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ClarkKent

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30/08/23

21:10

Post #: 69647654
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Originally posted by Giovanni33: ↑

Thanks for your post, I really appreciate the info and it's quite difficult to find good info about this online. I had a look on reddit but there's some very obviously misinformed opinions on there. Elsewhere the info is often paywalled and wants you to sign up to an accountant or something similar.

My concern with the nominee situation was more related to a legal right of ownership. What I mean by this is I am unsure what the safest broker to use would be in the event of a catastrophic (worse than 2008) market collapse. I don't want to get wiped out because a broker goes bust and nothing to do with my positions at all.

Hypothetically if IBKR has (I'll just use random figures here) 120 billion of stock which is held on behalf of the various clients who are going long on their positions (think people who just want to hold for 20 years, never sell) how secure does this end up being in practice during market collapse?

Within IBKR I assume they are also servicing clients who play with derivatives, lending out stock to short and all other manner of things beyond my current area of expertise. How do they sequester the long positions to ensure that if something blew up horribly within this side of the business, there is zero chance of it affecting the long positions and having them being used to compensate creditors?

I assume that IBKR would obviously take every attempt to risk manage and prevent this from happening, but in the event of a complete financial collapse/black swan event it may be out of their control. They're only human after all.

Do any of these brokers have the long position shares essentially firewalled so in the event of the firm collapsing, the shares are returned to a broker of the client's choice? Is that even a thing outside of ASX?

Just trying to understand how the whole system works outside of Australia because the more I look into it the more questions I have, but no-one seems to be that worried about the hypothetical scenario I outlined above. Surely unless the assets are somehow legally firewalled off from the rest of the business it would be a concern, right?

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I looked into this a few years back.
There is a process to do what you want, it is similar to what we here in Australia would call Issuer Sponsored Holdings (I think the yanks call it Direct Registration).
From memory, it seemed like a very cumbersome process, not bad if you want to buy and hold, too slow if you want to sell in a hurry.
The best people to talk to would be Computershare.

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