Scottrade Products & Services

Customer Cash Balances

Many investors inquire about how Scottrade holds and protects their cash balances. The safety and security of our customers' assets is our highest priority. Scottrade does not invest in subprime mortgages or other collateralized debt obligations. Please review the information below for more details.

How does Scottrade hold customer cash balances?

Scottrade holds customer cash balances as free credit balances in their brokerage account. A free credit balance is the amount of cash that a customer may immediately withdraw from his or her Scottrade account. Free credit balances are not segregated by customer name but are available on demand.

Free credit balances are used in Scottrade's business, but only to the extent permitted by SEC regulations and are not invested in subprime mortgages or other collateralized debt obligations. In fact, the balances that we hold in a special reserve bank account for the exclusive benefit of customers (described below) are held as cash as bank deposits or in U.S. Treasury securities.

How are deposits to special reserve bank accounts calculated?

Scottrade performs a weekly "reserve calculation" and deposits an amount equal to the results of the reserve calculation in a special reserve bank account for the exclusive benefit of customers in cash or U.S. Treasury securities. Generally, the reserve requirement is the difference between the amount that the broker owes its customers in the aggregate and the amounts that the customers owe the broker in the aggregate.

What type of protection does Scottrade provide for customer free credit balances?

Scottrade is a member of the Securities Investor Protection Corporation (SIPC), which protects eligible accounts of its members up to $500,000 (including $100,000 for claims for cash in most instances). A brochure with the details of SIPC's protections is available at www.sipc.org. Scottrade has also purchased additional protection from Aon Corp of $24.5 million (an additional $900,000 in claims for cash) to pay amounts in addition to those returned in a SIPC liquidation, subject to an aggregate limit of $100,000,000. Total protection per account is $25,000,000, including up to $1,000,000 in cash. This coverage does not protect against loss of the market value of securities.

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Brokerage Products and Services offered by Scottrade, Inc. – Member FINRA and SIPC.

No information on this web site should be considered a recommendation or solicitation to invest in a particular security or type of security.

Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Scottrade's margin agreement is available on our web site and at our branch offices; and contains the Margin Disclosure Statement and information on our lending policies, interest charges, and the risks associated with margin accounts. Options are not appropriate for all investors. Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options (available from your local branch office or here). All option accounts require prior approval by Scottrade.

Market volatility, volume, and system availability may impact account access and trade execution.