How We Handle Customer Assets
Customer money is segregated in special bank or custody accounts, which are designated for the exclusive benefit of customers of IB. This protection (the SEC term is "reserve" and the CFTC term is "segregation") is a core principle of securities and commodities brokerage. By properly segregating the customer's assets, if no money or stock is borrowed and no futures positions are held by the customer, then the customer's assets are available to be returned to the customer in the event of a default by or bankruptcy of the broker.
A portion of customer funds are typically invested in U.S. Treasury securities. Although permitted by CFTC regulations, given the credit concerns over foreign sovereign debt IB does not currently invest any customer money in money market funds.
As a practice, IB holds an excess amount of its own money in these reserve and segregated accounts to ensure that there is more than enough cash to protect all customers.
Securities accounts with no borrowing of cash or securities
Securities customer money is protected as follows: