject to a maximum limit of $150,000,000 per customer (in securities value) and $1,900,000 (in cash value). (Note: The cash value of Excess SIPC Insurance increased to $2.15 million from $1.9 million in September 2010). This outside/supplemental insurance protection is in addition to SIPC, which is provided by the Securities and Investors Protection Act, which is administered by SIPC. For more information regarding SIPC, please visit their home page at sipc.org.
Note that SIPC only insures losses that are the result of a brokerage failure or unscrupulous actions. Losses that are the result of investor activity or market fluctuation are not covered under this insurance.
The market contains its fair share of surprises, both good and otherwise. It’s nice to know that, at the end of the day, your assets are protected against events wholly out of your control.
If you have any questions or concerns, please don’t hesitate to call Customer Service toll-free during regular business hours (Monday through Friday from 7:00 am to 6:00 pm CT, except exchange holidays) at 1-877-653-2500. You can also use our live help feature while you are logged into your account, which is at the bottom right-hand corner of the screen, or email us any time at customerservice@optionshouse.com and we will respond promptly during regular business hours.
Photo Credit: ellenm1
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Tags: Insurance, Online Trading Platform, OptionsHouse, Penson, Platform Changes, SIPC
