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CDIC insurance on broker acct
June 6, 2024
4:08 pm
NCC1701Z
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For a single acct type. ie: a RRIF

I can't seem to get an answer for this issue.

For a single acct type. ie: a RRIF CIBC investors edge

If I purchase 3 3rd party GIC's at 100k each from 3 different banks in my broker acct am I insured for 100k total or 100k per bank?

CDIC tells me if the GIC is held in my name by the broker then it is 100k per bank. If the GIC's are help in trust then it is 100k total for all 3.

My broker is telling me it is 100k total for all GICs but when I ask them how the GIC's are held (my name or in trust) they tell me to call CDIC.

June 6, 2024
5:21 pm
Bill
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Your broker (who is it? Investors Edge?) is telling you it's $100K total, so doesn't that suggest they're held in trust?

I'd call the broker and get someone who knows stuff about GICs and ask why they said it's $100k total when CDIC says there's $100k coverage per institution and see what their answer is.

June 6, 2024
9:15 pm
NorthernRaven
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From my understanding, chatter here and elsewhere, and the CDIC docs, when in trust/nominee name, it still should be separate pots of coverage for each of those GIC institutions InvestorsEdge has obtained your GICs from, so $300K. But it may take some work to find someone on phone support who knows their stuff and can confirm this.

InvestorsEdge are the ones who are submitting the info to CDIC, so they know exactly how the GICs are set up, although they may not be designed to know that easily at the support level? I would have thought that GICs bought through a stock broker like IE would all be in nominee name, unlike a GIC broker where I wrote my cheque to the issuing institution, and the GIC broker is just acting as my agent, not a trust nominee.

June 7, 2024
8:14 am
Norman1
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NCC1701Z said

CDIC tells me if the GIC is held in my name by the broker then it is 100k per bank. If the GIC's are help in trust then it is 100k total for all 3.

My broker is telling me it is 100k total for all GICs but when I ask them how the GIC's are held (my name or in trust) they tell me to call CDIC.

$100,000 CDIC limit for GIC's issued by one CDIC member is never reduced by GIC's issued by a different CDIC member. It doesn't matter how the GIC's are held.

Investment dealers don't issue the bank GIC's they sell. If one buys a Bank of Montreal GIC through investment dealer CIBC Investor's Edge, then Bank of Montreal is the issuing CDIC member of the GIC, not CIBC Investor's Edge and not CDIC member CIBC.

June 7, 2024
11:36 am
NCC1701Z
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Here's the reply from CDIC:

"GICs purchased through brokers or investment advisors can be held at an issuing CDIC MI, in two ways:
· In your name (i.e., in client name);
· In your broker’s name as your nominee (i.e., in nominee name as deposits, “held in trust,” for you).
Placed in your name: Eligible deposits, including GICs, placed by a broker in your name are combined with other deposits held in your name at that MI (including those you may have purchased directly with that MI) that are in the same insurance category, and protected up to $100,000 at each MI.
Placed in your broker’s name as your nominee: Eligible deposits, including GICs, held by your broker as a nominee for you are treated by CDIC as a deposit “held in trust.” Deposits “held in trust” are protected separately up to $100,000 per beneficiary (that is, the brokerage account depositor), provided certain disclosure rules are met by the broker.
For example: John buys:
· $100,000 GIC from Bank A,
· $100,000 GIC from Bank B, and
· $100,000 GIC from Bank C, Deposited at Bank D, all 3 GICs would be insured separately, up to a maximum of $300,000, in the Trust Category, with each respective GIC issuer.
If a CDIC MI fails, GICs issued are combined with any other eligible deposits (e.g., cash, other term deposits, etc.), in the same deposit insurance category, and are reimbursed up to a limit of $100,000, including interest.
If you bought the GIC through a broker:
· CDIC will reimburse you directly if GICs are held in your name;
· CDIC will reimburse your broker if GICs are held in your broker’s name.
For more information on CDIC and deposit insurance, you may wish to visit CDIC’s web site at http://www.cdic.ca or call CDIC’s toll-free information line at 1-800-461-2342."

June 7, 2024
12:18 pm
Bill
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"Placed in your broker’s name as your nominee: Eligible deposits, including GICs, held by your broker as a nominee for you are treated by CDIC as a deposit “held in trust.” Deposits “held in trust” are protected separately up to $100,000 per beneficiary (that is, the brokerage account depositor), provided certain disclosure rules are met by the broker."

What does that mean? Sounds like total limit of $100K per brokerage account (per "beneficiary", per "brokerage account depositor"), no?

In any event CDIC can't help you with how your brokerage account GICs are being held, only brokerage can clarify that for you.

June 7, 2024
3:44 pm
NCC1701Z
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Bill said

In any event CDIC can't help you with how your brokerage account GICs are being held, only brokerage can clarify that for you.  

Round and round we go....
As I stated in my OP, my broker says I need to ask CDIC. I asked them to escalate and reply in writing but still was told to ask CDIC.

June 7, 2024
8:46 pm
Bill
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Obviously broker info is incorrect as CDIC has two separate coverages depending on whether gics are placed in your name or in broker's name as your nominee.

I wouldn't even mention CDIC, just ask broker if gics purchased are held in your name or in broker's name as your nominee. The answer to that will answer your CDIC coverage question.

If unsatisfactory response then if it's a deal breaker I'd just move my business somewhere where I can first get a clear answer on that.

June 7, 2024
9:27 pm
Norman1
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Bill said
"Placed in your broker’s name as your nominee: Eligible deposits, including GICs, held by your broker as a nominee for you are treated by CDIC as a deposit “held in trust.” Deposits “held in trust” are protected separately up to $100,000 per beneficiary (that is, the brokerage account depositor), provided certain disclosure rules are met by the broker."

What does that mean? Sounds like total limit of $100K per brokerage account (per "beneficiary", per "brokerage account depositor"), no?

No.

Each "deposit" at a member institution under the CDIC Act is insured up to $100,000.

A "deposit" in trust at a member institution is separate from any non-trust "deposit" of the trustee in trustee's own name at the same member institution.

A "deposit" in trust at a member institution for a beneficiary is separate from any "deposit" the beneficiary has in beneficiary's own name at the same member institution.

A "deposit" at a member institution is separate from any "deposit" at a different member institution.

June 7, 2024
9:34 pm
Norman1
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Bill said

…, just ask broker if gics purchased are held in your name or in broker's name as your nominee. The answer to that will answer your CDIC coverage question.

For a CIBC Investor's Edge RRIF, one can find the answer in the declaration of trust for the RRIF. See page 17 of the RRSP or RRIF Account Application.

The CIBC Investor's Edge self-directed RRIF is set up as a RIF trust. Trustee is CIBC Trust Corporation. Like any other trust, all of the RIF trust's assets are held in the trustee's name.

June 8, 2024
12:11 am
NCC1701Z
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Norman1 said

Bill said

…, just ask broker if gics purchased are held in your name or in broker's name as your nominee. The answer to that will answer your CDIC coverage question.

For a CIBC Investor's Edge RRIF, one can find the answer in the declaration of trust for the RRIF. See page 17 of the RRSP or RRIF Account Application.

The CIBC Investor's Edge self-directed RRIF is set up as a RIF trust. Trustee is CIBC Trust Corporation. Like any other trust, all of the RIF trust's assets are held in the trustee's name.  

So, to clarify an example...

If I purchase 3 100k 3rd party GIC's from 3 different banks I will only be covered for 100k since the 3 100k (total 300k) GIC's are held by the trustee CIBC investors edge.

June 8, 2024
6:45 am
Bill
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No, if I understand Norman1's analyis. As he said it doesn't matter how they're held, either way each gic at a different institution has its own $100k limit, is my read of what he's saying.

Perhaps the only difference is in who CDIC makes the cheque out to in the event of a failure, i.e. to depositer in one case, to broker in the other - ? Maybe that's the point of CDIC's distinction. Not very amateur-friendly info on their site.

June 8, 2024
9:08 am
Norman1
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Yes, that's all it would be: Whom CDIC would issue the cheque to in the event of a failure.

The example in CDIC's response actually says there's $300,000 of CDIC coverage for the three GIC's from three different banks held in trust by a fourth bank:

Placed in your broker’s name as your nominee: Eligible deposits, including GICs, held by your broker as a nominee for you are treated by CDIC as a deposit “held in trust.” Deposits “held in trust” are protected separately up to $100,000 per beneficiary (that is, the brokerage account depositor) [per member institution], provided certain [beneficiary] disclosure rules are met by the broker.

For example: John buys:
· $100,000 GIC from Bank A,
· $100,000 GIC from Bank B, and
· $100,000 GIC from Bank C.

Deposited [in trust] at [a broker associated with] Bank D, all 3 GICs would be insured separately, up to a maximum of $300,000, in the Trust Category, with each respective GIC issuer.

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