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Brokerage investment savings accounts
April 10, 2024
3:24 pm
zgic
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AltaRed said
CIPF will pay out up to $1M in insurance for those assets that have been consumed by the bankruptcy. I don't know how CIPF values the assets for the $1M but I assume it would be at the market value on the date the brokerage is placed into insolvency. I have never dug into the details.

So in the case of an account valued at $970k at date of insolvency, and the account consists of 1000 units of ISA X and 300 shares of company A, and 500 shares of company B, CIPF would thus ensure you get 1000 units of ISA X, 300 shares of company A and 500 shares of company B back when they pay out. Note that it is the quantity of shares, not the value of the shares that is protected. Company A's shares may have fallen 50% in value or increased 50% in value between insolvency and when you get the shares back.  

So if I have $1M at Questrade and all of that are in ISAs at CIBC, the whole $1M is covered under CIPF correct?
So I need not worry about CIBC CDIC coverage correct?

April 10, 2024
4:14 pm
AltaRed
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As I see it, they are different things. CIPF will insure 100,000 units of CIBC ISA that you hold in Questrade. That is all they insure, not the value of each unit so I don't know how that would actually play out.

April 10, 2024
4:23 pm
zgic
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I was just now chatting with Questrade and they confirmed that the whole $1M will be covered. Plus they have lot of private insurance upto $20M.
Since the ISA is actually a Mutual Fund it will be covered under CIPF.

April 10, 2024
7:30 pm
zgic
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AltaRed said
As I see it, they are different things. CIPF will insure 100,000 units of CIBC ISA that you hold in Questrade. That is all they insure, not the value of each unit so I don't know how that would actually play out.  

CIPF does not cover 100,000 units, it is CDIC. But we are not talking about CIBC failure.
We are talking about Questrade failure. So CDIC is not in the picture correct? CIPF is with $1M

April 10, 2024
9:31 pm
Norman1
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CIPF covers what Questrade would owe you in this case: The certificates or paperwork confirming your beneficial ownership of 100,000 units of the CIBC ISA.

CIPF will cover the cost of replacing the certificates/paperwork on up to $1 million worth of missing holdings per account category.

CIPF won't cover the $1 million original investment for those 100,000 ISA units after the buy order settles. That's because Questrade no longer owes you $1 million after that point.

April 10, 2024
10:06 pm
mordko
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Frieda said

Have you ever read The Great Taking, by David Rogers Webb?

I haven't finished myself, but did make efforts to understand how Canada implemented Article 8. Will put it on my book reader, and finish it.

fwiw, I do recommend the book. I've even likely posted it here already.  

I have not read it. Interesting critique: https://www.armstrongeconomics.com/world-news/conspiracy/the-great-taking-or-the-great-misconception/

April 11, 2024
12:21 am
zgic
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Norman1 said
CIPF covers what Questrade would owe you in this case: The certificates or paperwork confirming your beneficial ownership of 100,000 units of the CIBC ISA.

CIPF will cover the cost of replacing the certificates/paperwork on up to $1 million worth of missing holdings per account category.

CIPF won't cover the $1 million original investment for those 100,000 ISA units after the buy order settles. That's because Questrade no longer owes you $1 million after that point.  

Thank you Norman1.
Please clarify this to me. For the CIBC ISA it is $1 = 1 unit
So if I have 1,000,000 units (= $1Million) of CIBC ISA with Questrade and Questrade fails, will CIPF cover the $1Million for me?

April 11, 2024
4:45 am
savemoresaveoften
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zgic said

Thank you Norman1.
Please clarify this to me. For the CIBC ISA it is $1 = 1 unit
So if I have 1,000,000 units (= $1Million) of CIBC ISA with Questrade and Questrade fails, will CIPF cover the $1Million for me?  

CIPF will cover 1mm unit for u, not $1mm. if the ISA stays at $1 a unit, then u essentially get 1mm units back which equals $1mm

April 11, 2024
5:43 am
Norman1
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As savemoresaveoften describes, CIPF won't cover the $1 million of original cash because that's not what Questrade owes you. CIPF will try to provide the certificates/documents needed access up to the 1 million units of the CIBC ISA that Questrade owes you.

If it is not possible to replace the missing units, for some reason, CIPF will pay in cash the current market value (not original cost) of the units one would be short.

April 11, 2024
5:47 am
zgic
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savemoresaveoften said

CIPF will cover 1mm unit for u, not $1mm. if the ISA stays at $1 a unit, then u essentially get 1mm units back which equals $1mm  

Thank you savemoresaveoften.
This product is ATL5075 from Renaissance CIBC. How can I confirm that the unit price will remain $1 a unit. The product title is
Renaissance USD High Interest Savings Account and it says Investments made in the Renaissance High Interest Savings
Account or the Renaissance USD High Interest Savings Account
(the “Product”) are deposited into a bank account at Canadian
Imperial Bank of Commerce (the “Bank”). No other information is available.

April 11, 2024
7:54 am
Norman1
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Renaissance USD High Interest Savings Account (ATL5075) is a US$ savings account issued by CIBC.

1 million "units" of ATL5075 is equivalent to a CIBC savings account with a US$1 million balance. First C$100,000 of the balance is covered by CDIC. Rest of the balance is uninsured and currently has the risk of a AA-rated bond.

April 11, 2024
8:50 am
mordko
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zgic said

Thanks AltaRed. Very Helpful.
So in case the brokerage becomes insolvent what happens to the ISAs with CIBC? Assume the assets are under $1M at the brokerage.
This is Questrade's statement on their website for Investor Protection(besides being a CIPF member):
"We go above and beyond to protect your account with an additional $10 million in private insurance."  

Keep in mind that IF a brokerage goes bankrupt (very rare since the age of computer records), most of your assets are going to be just fine. Its only the shortfall, if any, that would need to be covered. Things like consultant fees for dealing with the bankruptcy.

April 11, 2024
12:01 pm
canuckles
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pablito said
I have an account with Questrade and want to split amongst 4 ISAs to remain fully CDIC insured. NBC200 (National Bank) and NBC8200 (Natcan Trust) are each individually insured to 100K$, right? The CDIC members list search doesn't explicitly call this out like they do for other similar arrangements. Yes, I'm being paranoid. sf-embarassed  

How were you able to buy ISA's on Questrade? I've searched in the past and couldn't find them. They're not under stocks or mutual funds.

April 11, 2024
12:03 pm
canuckles
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hwyc said
Hm. Looks like the Renaissance fund code changed recently. It was ATL5000 in #530 dated Jan 11, 2024. Then it is ATL5070 in #553 dated Feb 17, 2024 & thereafter.

Now this ... I see a promotional rate of 0.45% on eligible new deposit, effective February 12, 2024, on their product page. Wonder anyone benefited already? Too bad TDDI only offer TD HISA sf-frown  

Thanks for the tip! I've switched my ISA's on CIBC IE to Renaissance. 🙂

April 11, 2024
1:23 pm
pablito
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canuckles said

How were you able to buy ISA's on Questrade? I've searched in the past and couldn't find them. They're not under stocks or mutual funds.  

From the main hamburger menu, I choose "Questrade Edge Web", then "Mutual Funds" from the menu along the top and finally the green "Buy/Sell" button. In the window that comes up, enter the code (no spaces) in the Fund Code box. If it is available, the name appears in the fund name area (after a second or so) otherwise it doesn't. If that doesn't work, I'd call them. I didn't bother much looking through the fund company listings.

April 11, 2024
8:21 pm
Frieda
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mordko said

I have not read it. Interesting critique: https://www.armstrongeconomics.com/world-news/conspiracy/the-great-taking-or-the-great-misconception/  

Hi Mordko,
Thanks. I'll watch for any inconsistencies in Webb's discussion of the creation of the Fed, etc as laid out in the critique. The 'government", isn't the creditor of our brokerages. I'm not sure how the critic gets to that conclusion. From the video I guess..

The concern is more that the direct debt owed, and perhaps counter party risk of the intermediaries can be used to claim the assets of the brokerage, or our shares, through the intermediary holder. My terminology is probably off by a mile....
Webbs primary claim is, "The US and Canada based their law on the concept that investors do not own ’securities’, but they own ’securities entitlements’ against their account providers instead."
fwiw, A few other legal sources I have viewed.
- "Father knows best: Revised article 8 and the individual investor" - Florida case law
- "The rise and effects of the indirect holding system: How corporate America ceded its shareholders to intermediaries" - history
- "The Influence of UCC Article 8 on Canadian Securities Transfer Law: Is There Room For A Canadian Dialect in Global Commercial Language?" - history

Cheers.

April 12, 2024
10:14 am
smayer97
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AltaRed said
CDIC limits are easily dealt with by spreading ISAs around but I wouldn't think twice about having 7 figures in ISAs with one of the big 5 banks like CIBC, RY, etc. It is a red herring.

Brokerages have $1M of CIPF protection against brokerage bankruptcy, fraud and other such risks that could result in loss of client assets. Again, I would not worry about $1M CIPF limits with any of the big bank brokerages. They have far too much to lose reputationally to let their brokerage divisions go rogue/bankrupt, etc..... BUT I would never have more than $1M in an independent like Questrade that does not have reputational pressures. The principals of such private ventures just move on to their next adventure.  

mordko said
That's fear-mongering. Questrade was established in 99 and is a solid business. Suggesting that it's an “adventure” is a really, really poor choice of words without any basis.

Brokerages rarely fail, when they do someone else would likely buy the company for its assets and the insurance is there largely to deal with the cost of bankruptcy which is likely to be small.

Armageddons can of course happen, but it's an unlikely scenario to put it mildly.  

Anyone remember Lehman Brothers, or Royal Bank of Scotland near failure with over US$3T in assets under management, just as a few examples? This was only back in 2007/08. Let's not forget history. In comparison, RBC and TD only have about US$1.4T in assets.

To each their own but don't rest on your laurels.

April 12, 2024
11:14 am
savemoresaveoften
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smayer97 said

mordko said
That's fear-mongering. Questrade was established in 99 and is a solid business. Suggesting that it's an “adventure” is a really, really poor choice of words without any basis.

Brokerages rarely fail, when they do someone else would likely buy the company for its assets and the insurance is there largely to deal with the cost of bankruptcy which is likely to be small.

Armageddons can of course happen, but it's an unlikely scenario to put it mildly.  

Anyone remember Lehman Brothers, or Royal Bank of Scotland near failure with over US$3T in assets under management, just as a few examples? This was only back in 2007/08. Let's not forget history. In comparison, RBC and TD only have about US$1.4T in assets.

To each their own but don't rest on your laurels.  

Yup, during that time, CIBC was under severe stress as well given its exposure to subprime. Even TD was offering bonds yielding close to 9-10%, if you were ball enough to buy their stocks and debt, you are laughing to the bank 🙂
But assets under management does not mean much, its always liquidity and financial counterparties unwilling to deal with the name any more that brings a bank down quickly.

April 12, 2024
1:21 pm
zgic
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But we have to keep our Cash somewhere either a Bank or CU or a Brokerage I guess. Within CIPF or CDIC limits or just the Big 5 Banks.
Do you have any idea where the Ultra rich keep their CASH. I don't think they have any other options either but get more private insurance.
I am excluding Real Estate etc. here and only talking about CASH.
Please share options you use besides the above to avoid what you stated below.

"Anyone remember Lehman Brothers, or Royal Bank of Scotland near failure with over US$3T in assets under management, just as a few examples? This was only back in 2007/08. Let's not forget history. In comparison, RBC and TD only have about US$1.4T in assets."

April 12, 2024
2:14 pm
smayer97
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Depending on how many $millions, multi-brokers might fit the bill, at $1M each.

Beyond that, it would have to be hard assets, me thinks.

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