Alyssa Lane
Fidelity offers its customers SIPC insurance, which covers accounts at member brokerage firms that each have a separate capacity, meaning a different investing purpose or ownership. SIPC insurance covers up to \$500,000 in securities and \$250,000 in cash per account with separate capacity held at a SIPC-member brokerage firm. Certain assets are not eligible for SIPC protection, including commodity futures contracts, precious metals, investment contracts, and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission. In addition to SIPC protection, Fidelity provides its customers with excess SIPC coverage, which provides additional protection in the event that SIPC coverage is exhausted.
| Characteristics | Values |
|---|---|
| Fidelity's brokerage businesses | Fidelity Brokerage Services LLC and National Financial Services LLC (NFS) |
| Are they members of SIPC? | Yes |
| What does SIPC do? | Protects brokerage accounts of each customer when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing from accounts |
| How much does SIPC protect per customer? | $500,000 in securities, including a limit of $250,000 on claims for cash awaiting reinvestment |
| Does Fidelity provide additional coverage? | Yes, through NFS, Lloyd's of London and Axis Specialty Europe Ltd |
| When is the additional coverage used? | When SIPC coverage is exhausted |
| What is the total aggregate excess of SIPC coverage available through Fidelity's policy? | $1 billion |
| Is there a per-account dollar limit on coverage of securities? | No |
| Is there a per-account limit of coverage of cash awaiting investment? | Yes, $1.9 million |
| What does SIPC not cover? | Investment losses in customer accounts due to market fluctuation, other claims for losses incurred while broker-dealers remain in business, worthless securities, losses from market price changes, or receiving bad investing advice from a brokerage firm |
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What You'll Learn
Fidelity's brokerage businesses are members of SIPC
Fidelity's brokerage businesses, including Fidelity Brokerage Services LLC and National Financial Services LLC (NFS), are members of the Securities Investor Protection Corporation (SIPC). This membership provides protection for brokerage accounts maintained with Fidelity in the event of bankruptcy or other financial difficulties leading to the closure of the firm and the loss of customer assets.
The SIPC covers each customer's brokerage account up to $500,000 in securities, with a limit of $250,000 on claims for cash awaiting reinvestment. Money market funds held in a brokerage account are included in this coverage and considered securities.
In addition to SIPC protection, Fidelity offers its brokerage customers "excess SIPC coverage" through Lloyd's of London and Axis Specialty Europe Ltd. This excess coverage comes into effect only when the SIPC coverage limit is reached and does not cover investment losses in customer accounts due to market fluctuations or claims while broker-dealers remain operational. The total aggregate excess SIPC coverage available through Fidelity's policy is $1 billion, with no per-account dollar limit on securities coverage.
Fidelity's commitment to protecting its customers' assets is an important part of its dedication to providing the best service possible. By being a member of SIPC and offering additional coverage, Fidelity ensures that its customers' investments are safeguarded in the event of financial difficulties or bankruptcy.
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SIPC covers accounts at member brokerage firms
The Securities Investor Protection Corporation (SIPC) is a nonprofit organisation that protects investors if a brokerage firm fails. It covers accounts at member brokerage firms that each have a "separate capacity", meaning a different investing purpose or ownership.
SIPC covers <$500,000 in securities, including a $250,000 limit on cash per account with separate capacity held at a SIPC-member brokerage firm. Money market funds, which are often the default cash positions for investing accounts, are considered a security by SIPC and are protected up to $500,000.
If you hold multiple accounts of the same type, or with "similar capacity", those accounts do not get their own separate limits if they are held at the same firm. Your assets across those accounts are subject to the same overall limit. For example, if you have an IRA and a brokerage account with a SIPC-member brokerage firm, each of those accounts could be covered to the full limit: $500,000 for each account for a total of up to $1 million in coverage.
SIPC does not cover certain assets. Among the assets typically not eligible for SIPC protection are commodity futures contracts and precious metals, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
Fidelity's brokerage businesses (Fidelity Brokerage Services LLC and National Financial Services LLC [NFS]) are members of the SIPC, and brokerage accounts maintained with Fidelity are covered by SIPC. In addition to SIPC protection, Fidelity, through NFS, provides its brokerage customers with additional excess of SIPC coverage from Lloyd's of London together with Axis Specialty Europe Ltd.
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SIPC does not cover all assets
Fidelity's brokerage businesses are members of the Securities Investor Protection Corporation (SIPC). Brokerage accounts maintained with Fidelity are covered by SIPC, which protects each customer's account up to $500,000 in securities, with a limit of $250,000 on claims for cash awaiting reinvestment.
However, SIPC does not cover all assets. It does not protect against the decline in value of securities. SIPC does not protect individuals who are sold worthless stocks and other securities. It does not protect against losses due to a broker's bad investment advice or inappropriate investment recommendations.
SIPC does not protect digital asset securities that are investment contracts not registered with the U.S. Securities and Exchange Commission, even if held by a SIPC member brokerage firm. It does not cover foreign exchange trades or commodity futures contracts (unless held in a special portfolio margining account).
Certain assets are not eligible for SIPC protection. These include commodity futures contracts and precious metals, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
SIPC protection is not available for foreign currency held in an account as an investment because it does not qualify as a "security" under the Securities Investor Protection Act (SIPA). However, if the purpose of the foreign currency is to pay for investments that qualify as "securities" under SIPA, then the currency is viewed as "cash", and the customer is protected against its loss up to $250,000.
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Fidelity provides additional excess of SIPC coverage
Fidelity's brokerage businesses (Fidelity Brokerage Services LLC and National Financial Services LLC) are members of the Securities Investor Protection Corporation (SIPC). Brokerage accounts maintained with Fidelity are covered by SIPC, which protects brokerage accounts of each customer when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing from accounts. SIPC covers accounts at member brokerage firms that each have a "separate capacity", or a different investing purpose or ownership.
SIPC covers \$500,000 in securities, including a \$250,000 limit on cash per account with separate capacity held at a SIPC-member brokerage firm. Money market funds, which can be default cash positions for investing accounts, are considered a security by SIPC and are protected up to \$500,000.
In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage. The excess coverage would only be used when SIPC coverage is exhausted. The total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is \$1 billion. Within Fidelity's excess of SIPC coverage, there is no per-account dollar limit on coverage of securities, but there is a per-account limit of \$1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.
Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account, and securities held in book-entry form. Like SIPC, excess protection does not cover investment losses in customer accounts, including losses due to market fluctuation. For example, fraud claims would not be covered if the brokerage firm was still in operation.
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Excess coverage is used when SIPC coverage is exhausted
Fidelity's brokerage businesses (Fidelity Brokerage Services LLC and National Financial Services LLC) are members of the Securities Investor Protection Corporation (SIPC). Brokerage accounts maintained with Fidelity are covered by SIPC, which protects brokerage accounts of each customer when a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing from accounts.
SIPC protects brokerage accounts of each customer up to $500,000 in securities, including a limit of $250,000 on claims for cash awaiting reinvestment. Money market funds held in a brokerage account are considered securities.
In addition to SIPC protection, Fidelity, through NFS, provides its brokerage customers with additional excess SIPC coverage from Lloyd's of London together with Axis Specialty Europe Ltd. The excess SIPC coverage would only be used when SIPC coverage is exhausted. As with SIPC, excess SIPC protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business.
Total aggregate excess SIPC coverage available through Fidelity's excess SIPC policy is $1 billion. Within Fidelity's excess SIPC coverage, there is no per-account dollar limit on coverage of securities, but there is a per-account limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess SIPC protection currently available in the brokerage industry. Both SIPC and excess SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account, and securities held in book-entry form.
Excess SIPC insurance is insurance provided by a private insurer and not by SIPC. It is intended to protect brokerage customers against the risk that customers will not recover all of their cash and securities in the proceeding under the Securities Investor Protection Act (SIPA).
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Frequently asked questions
The Securities Investor Protection Corporation (SIPC) is a nonprofit organisation created by the US government to protect investors if a brokerage firm fails. It covers cash and securities held at a SIPC-member brokerage firm.
Yes, Fidelity's brokerage businesses (Fidelity Brokerage Services LLC and National Financial Services LLC) are members of the Securities Investor Protection Corporation (SIPC). Brokerage accounts maintained with Fidelity are covered by SIPC.
SIPC insurance covers up to $500,000 in securities, including a $250,000 limit on cash per account with separate capacity held at a SIPC-member brokerage firm. Money market funds are considered a security by SIPC and are protected up to $500,000.
