CIPF: what happens to your account if your broker fails

First: your securities are not "at" the broker like cash in a drawer

When you hold shares or ETF units in a brokerage account, the broker acts as custodian: it holds them for your account, normally segregated from its own assets. A broker's bankruptcy does not erase that ownership — in principle, your securities remain yours and are transferred to another institution.

The problem history has occasionally shown: in an insolvency, assets can be missing — securities or cash that should have been there and are not. That gap is exactly what the safety net exists for.

CIPF: what it covers

The CIPF (Canadian Investor Protection Fund) protects clients of brokers that are members of CIRO, Canada's investment self-regulatory organization. Its promise is precise:

• if a member broker becomes insolvent,
• and assets are missing from your account — securities or cash that should have been there,
• CIPF covers the shortfall, up to limits per account category, published on its site.

Coverage is automatic for clients of members: nothing to sign up for, nothing to pay.

What it NEVER covers — the crucial distinction

CIPF protects against the disappearance of your assets, not against their loss of value:

• a stock bought at $50 now worth $30: no protection — that is the market, not an insolvency;
• a disappointing investment, questionable advice, fraud committed by an issuer whose securities you hold: outside the perimeter;
• a broker that is not a CIRO member — a foreign platform, for example: no CIPF coverage at all.

A purely mechanical example: your account shows $20,000 of securities. The day after the broker's bankruptcy, two very different cases: if the $20,000 of securities are all there, they come back to you — CIPF does not even need to step in; if only $15,000 remains, CIPF in principle covers the missing $5,000, within its limits. And if the market takes your holdings from $20,000 to $12,000, neither custody nor CIPF changes anything — that is not their role.

Not to be confused with deposit insurance

CDIC (Canada Deposit Insurance Corporation) protects something else: deposits — savings accounts, eligible GICs — at member institutions, up to its own limits, if a bank fails. Two nets, two worlds: CDIC for money deposited at a bank, CIPF for assets held at a broker. A brokerage account is not a bank deposit, and vice versa.

What this changes for your tracking

Prices are not yet shown in the app; they will be at launch.

Nothing to do in Everyfolio — but two readings become clearer: the value the app displays moves with the market, and that movement is covered by no one; the holding of your securities rests on the broker's custody with CIPF as the backstop. Whether your broker is a CIRO member takes two minutes to check on the sites in the sources — the only verification this mechanism asks of you.