Risks of using a stock broker?

[Seppia]

I always used a bank (custodian) to handle my investments as I prefer to work with custodians (meaning my assets are off of their balance sheet) because of the additional protection.
Now that I moved to Hong Kong, I am seeing how cumbersome it is to invest globally through a bank, so I'm looking at brokers (specifically: Interactive Brokers).

Does anybody have a clear knowledge of what kind of extra risks are associated with this? The idea of seeing all my saving vaporized in case of an IB bankruptcy isn't thrilling (HK has an investor protection fund but it only covers hkd 500,000, around 60k usd)

Thanks in advance!

[Alphaville]

i don’t use brokers, but just a lateral thought, could you look into singapore also?

[Flurry]

It depends on the country of the broker. US-Law (to which IB must adhere) isn't that great compared to European law for investors but I still trust IB for a part of my investments. See their website:

https://www1.interactivebrokers.com/en/ ... cc&conf=am

Client securities accounts at Interactive Brokers LLC are protected by the Securities Investor Protection Corporation ("SIPC") for a maximum coverage of $500,000 (with a cash sublimit of $250,000) and under Interactive Brokers LLC's excess SIPC policy with certain underwriters at Lloyd's of London 1 for up to an additional $30 million (with a cash sublimit of $900,000) subject to an aggregate limit of $150 million. Futures and options on futures are not covered. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities.

Not that bad but I still prefer European brokers where my securities are 100% safe. As you are from Italy, can't you just keep your account there?

[Seppia]

Thanks to both

i don’t use brokers, but just a lateral thought, could you look into singapore also?

I will, is it safer there for investors?

As you are from Italy, can't you just keep your account there?

I could, but there would be a 26% tax on dividends plus an annual 0,2% tax on average account value that I would rather not pay.

[Flurry]

You shouldn't be obligated to pay taxes in Italy if your tax residence is not in Italy. Just inform your custodian/broker that your tax residence changed so no Italian taxes are paid automatically. The question is just if they want to keep you as a customer if you leave the EU but at least it's not the USA, no financial institution wants the hassle of dealing with US authorities.

[Alphaville]

I will, is it safer there for investors?

i can’t say. it’s a lateral thought not a direct conclusion.

my understanding is that singapore’s economic success is based on trust. maybe some of it is pr but much of it true.

i also know of rich americans who went to live there for tax reasons. eg. https://en.m.wikipedia.org/wiki/Derek_Sivers

hm, article says he lives in new zealand now. but look:

https://sive.rs/singapore

so while i don’t know, i think it’s worth looking into.

also europe based... maybe switzerland, luxembourg, etc?

i free-associate a bit... https://www.investopedia.com/articles/w ... havens.asp

[eta: found sivers explanation which maybe has nothing to do with investing: https://sive.rs/local ]