Indian investors can now buy shares of companies like Apple, Microsoft and Amazon through several fintech platforms. While these apps make international investing seamless, they often create the impression that they are responsible for safeguarding your investments.
In reality, that's not how the system works.
Key Takeaways
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SIPC protects customers if a SIPC-member brokerage firm becomes insolvent.
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Coverage is up to $500,000 per customer, including $250,000 for cash.
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Indian and other non-US investors are also eligible if they invest through a SIPC-member brokerage.
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SIPC covers missing securities and cash, and does not offer protection against losses due to falling stock prices.
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It does not protect investments such as most cryptocurrencies, forex trades, or commodity futures.
What is SIPC?
The Securities Investor Protection Corporation (SIPC) is a US non-profit corporation created under federal law to protect customers of financially troubled SIPC-member brokerage firms.
When you invest in US stocks through an Indian platform, your securities are generally held with its partner US broker. If that broker is a SIPC member and enters liquidation, SIPC helps recover or replace customers' missing cash and securities, subject to the prescribed limits.
The protection limit is up to $500,000 per customer, including a maximum of $250,000 for cash held for investing in securities.
How Does SIPC Protection Work for Indian Investors?
Most Indian platforms allowing investors to access US markets are only the front-end interface. Suppose you open a US investing account through an Indian fintech platform. While you place trades through that app, your stocks are generally held by its partner US brokerage. Legally, that brokerage is the custodian of your investments.
If the US brokerage becomes insolvent and customer assets are missing, SIPC protection may apply because the securities are held with a SIPC-member broker. However, SIPC does not protect the Indian platform itself, it only protects the customer accounts maintained with the underlying US brokerage.
Checklist For Investing in US Stocks
For this reason, investors should not evaluate an international investing platform based only on its app experience or pricing. They should also identify:
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Which US brokerage holds their investments?
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Is that brokerage a SIPC member?
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How are their stocks and cash being held in custody?
These details are generally available in the platform's disclosures or FAQs and can help investors understand the level of protection available.
What Does SIPC Cover?
The objective of SIPC is to return customers' securities and cash if they are missing because of the brokerage's failure. It covers:
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Stocks
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Bonds
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Treasury securities
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Certificates of Deposit (CDs)
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Money market mutual funds
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Cash held for purchasing securities
What Does SIPC Not Protect?
SIPC protection has clear limitations. It does not cover:
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Losses from falling stock prices
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Poor investment advice
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Worthless investments
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Commodity futures (except certain cases)
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Foreign exchange trades
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Most crypto assets that are not recognised as securities
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Investment returns or profits
In other words, SIPC protects custody risk, not market risk. If your investments lose value because markets fall, SIPC does not compensate those losses.
Also Read About: Forex Trading
Conclusion
For Indian investors, the safety of US stock investments depends not just on the platform they use but also on who actually holds their assets.
Since most Indian platforms rely on partner US brokerages, SIPC protection applies to the underlying US broker if it is a SIPC member. Understanding this custody arrangement, verifying the broker's SIPC membership, and knowing what SIPC does can help investors make more informed decisions while investing in global markets.
Disclaimer: Access to US securities is offered via IFSCA Global Access route. Angel One Limited is registered with IFSCA as a Global Access Provider. Investment in securities market is subject to market risks, read all the documents carefully before investing. Any reference to securities is indicative and not a recommendation. Angel One Limited claims no right, title or interest therein, and no endorsement or affiliation is implied. Office address: Unit No. 256, Seats 1 to 4 located on the first floor of Pragya Accelerator II, Building -15B, Block – 15, Road No- 1C, Zone-1, GIFT SEZ, GIFT City, Gandhinagar – 382050. IFSCA Broker-Dealer Registration No. CMI2026BDK1061, GAP Registration No. IFSCA/GAP/BD/2026-2027/016.
