Hello to all ,
I am new to this board and hope can get some clarification with coverage provided by CPIF. I checked previous discussions but it was not clear to me. If I have investments in GICs & index funds bought through brokerage firm. I asked my brokerage company if these are insured by cpif and was told they are. I assumed from that answer that if my brokerage firm goes bankruptcy I would be was covered but when I check cpif's web site I see the following:
8. Does CIPF protect the value of my GICs (guaranteed investment certificates)?
No, CIPF does not protect the value of your GICs. If you have an account with a CIPF member firm, and the CIPF member firm becomes insolvent, CIPF works to ensure that any property (including GICs) being held for you by the firm at that time is given back to you, within certain limits. CIPF does not guarantee what the GIC will be worth.
What is meant by "certain limits' ? what do they guarantee with the GIC ? Principle only, what about index funds ?[/size][/size]
coverage by Cpif (new to FWF)
Re: coverage by Cpif (new to FWP)
CPIF just covers cash in your brokerage account. GICs are covered by CDIC.
Index funds are not covered.
Index funds are not covered.
Re: coverage by Cpif (new to FWP)
CPIF protects the assets in the account in case of insolvency, etc. of the brokerage. It does not cover market valuations of the securities themselves. IOW, it protects against someone making off with your 100 shares of RY. It does not protect them from RY going insolvent and the value of those shares going to $0.
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Re: coverage by Cpif (new to FWP)
To expand:
you use your brokerage to buy a $10k 5 year GIC @ 2% in January,
in June interest rates shoot up to 10% and your GIC is worth $8k,
then in July your brokerage becomes insolvent,
CIPF will make sure you have your original GIC returned to you (now worth $8k),
CDIC will make sure that the original terms of your GIC are honoured, likely by having it taken over by another member firm.
you use your brokerage to buy a $10k 5 year GIC @ 2% in January,
in June interest rates shoot up to 10% and your GIC is worth $8k,
then in July your brokerage becomes insolvent,
CIPF will make sure you have your original GIC returned to you (now worth $8k),
CDIC will make sure that the original terms of your GIC are honoured, likely by having it taken over by another member firm.
finiki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
Re: coverage by Cpif (new to FWF)
This documents provides general information about CIDC’s coverage rules with respect to brokered deposits.
http://www.cdic.ca/en/financial-communi ... stees.aspx
http://www.cdic.ca/en/financial-communi ... stees.aspx