Protection and security
Once you have transferred your money to your LYNX account, you want absolute certainty that it is secured and protected in both quiet and more turbulent times. LYNX attaches the highest degree of importance to the optimal protection and security of its clients.
LYNX – a partner on which you can rely
Transparent, professional, integer and reliable: this is what has characterized LYNX ever since its inception over ten years ago. For the administration of your account and settlement of your orders, LYNX works together with Interactive Brokers Ireland Limited (“IBIE”). The listed company Interactive Brokers is one of the largest and most reliable brokers.
Access only for you
At LYNX, your account is protected by very strict security measures against any unauthorized access. To achieve this, we offer the following security measures in addition to your login details:
-
A unique security card as an extra layer of security when logging in.
-
A mobile security application that you can install on your smartphone. It is possible to use your fingerprint as a code (optional).
- Use the option of IP restrictions. This way, you can determine from which place(s) you can log into your LYNX account.
In addition, a transfer from your investment account to your contra account is only possible if you have verified the account number of the contra account. In short, our system continuously monitors all activities and only makes changes after you have personally verified them based on some security questions and/or security codes.
Trust is good, certainty is better
As a financial institute in the Netherlands, LYNX is regulated by government agencies established for that purpose: De Nederlandsche Bank (DNB) and the Dutch Authority for the Financial Markets (AFM).
As a carrying broker, IBIE is offering clearing, settlement and custodial services to introducing broker LYNX. IBIE is a subsidiary of IBKR. IBKR owns operating subsidiaries, which has been a registered broker-dealer with the SEC since 1994. IBKR is listed on the Nasdaq stock exchange (ticker code: IBKR) in the United States. On a consolidated basis, IBKR exceeds $8.5 billion in equity capital, over $6.0 billion above regulatory requirements. IBKR reported $1.2 billion of pretax profit for 2019 and has no long-term debt. The shareholders of the new entities of IB are the public company, Interactive Brokers Group, Inc. (18.5%) and the firm’s employees and their affiliates (81.5%). Unlike most other firms where management owns a relatively small share, at IB they participate equally in the downward as well as the upward development of the company. Because of these vested interests, they run the business conservatively. Finally, IBKR is listed on the Nasdaq exchange and is rated ‘BBB+ Outlook Positive’ by Standard & Poor’s.
Due to the connection with IBIE, LYNX is able to provide clients access to 150 exchanges in 33 countries. On most of these exchanges, clients have the opportunity to invest directly in stocks, options, futures, structured products, bonds, ETFs and CFDs. Additionally, clients have access to 22 different currencies.
The orders clients submit to LYNX and are executed by or through IBIE are not sold to high-frequency traders or market makers. Reselling client orders to third parties that act as counterparties may harm the actual transaction price.
Clients also have access to IBIE’s high-speed best execution order routing system (SmartRoutingSM), which is connected to many exchanges and markets. This technology scans the various stock exchanges and seeks to route orders to the best market, taking execution price into consideration, speed and total cost of execution.
In summary, LYNX is able to let investors trade worldwide with the most advanced trading infrastructure as an introducing broker of IBIE.
The investment account is legally constructed under IBIE, which is a subsidiary of IBKR. This way, LYNX can offer clients worldwide trading possibilities, including multiple types of financial instruments. Both clients’ cash as financial instruments are required to be kept separate from the assets of IBKR. All cash positions or financial instruments held with external financial institutions are the property of IBIE’s clients and are segregated, including in the event of default or bankruptcy of the broker. IBKR uses a range of banks to custody client cash to avoid a concentration risk with any single institution. IBKR also performs routine checks on these custody accounts of clients.
Brokerage firms can avoid delays associated with the transfer of ownership and quickly execute trades at a minimal cost by safekeeping financial instruments in ‘street name’. This means that the instruments are in the name of IBKR at the custodian, but that the ownership rights belong to the respective client. In the unlikely event of bankruptcy, creditors will not be able to access the clients’ assets due to the prevailing ownership rights of clients.
If financial instruments are financed with margin, they may possibly be lent to other financial institutions (for example to facilitate short selling). When clients borrow money from IBKR to purchase securities, IBKR is allowed to lend shares with a value up to 140% of the loan. To the extent any one client maintains a margin loan with IBIE, the security of the loan is enhanced by IBIE’s conservative margin policies, which do not allow the borrower to correct a margin deficiency within days, as permitted by regulation. Instead, IBIE monitors and acts on a real-time basis to automatically liquidate positions and repay the loan. This brings the borrower back into margin compliance without putting IBIE and other clients at risk.
The counterparty who borrows the shares is obliged to provide funds equal to at least 100% of the market value of the borrowed shares as collateral. Each trading day, the collateral is adjusted based on the market price of the borrowed shares. The funds that serve as collateral must be kept separately by IBKR, and solely for the benefit of clients. This means that the value of the instruments is covered in a scenario where a counterparty can no longer return the loaned instruments.
IBIE is a subsidiary of IBKR. From a formal point of view, IBKR does not have to cover any debts of IBIE in case the latter would go bankrupt, but it is common practice in the financial world to do so. On a consolidated basis, IBKR exceeds $8.5 billion in equity capital, which is over $6.0 billion above regulatory requirements. IBKR reported $1.2 billion of pretax profit for 2019 and has no long-term debt. The owners of the new entities of IB are the public company, Interactive Brokers Group, Inc. (18.5%) and the firm’s employees and their affiliates (81.5%). Unlike most other firms where management owns a relatively small share, at IB they participate equally in the downward as well as the upward development of the company. Because of this vested interest, they run the business conservatively. Finally, IBKR is listed on the Nasdaq exchange and is rated ‘BBB+ Outlook Positive’ by Standard & Poor’s.
Your assets are not part of the balance sheet of IBIE. In the unlikely event of IBIE going bankrupt, creditors will not be able to access the clients’ cash and assets due to the segregation and safekeeping of the financial instruments and cash. Clients are therefore able to transfer their assets to another party as they fall outside of creditors claims.
Only in rare circumstances during which the segregation of customers’ cash and assets from IBs own assets is not ensured (e.g. fraud) and IBIE would not be able to fulfill its compensational obligations (e.g. bankruptcy) and therefore fail to return the investor’s assets, the applicable investor protection scheme becomes relevant.
As your account is held via IBIE, the Investor Compensation Scheme of Ireland (www.investorcompensation.ie) is applicable. The scheme compensates for 90% of the loss to a maximum of €20.000.
Similar as to [local country] compensation, the directive on investor compensation schemes, adopted in 1997, protects investors by providing compensation if an investment firm fails to return the investor’s assets. The directive requires EU countries to set up one or more investor compensation schemes, ensuring a minimum level of compensation per investor of €20,000. All firms supplying investment services, including IB’s new entities in Ireland, Luxembourg and Hungary, must belong to such a scheme.
In the unlikely event that LYNX goes bankrupt, as a result of which LYNX can no longer meet its obligations related to the Basic Agreement, clients may be able to rely on the Dutch Investor Compensation Scheme, in Dutch ‘Beleggerscompensatiestelsel’ (BCS). LYNX participates in the BCS as a licensed entity.
The maximum compensation under the Dutch investor compensation scheme is €20,000 per client. Clients can claim the BCS if LYNX should unexpectedly go bankrupt and as a result of mismanagement or fraud LYNX can no longer meet its financial obligations and the funds and/or financial instruments of clients can no longer be returned. Since clients of LYNX hold their funds and/or financial instrument with IBIE, the situation in which LYNX cannot return funds and/or financial instruments from clients will not arise.
More information about the Dutch investor compensation scheme can be found on the websites of the AFM and DNB.