Canadian Discount Brokers

[no_free_lunch]

I currently use one of the larger Canadian discount online brokers for my trading.  I am just wondering if people think that there is a need to diversify across brokers?  Is it possible that due to some type of fraud whether at the company at large or by disenfranchised employee I could find I don't actually own what I think I own?  Are they audited or is there some type of government oversight that reduces this risk?  I know that any cash sitting around is covered by the government up to a limit but I am not sure about the securities.  I do so much work against the various stocks I invest in but put almost no thought into the company actually holding my investments.

[Cigarbutt]

Had similar custodian concerns and found answers here:

https://www.theglobeandmail.com/globe-investor/investment-ideas/what-protection-do-you-have-if-your-broker-goes-broke/article19783968/

 

and here:

http://www.cipf.ca/

 

Hope that helps.

[bizaro86]

Is your broker one of the big banks? While the industry funds mentioned would be sunk if one of the big banks brokers went under, I think it's a virtual certainty that the govt would consider all 5 too big too fail and would cover client losses in that unlikely event.

[RichardGibbons]

I use multiple brokers because:

 

1. 2008 proved that big, well-respected brokers can fail.

2. Investor protection (CIPF) is capped at $1M.

3. Even if investor protection were unlimited, I imagine the payout wouldn't be quick. It would be annoying and stressful waiting to get access to my money if I had it all at one broker that failed.

 

Richard

[no_free_lunch]

Thanks for the replies.

 

My brokerage is a IIROC member so it appears I do have some insurance against fraud.  Not a big 5 bank either (they charge too high fees).

 

I agree with Richard, in spite of the insurance it is probably best to diversify.

[rb]

IB has extra insurance on top of CIPF. Up to 3 million i think.