Hi RIP readers,
This is a quick post about how Brexit is impacting Interactive Brokers account in Europe.
For those who don’t know what I’m talking about: Interactive Brokers (IB) is one of the most popular US discount broker, with very low fees, incredible instruments availability, 40 years of history, and they’re a public company traded on NASDAQ stock exchange.
I wrote few posts about IB during last 4 years, including a long IB 101 guide.
I also joined their affiliate program, and earned ~300 USD from referrals so far. Not a great affiliate program, because I earn money only if you sign up with my link and spend at least 300 USD in fees in one year, which is very unlikely. Perfect! I wouldn’t join unsustainable affiliate programs. Those who offer too much money to the their salesmen are usually selling a crappy overpriced product.
Most important of all, I use IB daily and I’m a very happy customer!
Yesterday I found this r/eupersonalfinance thread titled “Interactive Brokers: Brexit account migration = insurance drops from 500k USD to 20k EUR“.
It points to a F.A.Q. about Brexit on IB website.
Essentially, IB (UK) accounts will be moved to Europe. Either Luxemburg, Ireland or “Central Europe” (which seems to be based in Hungary).
Swiss investors have been served by IBUK so far.
The only thing that matters is this:
Essentially, we’re going to lose SIPC protection up to 500k USD (with 250k USD cash sublimit).
This is a serious issue, and I don’t know how to react at the moment.
Except: Fuck Brexit!
At the moment, I hadn’t received any official communication from IB.
What I see on their website is that one can deny the consent to the transfer, but then your account is frozen: you can’t buy, sell, deposit, withdraw… You can only transfer your assets to another broker or… give your consent to the transfer of your account to one of the European IB brokers (Lux, IE, or CE). Holding on the higher protection in the meantime.
Not a long term strategy.
There’s a thread in the MustachianPost Forum to discuss whether Swiss investors will be affected or not. I called the IB customer support and their representative told me that Swiss accounts will be moved to EU anyway. This is not good.
I don’t have a strategy at the moment.
First, I should assess the impact of a lower protection on my assets (just 20k EUR thanks to European regulations). Let’s not forget that in case of a broker going belly up “gracefully”, your assets are indeed preserved. The “protection” I care about is to cover for the case where a broker goes offline “Madoff style”, i.e. maliciously. Which is very unlikely for a brokerage firm which has been in the market for many decades, and heavily regulated.
I’ll do my research on the topic “what happens if your broker goes broke?” and I’ll write a post about it in the near future. Stay tuned 😉
Have a nice (protected) day!
And fuck Brexit and Brexiters