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boroangel

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Hi,
This (IBTA) is listed on LSE. So I would have to convert my USD to pounds on IB Idealpro forex, before buying this on the LSE?
 

BBCWatcher

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This (IBTA) is listed on LSE. So I would have to convert my USD to pounds on IB Idealpro forex, before buying this on the LSE?
No, of course not. Plenty of securities are quoted on the LSE in currencies other than British pounds. IBTA is quoted in U.S. dollars, which certainly makes sense for a bond fund that holds U.S. Treasuries.
 

BBCWatcher

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I’ve mentioned U.S. I Bonds before, and I’ll mention them again since they’re starting to look interesting. I’ll point out up front that this type of U.S. government bond is only available in small U.S. dollar amounts and (practically speaking) only available if you already have a TreasuryDirect account or can open one. To open a TreasuryDirect account you need a U.S. Social Security Number (SSN), a U.S. mailing address, and a checking or savings account at a U.S. bank or U.S. credit union.

An I Bond is a real return bond, similar to TIPS. But it’s the “small saver” variant with a low purchase limit and some interesting, quirky features. I Bond offerings and interest rates are adjusted twice per year: on May 1 and November 1. As with all U.S. federal government general debt obligations they are the safest available place to park U.S. dollars, and because they are real return bonds they are particularly safe since they defend against possible U.S. dollar inflation risks over their 30 year maturities.

You can redeem I Bonds prematurely after a minimum 12 month holding period. It’s more like 11 1/2 months minimum, because if you buy an I Bond near the end of a calendar month you get the full month of interest. Then you can redeem it as soon as the 12th calendar month, or just over 11 months later. If you redeem within 5 years of purchase (actually more like 4.9 years with that timing trick), you lose the last 3 months of interest as a minor penalty.

What is the current interest rate on the current I Bond? It’s 1.90%, which consists of a 0.5% fixed rate (which the U.S. Treasury adjusts from time to time) plus the inflation rate, based on U.S. CPI-U. The inflation rate happened to be a bit low last time around, so 1.90% was the result. And that’s OK, but T-bills are still yielding a bit more.

However, going forward, this I Bond is looking a little more interesting to me. Inflation has picked up a little in the BLS data, perhaps for tariff-related reasons, and added to the 0.5% fixed rate that should be interesting. So you might want to take a fly on this one if you’d like to park a few U.S. dollars for a year or more. Then again CDs are looking pretty good, too.

For non-U.S. persons an I Bond is generally completely U.S. tax free. Buy them (if you buy them) toward the end of the calendar month — 3 or 4 business days before the end of month should be fine — and redeem them (if you redeem them) on the first business day of the month. There are no charges to buy or to redeem I Bonds through TreasuryDirect, except for the 3 month interest penalty I mentioned if you’re redeeming an I Bond before the 5 year mark.
 

foozgarden

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BBCW,

If a US company files for chapter 11.
What does it mean for its employees?
Is there anything the employees should do?
Are they allowed to withhold paying salaries, bonuses , etc...?
 

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If a US company files for chapter 11.
What does it mean for its employees?
Chapter 11 refers to the section of the U.S. bankruptcy code designed for reorganization of a struggling but still at least notionally viable business.

When a company enters Chapter 11 there's not necessarily any immediate impact on employees. Occasionally a company in Chapter 11 gets bankruptcy court permission for retention incentives to hold onto key employees who are deemed critical to the company's reorganization and to preservation of creditor interests. On the other hand, part of the reorganization often involves workforce reductions and/or spinoffs of business units.

One possible negative factor is that a company entering Chapter 11 is often tempted to pull back from its international (non-U.S.) expansion efforts, especially if it's recent and/or unsuccessful -- to beat a retreat, similar to a retreating army that's losing a war. Sometimes that can work out well, for example if the company sells its Singapore-based unit to an acquirer that's looking to expand and grow in Singapore. Sometimes not. You presumably know your multinational/U.S. headquartered company, its industry and the dynamics within that industry, and its posture in Singapore.

Is there anything the employees should do?
Yes, I'd recommend the following:

1. Avoid incurring personal debt that should properly be company debt, such as unreimbursed "corporate credit card" charges. Get all your expense reports filed and keep filing them in timely fashion, if applicable. If you travel for the company then stay in the cheapest hotels, be flexible with air travel and find the cheapest fares, and otherwise spend as little as possible on business travel (and only when video conferencing isn't enough). Your company will appreciate that anyway, and you'll reduce your personal risk of being left as a big, unsecured creditor if something really bad happens.

2. File any outstanding claims for company-provided medical insurance reimbursement as quickly as possible, if applicable.

3. Discontinue any employee stock purchase plan participation if you have any. If you hold company shares you're likely already wiped out (for those). It's likely the company has already done this for you (ended the ESPP), but just make sure.

4. On the other hand, if you're participating in a U.S. 401(k) plan -- Chapter 11 is a U.S. bankruptcy code construction, so maybe you are -- then you should continue doing that, and try to collect as much company match as soon as you can, if applicable. Defined contribution retirement plans are well protected. Obviously don't buy your own company's stock shares via the 401(k), but you shouldn't have been doing that anyway.

5. Explore other job opportunities more actively and aggressively, especially if you are pessimistic about the company's prospects and your ability/position to make positive change.

6. Take a look at your emergency reserve fund and take steps now to bolster it if you can, if you feel it's too weak given your industry's overall job climate. Likewise, look at your household budget and keep discretionary expenses under tight control, especially if you are concerned about your industry's overall job climate.

7. Continue doing your job and doing it well, as long as you're getting paid exactly as promised and as long as you remain with the company. Act legally and ethically, and keep careful records (as you should be doing anyway), such as payslips, etc.

8. Pay attention to what your management says, and give it a fair assessment. That doesn't mean you have to trust or to believe management, but that also doesn't mean you should dismiss management's views out of hand. I suggest being "reasonably skeptical," meaning that you should respect not soothing words but concrete, positive deeds. For example, if there's a talented, "plugged in" manager (or two) you trust who leave(s) the company, you may wish to do the same.

9. If you are in a precarious immigration status in Singapore (i.e. not a citizen, PR, or a dependent of one working via a LOC) and wish to remain in Singapore (or at least try), there's probably not much you can do if you lose your job on short notice. However, one possibility available to some on Employment Passes is to apply for a Personalised Employment Pass (PEP). You get only one PEP per lifetime, if you get it, and it lasts for up to 3 years. The advantage with a PEP is that you can remain in Singapore for up to 6 months between jobs if necessary instead of the 30 days EP holders get.

Another possibility if you're married to a citizen, PR, or EP/PEP holder (with sufficient income), and if you currently have your own individual work permission, is to attempt to switch to a LTVP or DP (as applicable) with Letter of Consent (LOC)-based permission to work. If you're currently counted against your employer's foreigner worker quota then that switch would be helpful to your employer, if you can pull it off.

On the other hand, if your current employer is going to let anyone go first, it'll probably be "flex" workers such as temporary contractors and highly "replaceable" workers (in their view), especially if they're counting against foreign worker quotas and incurring levies. But the company might also choose to cull certain highly compensated employees. Those employees tend to be older, on average, but on the other hand employers in Singapore get some incentives to hang onto older citizen workers, in particular. Anyway, know your place in the company, basically -- including these status-related dynamics.

Are they allowed to withhold paying salaries, bonuses , etc...?
In most cases you are an "at will" employee, and the company can unilaterally decide, going forward, that you'll either be compensated differently (usually lower, but possibly with an approved retention incentive if you're deemed key) or let you go. That was true before Chapter 11, and that's still true after Chapter 11.

Very, very rarely a company fails to pay promised compensation for work already performed. But that's company suicide. Lose the workforce, and that's the end. I don't think this is a serious risk generically for Chapter 11 filings.

I think you should assume that promised future benefits that aren't vested -- aren't actually yours, or in a safe custodian's care as with 401(k) plans -- won't materialize. For example, if the company promised you a Rolex watch when you reach 20 years of service with the company, and you're now at 19.5 years and waiting for that Rolex watch, don't count on getting that Rolex. Don't bank on it, in other words. As another example, don't count on your company following through on its "promise" to move you to the U.S. next year for a 2 year international assignment. Indeed, it's likely your company will prematurely end any IAs they can as soon as they can, because they're "expensive."
 
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foozgarden

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What happens below $2k?

I always thought as long as you don't hit the $10 min comm or 100k min balance./ total account
0 to 99k shouldn't matter.

Total account value counts, so yes. But those stocks can and do wobble in value, so don’t cut it too close.
 
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foozgarden

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Wow. Thanks for the detailed explanation!

There are some overseas colleagues who have delayed bonuses. Hence we think that it might be due to cash flow.

Not participating in ESP. But there is an equal contribution (employee and employer) to an external investment firm.

Are these funds ring fenced against the employer?
So they are not able to retrieve these monies from the fund in any circumstances.
Fyi, The account is under my name. Just that it's US based investment firm
 

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What happens below $2k?
IB doubles the Monthly Activity Fee for not meeting minimum commissions to US$20 when your total account value is under US$2,000. So, to avoid that, keep the total account value at or above US$2,000.

There are some overseas colleagues who have delayed bonuses. Hence we think that it might be due to cash flow.
Probably. It's reasonable for your colleagues to question whether the bonuses will be paid. If you read the "fine print" associated with the vast majority of bonus programs, they're almost always non-guaranteed anyway.

Fortunately, slavery is illegal. If they're upset about the potential or actual loss of their bonuses, they should seriously consider whether they ought to stay with the company. If there's a voluntary redundancy program that's still operable then that could be worth taking.

To be clear, I don't know if they'll get their bonuses or not. There's simply much greater bonus uncertainty with a bankruptcy filing. Lehman Brothers, the famous (or infamous) Wall Street firm that filed for Chapter 11 bankruptcy reorganization in late 2008, ended up paying US$50 million in bonuses in 2013 and another US$44 million in 2014. And probably more than that, but that's some available data I could find quickly. They got bankruptcy court approval to pay those bonuses, in cash, to retain key talent to chop up what was left of Lehman Brothers, to parcel out the bits to surviving financial institutions. But Lehman also lost lots of talent (quickly), some employees never got their bonuses, and some got their bonuses but in the form of stock options and grants that became worthless.

I saw an interview with one Lehman employee in September, 2008. He joined the firm as a fresh graduate, he had been on the job a week, and then he was fired. Probably after buying lots of suits, getting a lease on a new apartment, etc., etc. Maybe he got a signing bonus of some kind, but even so, that must have been somewhat tough/rough anyway.

The quick loss of talent was well documented in TV news reports at that time, with reporters interviewing the many employees who carried their few personal belongings out of the office in cardboard boxes the same day or the day after the Chapter 11 bankruptcy filing. The company dismissed many employees right away, and some even months before the filing. It turns out Lehman knew it was in trouble, but basically it counted on a government bailout or some other white knight. That obviously didn't happen.

But there is an equal contribution (employee and employer) to an external investment firm.

Are these funds ring fenced against the employer? So they are not able to retrieve these monies from the fund in any circumstances. Fyi, The account is under my name. Just that it's US based investment firm
Yes, that account should be well protected. Double check your plan documents, of course.

The employer match is still obviously valuable as long as it's being paid, so it'd be in your financial interest to max out all employer matches for as long as you're allowed (and the company is paying). If you can boost contributions to collect the same matching funds sooner rather than later, I would, provided you feel comfortable with your emergency reserve. Some plans let you do that.
 

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Every bankruptcy filing is a little different. There are some Chapter 11 filings -- including in the airline industry -- that are practically non-events for employees.

Eastern Air Lines was a really interesting historic case in certain respects. Eastern filed for Chapter 11 bankruptcy reorganization on March 9, 1989. That was mainly so Eastern's corporate parent, Texas Air, could break union contracts, which obviously affected employees greatly. That doesn't work well in a customer service-oriented business. In late 1990 the bankruptcy court appointed Martin Shugrue as Eastern's trustee to oversee operations. What was left of Eastern's marketing department evidently ran out of ideas, and Eastern aired some very strange TV ads:

Example 1
Example 2

Contrary to Shugrue's forecast, Eastern didn't survive well into 1991. It stopped flying on January 19, 1991. But that was nearly two years after Eastern's Chapter 11 filing, so even full collapses can sometimes take a long time.

Eastern's employees' traditional defined benefit pensions were/are guaranteed by the U.S. Pension Benefit Guaranty Corporation, a U.S. government agency. There's a monthly cap on the government insurance per pensioner, and it varies based on a pension/age-related formula. Oversimplifying only slightly, some Eastern pilots lost some (but nowhere near all) of their promised pension benefits, but other Eastern employees were generally well protected. Vested, defined contribution schemes tend to be even safer (arguably) because that money is portable, under the custody of an independent plan administrator, and has left the company balance sheet.
 

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Here's another example: the first Chrysler "bankruptcy." That one was a big success, although it was government aided. The U.S. federal government extended a loan guarantee to Chrysler (headed by then new chief Lee Iacocca), and the company emerged as "The New Chrysler." Iacocca also became the new face of Chrysler.

It worked, although employees endured some burdens in making it work. Sales rebounded, and by 1983 Chrysler had fully paid off all its government guaranteed loans, with interest. Chrysler funded investments into new products, including their lineup of smaller "K cars" built on a common platform. With hindsight, the K cars were mediocre cars but value priced and backed by an industry leading warranty. And mediocre cars were a lot better than Chrysler's previous terrible cars. Chrysler also essentially invented the minivan, and that proved a big success for the company, too. And there was a little luck involved: lower oil prices in the 1980s, and a fairly strong U.S. economy.

This was not a bankruptcy in the technical sense. However, Chrysler would have certainly filed for bankruptcy if not for the government loan help. In 2009 Chrysler did file for Chapter 11 bankruptcy protection, but that too was a "managed" bankruptcy (or pseudo bankruptcy), with Fiat taking quick control of the company under court supervision. Chrysler had acquired American Motors (AMC), most famous for its Jeep vehicles, in 1988. So Fiat Chrysler Automobiles (FCA) now owns the Jeep vehicle range, too. Some employees lost their jobs through these various machinations, and some didn't.
 

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IB doubles the Monthly Activity Fee for not meeting minimum commissions to US$20 when your total account value is under US$2,000. So, to avoid that, keep the total account value at or above US$2,000.




Yes, that account should be well protected. Double check your plan documents, of course.

The employer match is still obviously valuable as long as it's being paid, so it'd be in your financial interest to max out all employer matches for as long as you're allowed (and the company is paying). If you can boost contributions to collect the same matching funds sooner rather than later, I would, provided you feel comfortable with your emergency reserve. Some plans let you do that.


ahh.. i didnt realise there was a min 2k..
thanks for the heads up...

yes, the contributtions are maxed out to the same amount as the employer.
its a decent sum (free) , so why not.. as long as the money wont be absconded!
 

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speaking of the idle money ...

i have a sum of USD which is parked in FCY FD generating 1.9+% (depending on tenor)
if i move this to IB, is there an Singapore SSB equivilent on IB?
capital guaranteed, minimal transaction cost ($2 for SSB) and still yield higher than our local FCY FD
 

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Hi BBW, been reading ur thread and found it very informative. Just a question - I'm interested to purchase in IWDA thru SCB. I am not sure what accounts that are needed to be open and how do I buy (over the counter or online)? Thank you in advance
 

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Just a question - I'm interested to purchase in IWDA thru SCB. I am not sure what accounts that are needed to be open and how do I buy (over the counter or online)?
Assuming Standard Chartered is the correct choice for your circumstances, you can open a Securities Settlement Account by filling out this form and bringing it to a Standard Chartered branch in Singapore with your documentation. For IWDA you need a U.S. dollar Securities Settlement Account, so tick the box next to USD. You don't need to tick any other currency boxes, and you can add currencies later if need be. Don't sign the application form until you're meeting with the bank employee at the branch, and the bank employee has the opportunity to witness it.

It's likely the bank employee will try to persuade you to open other accounts, such as a current or savings account or even a credit card. You're not required to do that, and you can change your mind and apply in the future if you wish. Those other products will have their own fees and charges that you should research and understand before deciding whether to open one.

You need to use Standard Chartered's Internet or mobile online banking to transfer funds to or from a Standard Chartered Securities Settlement Account. A currency conversion cost will apply if, as a notable example, you're transferring Singapore dollars into your U.S. dollar Securities Settlement Account. Regardless of currency, paper check deposits are not accepted directly into a Standard Chartered Securities Settlement Account. Paper checks have to go through the banking system, i.e. they must be deposited into a bank account (at Standard Chartered or elsewhere), not a Securities Settlement Account.
 

kram62

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Assuming Standard Chartered is the correct choice for your circumstances, you can open a Securities Settlement Account by filling out this form and bringing it to a Standard Chartered branch in Singapore with your documentation. For IWDA you need a U.S. dollar Securities Settlement Account, so tick the box next to USD. You don't need to tick any other currency boxes, and you can add currencies later if need be. Don't sign the application form until you're meeting with the bank employee at the branch, and the bank employee has the opportunity to witness it.

It's likely the bank employee will try to persuade you to open other accounts, such as a current or savings account or even a credit card. You're not required to do that, and you can change your mind and apply in the future if you wish. Those other products will have their own fees and charges that you should research and understand before deciding whether to open one.

You need to use Standard Chartered's Internet or mobile online banking to transfer funds to or from a Standard Chartered Securities Settlement Account. A currency conversion cost will apply if, as a notable example, you're transferring Singapore dollars into your U.S. dollar Securities Settlement Account. Regardless of currency, paper check deposits are not accepted directly into a Standard Chartered Securities Settlement Account. Paper checks have to go through the banking system, i.e. they must be deposited into a bank account (at Standard Chartered or elsewhere), not a Securities Settlement Account.
Small detail, you have to at least open an esaver account at the same time as opening the trading account so you can fund the settlement account from the esaver. (The esaver has a monthly fall below fee if the average daily balance is less than 1000 sgd.)

(source: I opened scb trading account at the branch last week and specifically asked whether opening the esaver account was required, which the representative said yes. Note that I had no previous banking relationship with scb)
 

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Small detail, you have to at least open an esaver account at the same time as opening the trading account so you can fund the settlement account from the esaver. (The esaver has a monthly fall below fee if the average daily balance is less than 1000 sgd.)

(source: I opened scb trading account at the branch last week and specifically asked whether opening the esaver account was required, which the representative said yes. Note that I had no previous banking relationship with scb)

Same for me. I was told by the staff that at least one sc account must be opened. In the end i choose esaver
 

BBCWatcher

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Small detail, you have to at least open an esaver account at the same time as opening the trading account so you can fund the settlement account from the esaver. (The esaver has a monthly fall below fee if the average daily balance is less than 1000 sgd.)

Same for me. I was told by the staff that at least one sc account must be opened. In the end i choose esaver
OK, that could be. Standard Chartered doesn't actually mention that requirement (or "requirement") in their Securities Settlement Account T&Cs that I can see while they see fit to mention everything else you can imagine, and more. I tend to be skeptical (cynical?) when bank employees claim there are requirements or rules that don't seem to be published in writing anywhere.

Note that if you opened a Singtel Dash account in the past, during the period when Singtel had its partnership with Standard Chartered, I think you should still have the free paired Standard Chartered basic savings account with no minimum balance/no fall below fee. That should be enough for these purposes.

What is the counter name?Or what is it called under IB?
U.S. Treasuries each have unique 9 digit CUSIP identifiers. Just look for the specific U.S. Treasuries you're interested in holding -- the U.S. Treasury publishes them on its Web sites, mostly at TreasuryDirect.gov -- find the CUSIP numbers, and match them up on IB's platform. For example, U.S. T-bills currently have CUSIPs that start with the 6 digits 912795 and 912796.
 

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Assuming Standard Chartered is the correct choice for your circumstances, you can open a Securities Settlement Account by filling out this form and bringing it to a Standard Chartered branch in Singapore with your documentation. For IWDA you need a U.S. dollar Securities Settlement Account, so tick the box next to USD. You don't need to tick any other currency boxes, and you can add currencies later if need be. Don't sign the application form until you're meeting with the bank employee at the branch, and the bank employee has the opportunity to witness it.

It's likely the bank employee will try to persuade you to open other accounts, such as a current or savings account or even a credit card. You're not required to do that, and you can change your mind and apply in the future if you wish. Those other products will have their own fees and charges that you should research and understand before deciding whether to open one.

You need to use Standard Chartered's Internet or mobile online banking to transfer funds to or from a Standard Chartered Securities Settlement Account. A currency conversion cost will apply if, as a notable example, you're transferring Singapore dollars into your U.S. dollar Securities Settlement Account. Regardless of currency, paper check deposits are not accepted directly into a Standard Chartered Securities Settlement Account. Paper checks have to go through the banking system, i.e. they must be deposited into a bank account (at Standard Chartered or elsewhere), not a Securities Settlement Account.

Hi BBCW, thks for ur reply. I'm deciding btw the SCB and IB, leaning more twds SCB as it mayb more convenient to use Internet banking and also from Wat I read, the difference in charges are negligible in the long run. May I ask if one is better than the other? Many thanks in advance
 
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