RetireJapan

So my partner was worried about rakutens future with their mobile division being generally a bit of a mess.

I do think she's probably overthinking it and assume that rakuten shoken would be well insulated from the mobile division, but it did get me to thinking that like I don't want all my eggs in one basket with stocks, sectors or even countries, I probably should have them spread around different brokers too, but the management aspect of it seems frustrating, so I have questions

1) Exactly how does the insurance work? It's meant to be up to 10m yen, insured by the government. If rakuten securities went down the drain tomorrow, exactly what would happen? I understand that there are some systems by which stock ownership is recorded by the funds/etfs, so would there be some mechanism simply to transfer them all? I am not lending any stocks out(e.g. so they can be used by rakuten to allow people to get leverage). Would assets held in investors steads be used to settle debts before released to investors?

2) What are the actual risks(worst case scenario and what would have to happen) of a your brokerage failing here in japan?

3) is it possible to transfer assets to a different brokerage without liquidating them first(incurring taxes)

4) has anyone here split assets over multiple accounts and how have they managed rebalancing and all that?

there's a summary of what happens with US brokerages here https://www.investopedia.com/articles/i ... s-bust.asp

jcc wrote: ↑Wed Feb 22, 2023 6:46 am 3) is it possible to transfer assets to a different brokerage without liquidating them first(incurring taxes)

Yes this is possible for both domestic / foreign stocks and for mutual funds.

Doing the former is free, but Rakuten charges ¥3,300 per mutual fund transferred out. Some brokerages will refund these fees however, e.g. SBI.

The process takes a few weeks and you cannot trade the products or access the funds while the transfer is ongoing. But it is relatively pain-free in my experience.


Managing investments across different brokerages is more work than just sticking with one. However here's two more advantages I like:

- The investments I hold across different brokerages I have bought at different times. This means my capital gains liabilities (average purchase prices) are different between them, so when I need to access funds I can sell from the one that has the highest av purchase price. This minimizes my capital gains liability now, more so than if everything was held in one place, which is tax advantageous.
- Some brokerages, e.g. Rakuten, pay out faster than others. This can be useful if needing access to cash quickly.

Actually, this just gave me a good idea. Going to post about it in the New NISA board

RetireJapan wrote: ↑Thu Feb 23, 2023 1:19 am Actually, this just gave me a good idea. Going to post about it in the New NISA board

One thing to add is that existing NISA/tNISA accounts cannot be transferred between brokerages. So @jcc if your NISA is with Rakuten, it is stuck there until the tax-free period finishes or you decide to sell up.

jcc wrote: ↑Wed Feb 22, 2023 6:46 am 1) Exactly how does the insurance work? It's meant to be up to 10m yen, insured by the government.

Is that for brokerages too?

I recall that is the case for banks, but these days I personally wouldn’t be caught dead with 10 million yen in a bank account.

For brokerages I assumed they are just “brokering”, and not actually acting in the capacity of holding your assets. In Japan I believe stocks would be segregated away at JASDEC, and for the US I think it was the DTCC, but then for non-listed instruments like toshin mutual funds I think it is different - probably an asset management firm is involved but again I assume in Japan at least that customer assets are again segregated from those of the broker and other in betweens.

My memory is hazy, but in other words, I am pretty sure you need not worry about losing your assets if you are with a reputable outfit that is frequently audited, which Rakuten and the other big names should be… wow what a scandal it would be if they weren’t!

I understand that there are some systems by which stock ownership is recorded by the funds/etfs

So that is the part that saves your bacon (unlike crypto at FTX)

4) has anyone here split assets over multiple accounts and how have they managed rebalancing and all that?

I am thinking of opening an account with SBI in addition to my Monex one, since SBI seems like it would play well with my SBI net bank account and foreign ETF purchases.
But yeah, keeping a track of overall portfolio would become a bit of a pain, but on the other hand, I ideally should only be looking at it once or twice a year anyway, so maybe that nuisance could help me ensure that I don’t fritter away time more frequently due to the ease of doing so with just Monex… although even now I am having hassles due to dealing with Monex, iDeCo, company DC plan, j-NISAs.

I recalled a term here - 分別管理 - refering to segregation of customer assets from company assets, and there are many Google hits about this.
Here are some (smartphone) links from Rakuten itself, but I think the info is trustworthy and you can find similar from other reputable sources:

https://www.rakuten-sec.co.jp/web/fund/ ... afety.html

https://www.rakuten-sec.co.jp/smartphon ... arate.html

Fine as a broker I think, but can’t vouch for their mobile service

Rakuten Securities is also partly owned by Mizuho Financial Group so it's not like Mikitani can just tank it by himself. Rakuten Financial (Card, Bank, Securities) is also said to be going public soon so hopefully that alleviates people's concerns about Rakuten Mobile destroying the company. Worst case, Mikitani is forced to sell off the (profitable) financial group.

zeroshiki wrote: ↑Thu Feb 23, 2023 2:36 pm Rakuten Securities is also partly owned by Mizuho Financial Group so it's not like Mikitani can just tank it by himself. Rakuten Financial (Card, Bank, Securities) is also said to be going public soon so hopefully that alleviates people's concerns about Rakuten Mobile destroying the company. Worst case, Mikitani is forced to sell off the (profitable) financial group.

I was talking with someone recently who had worked in finance for the group/holding company. He confirmed that their financial businesses are the most profitable, and that the networks and mobile companies were bleeding.

As others have hinted, this does not affect anyone's investments with Securities at all.(for the OP).

sutebayashi wrote: ↑Thu Feb 23, 2023 12:40 pm I recalled a term here - 分別管理 - refering to segregation of customer assets from company assets, and there are many Google hits about this.
Here are some (smartphone) links from Rakuten itself, but I think the info is trustworthy and you can find similar from other reputable sources:

https://www.rakuten-sec.co.jp/web/fund/ ... afety.html

https://www.rakuten-sec.co.jp/smartphon ... arate.html

Fine as a broker I think, but can’t vouch for their mobile service

These links are good thanks. I did expect there'd be some mechanism in place to clearly delineate ownership, but hadn't really found it clearly in writing what that mechanism was. Good to see they have clear lines of ownership.

Something that was mentioned by my partner is that if you're lending stocks(and receiving compensation for it) to rakuten and they folded then those stocks you are lending(and which they are thus lending to others in part of leverage) might be gone(since said stocks are currently not in your possession and all you have is an iou which would just put you on a list of creditors to be made whole, which might not give anything depending how low down the list you are)

jcc wrote: ↑Mon Feb 27, 2023 4:30 am
Something that was mentioned by my partner is that if you're lending stocks(and receiving compensation for it) to rakuten and they folded then those stocks you are lending(and which they are thus lending to others in part of leverage) might be gone(since said stocks are currently not in your possession and all you have is an iou which would just put you on a list of creditors to be made whole, which might not give anything depending how low down the list you are)

So...don't lend them your stocks then...