dropping 10% today made me think.

I'm only using TD Ameritrade (Schwab) as a broker for the equities I own.

I assume I'm safe since they are only acting a broker and not a bank for me.

not hedge said:

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If Schwab and TD fold we have bigger issues than our investments

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I understand, but that wasnt my question.

Yes they are safe they are part of the big 4 brokerages along with Fidelity and E Trade. The government won't let them fail

txaggieacct85 said:

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dropping 10% today made me think.

I'm only using TD Ameritrade (Schwab) as a broker for the equities I own.

I assume I'm safe since they are only acting a broker and not a bank for me.

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My guess is that it would depend on how much you have on the sidelines as cash in their money market.

not hedge said:

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Yes they are safe they are part of the big 4 brokerages along with Fidelity and E Trade. The government won't let them fail

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So I'm protected up to $500,000 per "investor" I have mutiple accounts in TD including SEP IRA, IRA, regular account, wifes IRA. I assume by investor it means, the total for all accounts in my name

[ol]

A brokerage account. Uninvested cash from this type of account earns interest and is available for investing or managing expenses. Holding cash here is appropriate if you plan to spend the money within a few days or would like to quickly place a trade. Assets in your brokerage account are protected up to $500,000 per investor, including a maximum of $250,000 in cash, by Securities Investor Protection Corporation (SIPC), in the event a SIPC-member brokerage fails.

[/ol]

txaggieacct85 said:

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dropping 10% today made me think.

I'm only using TD Ameritrade (Schwab) as a broker for the equities I own.

I assume I'm safe since they are only acting a broker and not a bank for me.

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"In the vast majority of cases where a broker fails, there are no missing securities or cash and the SIPC's primary role is to oversee the transfer from failed firm to solvent firm. If there are missing securities or cash, the SIPC will help oversee the reconstitution of client accounts.

However, it's important to know what the SIPC covers and what it doesn't. If a broker fails and is liquidated, the SIPC protects each account for up to $500,000 including $250,000 cash. Securities covered include stocks, bonds, money market funds, mutual funds, exchange-traded funds (ETFs), options and most other SEC-registered securities."

not hedge said:

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Yes they are safe they are part of the big 4 brokerages along with Fidelity and E Trade. The government won't let them fail

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E*Trade is owned by Morgan Stanley.

txaggie_08 said:

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txaggieacct85 said:

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dropping 10% today made me think.

I'm only using TD Ameritrade (Schwab) as a broker for the equities I own.

I assume I'm safe since they are only acting a broker and not a bank for me.

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"In the vast majority of cases where a broker fails, there are no missing securities or cash and the SIPC's primary role is to oversee the transfer from failed firm to solvent firm. If there are missing securities or cash, the SIPC will help oversee the reconstitution of client accounts.

However, it's important to know what the SIPC covers and what it doesn't. If a broker fails and is liquidated, the SIPC protects each account for up to $500,000 including $250,000 cash. Securities covered include stocks, bonds, money market funds, mutual funds, exchange-traded funds (ETFs), options and most other SEC-registered securities."

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you answered my question and I googled and found that $500,000 limit. time to move some equities to another broker.

Was this recent? I didn't know that

Seems like stocks, ETFs, etc would be pretty safe, unless a brokerage is doing something really shady behind closed doors, right?

…Like if they didn't actually buy the equities based on your orders but instead did other things with your money in hopes that they can outperform your portfolio.

Short of something like that, I'm struggling to see how you could lose equities you own… might take awhile to get them sorted out, but your shares are your shares, right?

I have a sinking feeling someone's about to educate me about something I'd probably be better off being ignorant about.

Your Schwab brokerage account is part of their custodial assets which is roughly $5.7 trillion in assets. They're segregated by the bank by law, SIPC etc. comes in if they commingle assets.

I do think Schwab bank has issues with cash sorting, that is a risk, I think given the other side of the house, they will step in. With that said, I'm making sure my cash allocations are not high in my various brokerage accounts or MM.

There doesn't appear to be any fundamental reason why their stock price has dropped 20% in the last week. I bought some at 51 this morning.

I'm bullish on JPM

not hedge said:

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I'm bullish on JPM

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I've made over 25% on JPM stock since my buys last summer and fall

The fundamental reason is Schwab Bank (which is a very large bank) has the same cash sorting issues as SVB but has a better base to raise equity to solve for. The risk is not too left field.

Cyp0111 said:

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The fundamental reason is Schwab Bank (which is a very large bank) has the same cash sorting issues as SVB but has a better base to raise equity to solve for. The risk is not too left field.

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In the interest of achieving a better understanding, what is this "cash sorting issue" you bring up?

To me, on the surface, it appears that the issue with SVB and potentially others is a simple asset.liability matching/management issue. You obviously don't invest in long term bonds for short term liabilities like cash deposits, which can be withdrawn at any time, penalty-free. Yet SVB was going with long-maturity treasuries? Unless they hedged with derivatives that made the effective duration shorter, or had some other method to mitigate the mismatch, this is pretty gross negligence. It seems commercial paper, or something close to money market funds would have been a far better choice?

Let me know where I'm missing the boat on this, as I have not been involved in the financial services industry for quite a while.

Did the same but at $52.

not hedge said:

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Was this recent? I didn't know that

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It happened in 2020. Same year that Schwab bought TD Ameritrade.

https://www.morganstanley.com/press-releases/morgan-stanley-closes-acquisition-of-e-trade

Regarding all of the "how will the turmoil affect me?" questions today, if you don't already know the answer, then the answer is "it won't."

Schwab Bank has the same type of HTM bond book issue. Their deposit base is 80% covered by FDIC so less likely to run vs SVB where less than 10% we're covered by FDIC.

TriAg2010 said:

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Regarding all of the "how will the turmoil affect me?" questions today, if you don't already know the answer, then the answer is "it won't."

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If you own 100 shares of Stock XYZ and Schwab fails you still own 100 shares of XYZ. Multiply that by 100 issues and nothing changes your ownership.

OldArmyCT said:

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If you own 100 shares of Stock XYZ and Schwab fails you still own 100 shares of XYZ. Multiply that by 100 issues and nothing changes your ownership.

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where's the $ that you paid to Schwab for those equities?