What does SIPC coverage apply to?

SIPC coverage applies specifically to accounts holding securities. The Securities Investor Protection Corporation (SIPC) was established to protect customers of broker-dealers that are members of SIPC in the event of the firm's bankruptcy or financial failure. This protection covers most types of securities held in accounts at these firms, including stocks, bonds, and mutual funds.

It is important to understand that SIPC does not cover all types of financial accounts. For example, it does not cover futures trading accounts, which are governed by different regulatory bodies and have separate protections. Similarly, commodities accounts and real estate investment trusts (REITs) do not fall under the SIPC umbrella, as these are classified differently than traditional securities. Therefore, the focus of SIPC coverage is exclusively on accounts that hold securities, ensuring customers have a level of protection against losses due to insolvency of their broker-dealer.