Insurance of cash balances in discount broker accounts | General financial discussion | Discussion forum

Bill said
Thanks, Norman1, I kind of figured that.

Doug, you say I've got CDIC coverage. You do indicate though "remember, though CIBC Trust Company is a CDIC issuer, it's not how your brokered deposits are insured. Insurance is of the deposit issuer in your brokerage account." I have no deposit issuers, there is only a cash balance sitting in my investment account. So do you agree with Norman1 re that money?

BTW, the CDIC insured entity you refer to is CIBC Trust Corporation, according to CDIC list. There is also CIBC Mellon Trust Company (I assume that's their full-service broker) and CIBC Mortgages Inc., as well as the bank itself.  

Oh, right. Thanks for the reminder. Your cash balance in your brokerage accounts is not insured by CDIC because the brokerage firm pools it together and deposits it in a segregated bank account for its client assets. They are, however, protected by CIPF (which is different) to the usual $1 million per account limit. Going to re-read Norman1's response.

CIBC Mellon Trust Company may issue some CDIC insured deposits, but probably only to institutions. It's a joint-venture between BNY Mellon and CIBC that is primarily involved in the recordkeeping and custody of Canadian mutual fund assets as well as assets of other institutional asset managers. (Interestingly, you may be interested to learn that they won the sub-contract to hold and custody the corporate and provincial bonds the Bank of Canada purchases under its Provincial Bond Purchase Program and Corporate Bond Purchase Program; BMO Asset Management is asset manager for the former and TD Asset Management is asset manager for the latter, having won the competitive bid process that BlackRock Financial Advisory Solutions managed for the BoC. BlackRock won that bid process management contract from the BoC.)

As for which is the custodian of the CIBC Investor's Edge, I believe it's CIBC Trust Company, actually, but check what's called your Relationship Disclosure Document. It'll be in there. (That is the most important document of any discount brokerage, in my opinion.)

CIBC Mortgages Inc. is basically an amalgam of FirstLine Mortgages Inc., which was put into run-off when CIBC exited the mortgage broker channel, and CIBC Mortgage Corporation. There's also several other mortgage corporation subsidiaries currently in wind-down processes with OSFI; eventually they'll likely be comingled with one or more CIBC mortgage corporation(s) and/or the mainline bank. Principally, it is the chief holder and servicer of CIBC's residential and commercial mortgages, but it does issue deposits; you can find a list of the CIBC deposit FundSERV codes from their Renaissance Investments website.

Looks like CIBC may only issue deposits under the Renaissance HISA, which is a brokerage HISA product (in CAD and USD) under the mainline bank, Canadian Imperial Bank of Commerce. Current rate is 0.30% on class A units (net of 0.25% trailing commission payable to the discount broker; if you deal with a fee-only advisor, you may be able to purchase the class F units and earn 0.55%).

http://www.renaissanceinvestme.....s/hisa.asp
http://www.renaissanceinvestme.....s_HISA.pdf

Renaissance High Interest Savings Account Series A: ATL5000
Renaissance High Interest Savings Account Series F: ATL5001
Renaissance U.S. Dollar High Interest Savings Account Series A: ATL5500
Renaissance U.S. Dollar High Interest Savings Account Series F: ATL5501

Enter one of this ticker codes into the "mutual fund" order entry screen in CIBC Investor's Edge. They're not mutual funds, but trade that way as they trade through FundSERV.

Cheers,
Doug

Yes. They are deposit accounts.

Bill said
Thanks, AltaRed, guess that beats sitting there uninsured, only downside is have to wait an extra day to settle if I ever want to access the money.  

Yeah, that can be the downside; however, with Scotia iTRADE, even in registered accounts, they will usually increase your trading cash (not available for withdrawal, but redeploying into other assets) within ~1 hour. CIBC Investor's Edge may be similar.

0.30% seems low, but Manulife Bank's direct-to-consumer, much touted Advantage Savings Account is paying the same, so it's all relative. And, like you say, 0.30% does beat 0.0% and it's completely hassle free.

Also, I mistakenly thought if you withdrew your funds before the last business day of the month when the interest payment is credited, but the interest is indeed daily compounded and paid monthly. You'll just end up with a few pennies (or whatever) next month (unless you place the sell trade on the same day as the interest payment date), and then have to place another trade to sell those pennies. Good thing the trades are free!

To add to what AltaRed said re: deposit insurance, because these are held in "street" name, even if you have a CIBC bank joint account with your wife, this is considered a separate beneficial owner (because it's tracked and reported separately).

Cheers,
Doug

It's separate for each brokerage firm so you'd be covered for each account separately (unlikely both going insolvent at same time anyway).

All the info's here:
https://www.cipf.ca/