Account value >85K

Hi all,
Just wondering what anyone does when they reached the FSCS-protected 85K mark in terms of investment value?

  1. Do you start using other brokers to mitigate the risk, or
  2. Do you continue investing with T212 even though your money over 85K may be at risk?

Many thanks,

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If i am not mistaken, this insurance only covers cash balance.
Shares are normally fully segregated from the brokers’ accounts, and while a bit cumbersome to retrieve in case of bankrupty, they are not at risks.

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@Zergui My understanding is that FSCS covers both the free fund and your investment value up to 85K, per person per account. Investment compensation & protection | Check you're protected | FSCS But I’m happy to be corrected. :slight_smile:

Others around here are more knowledgeable about the current situation with T212.

My understanding is that shares, as per regulation to all brokerage, are segregated and not at risk of recapitalization in case of bankrupty.

The insurance from the FSCS would then be null on the shares, but then possibly free funds would not receive any extra coverage in case you own more than 85k of assets.

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I know we’d all like to be in the position of having say a million pound portfolio, but as an example, if your limit was 85k per broker you’d need to use 11 different brokers. At what point do you draw the line?

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I think you’re right, the only thing I’m not sure about is the lent out shares, they should be the property of whoever they’re lent.

If I have a $385k portfolio of which 360k is in stocks (not lent out) and 25k in cash, if t212 goes bankrupt I will lose nothing.

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The loaned out shares don’t matter in case of T212’s bankruptcy; the IOU is still yours to claim.

The risks of the loaned out shares come from the borrower failing to deliver back the shares, in case he gets bankrupt while having borrowed positions standing, or failing to buy enough shares back from the market.

But from T212’s failure, the IOU carries forward. Lent out shares are never explicitly in your name, as they are fully fungible.

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I would consider the wider regulation that requires client funds to be segregated. If 212 were to go bust, your assets should be transferred to another broker whom would assume responsibility. If we were to suggest otherwise here or elsewhere, then the regulator and Depositary are not doing their job.

I think initially, all the customers account are frozen. But then it is one of the first order from the bankruptcy court to insure the transfer to a liquid broker for users to reclaim their ownership.

That being said, given the omnibus status of T212, this might get delayed, as the bankruptcy court will have to go thoroughly throughout the records of T212 to award ownership to each individual users.

While it seems like a hassle, i suppose it’s the best way to protect funds.

Alternatively reinvest any dividends at the earliest possible opportunity so cash isn’t lying around inside the brokerage account for too long, once over 85k

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This is just not scalable tho.
100+ brokers by 10M? Sure, you could argue you don’t aim for that much in the first place. But if we’re talking about protecting your wealth past 1M, surely it shouldn’t crumble to pieces at 10M.

Once again though, shares aren’t up for sale in a bankruptcy court; and for cash, nowhere is safe past 85k/whatever is the bank protection where you are from. But it’s generally never a good idea to keep that much in cash; past 100k, anything else “cash” should be held in short term treasuries at the very least.

So just to confirm the 85k protection is for cash and not securities as these are held in the nominee companies. Generally speaking of course

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That’s correct. If you have a £1m portfolio of which £900,000.00 in securities and £100,000.00 in cash, if t212 goes bankrupt max you can lose is £15,000.00.

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As a side note, recovering ownership of the securities might not be a straightforward process; but you will get them back.

As a side note, with last report T212 had no outstanding debt, and made £45M profit for 2021.

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How can one download their stock holdings records from T212 web/app? Am having to manage my record keeping on a spreadsheet separately which can be cumbersome sometime.

Hi all, @Zergui @Darko @RumNCoke @MaxZorin @Dougal1984
I’ve put this question to T212 live chat and they confirmed that FSCS £85,000 covers all assets in one’s account, including cash and securities (shares) - any amount more than £85,000 is NOT covered whether it’s cash or shares, in case T212 fails. However, they stress that they are stable at the moment, and cannot predict what would happen in the future, and the onus is on customers to evaluate the risk.

I like T212 and enjoy using it very much, but putting all the eggs in one basket is too big a risk I think; hope it helps…

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Thanks and yes - that is correct.

I go back to my original answer. In order to provide brokerage services, a broker must appropriately segregate client assets from their own and maintain appropriate records. I have confidence in the regulator doing their job and ensuring any companies they authorise to provide financial services comply. As such should any of my brokers go bust, I would expect my assets to be transferred over to another broker.

That said there is only one guarantee in life, and it is up to you how you manage your risk.

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This is correct.

However, there is precedent to this where the FCA distributed the client assets from the nominee account to other brokers and 95% of customers had all of their assets reallocated.

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Shares are segregated but Dosent protect you if the company was fraudulent or made a mistake. My understanding is the Insurnace will give you the cash equivalent of the share value if the company lost your shares due to fraud or some other mistake. above 85k it would be lost.

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Good point indeed! If compliant to regulations, in case of bankrupty our shares would be entirely safe.

But in the case of fraudulent activity, then yes, the 85k would be in place.