The Securities Investor Protection Corporation (SIPC) is a federally-mandated, nonprofit corporation that insures investors against asset loss. Standard SIPC insurance covers accounts up to $500,000, including up to $250,000 in cash claims.
SIPC insurance protects investors in two main situations:
The SIPC was originally created to return customer property when clearing firms become insolvent or declare bankruptcy. (Introducing firms make trades for investors; clearing firms hold the actual cash and securities.) In the event a firm can’t return customer assets, the SIPC makes investors whole again.
SIPC insurance provides limited coverage against unauthorized trading in investors’ accounts. Exact protections may depend on the specific situation.
Most SEC-registered broker-dealers are SIPC members, and those who aren’t must disclose this fact.
If you invest with a member SIPC, then your eligible accounts and assets are already covered. SIPC insurance also protects customers for 180 days after their brokerage loses its SEC registration.
Importantly, SIPC coverage does not mandate U.S. citizenship or residency; all customers of SIPC member firms qualify for the same benefits.
Standard SIPC insurance covers up to $500,000 per customer, per separate capacity, per brokerage. This limit includes up to $250,000 in coverage for cash deposits in brokerage accounts. However, the maximum claim amount is $500,000.
“Separate capacities” describe different kinds of investment accounts, similar to ownership categories under FDIC insurance. Each separate capacity at a brokerage is insured up to the $500,000 limit.
Common examples of separate capacities include:
SIPC coverage extends to most SEC-registered securities (and a few unregistered ones), such as:
Generally, SIPC insurance does not cover:
Crucially, SIPC doesn’t protect the value of securities – just missing securities. It doesn’t pay out when assets lose value, even if you traded on bad advice or bought worthless securities.
Brokerages shield investors from loss by separating customer and business assets and maintaining some liquidity. Typically, when brokerages enter liquidation, customer assets are already safe at another firm.
But if a brokerage enters liquidation before transferring customer assets, the SIPC works with a court-appointed trustee to return your property. You’ll receive a notification for how to file a claim, or you can request a claim form at SIPC.org. (Note: Claim values are calculated on the date that liquidation begins.)
The SIPC steps in during worst-case scenarios – meaning you’re unlikely to use your coverage, ever. But when you need it, you want every possible dollar protected.
That’s why Q.ai partners with APEX Clearing to manage and protect your investments.
With Q.ai, your brokerage account is SIPC insured up to $500,000, including up to $250,000 in cash claims. Additionally, all cash held in APEX’s Sweep Program is separately insured by the FDIC up to $250,000.
That’s just another example of how Q.ai goes the extra mile for our investors every day.
Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.