Client Protection - Strength and Security

Client Protection at Interactive Brokers Securities Japan Inc.

IBSJ takes a proactive approach to the protection of client assets. IBSJ determines the amount of cash and securities designated for customers daily and segregates funds for the exclusive benefit of customers in a trust bank account specifically indentified as a client segregated account.

IBSJ applies real-time risk margin requirements to customer accounts. If a customer is deemed to have insufficient assets to cover the risk of their open positions, IBSJ will perform real-time liquidations of their positions to return the account to margin compliance.

Another benefit of doing business with IBSJ is that it does not carry materially significant proprietary inventory. IBSJ does not make directional bets and only holds proprietary inventory to facilitate client trading on the IBSJ Systematic Internaliser and to facilitate client trading in certain OTC products. Two of the most significant bankruptcies of the past decade (Lehman Brothers and MF Global) were caused by the risk generated from proprietary holdings.

Account Protection for the account holders of Interactive Brokers Securities Japan, Inc.

Securities (including foreign securities) and cash (including margins for futures, options, and CFD transactions) deposited by customers with securities firms are considered "customer assets" and are required by the Financial Instruments and Exchange Law to be clearly separated from securities and money held by the securities firms themselves in Japan. Naturally, the Company also manage its customer assets (securities and cash) entrusted to the Company by its customers separately in accordance with the Japanese Financial Instruments and Exchange Law. Note that unsettled open interest in Futures, Options and CFD transactions are not subject to segregation control.

The Company clearly separates the storage locations of "customer securities" and "proprietary securities, etc." held by the Company, and manages the customer securities in a manner that allows the Company to immediately identify which customer holds which securities. The amount of cash deposited with the Company, which is the total amount of cash deposited with the Company minus the amount of cash the Company has advanced for purchases and other amounts that can be deducted from the total amount of cash deposited with the Company for the calculation of the amount to be returned in the event of our bankruptcy ("customer segregated cash"), is kept in the custody of the trust bank designated by the Company. As for cash in foreign currencies, the equivalent amount in Japanese yen is entrusted to the trust bank designated by the Company.

Securities deposited by customers are placed in the custody of a third party (Japan Securities Depository Center, Inc. or a local securities depository in the case of foreign securities). The securities deposited with third parties are kept in segregated storage, and each customer's interest in the securities is immediately identifiable by the customer's own books and records.

As a securities company engaged in the Type I financial instruments business in Japan, the Company is a member of the Japan Investor Protection Fund. The Japan Investor Protection Fund is a fund that provides monetary compensation to customers for the purpose of investor protection in the event that it becomes difficult to return securities or cash entrusted by customers due to the bankruptcy of a financial instruments business operator, etc.

For more information, visit the Japan Investor Protection Fund.