Client money safety: what did you check before depositing?

FTC Community TeamStaff14 views

Segregation and compensation schemes protect client money when brokers fail — but only in some jurisdictions, and only when you've checked. Most traders never do.

Client money safety: what did you check before depositing? — risk-reward diagram
A risk-reward ratio of 1 to 2

Did you check?

  • what your broker's documents say about segregation
  • the compensation scheme in your jurisdiction
  • anything that concerned you
Client money safety: what did you check before depositing? — candlestick anatomy diagram
The parts of a candlestick: wick, body, open and close

The client money guide covers the protections.

Background: Negative balance protection, client money and compensation schemes

What happens to your money if a trade goes badly wrong, or if your broker goes bust? The protections that apply in the UK, EU, Australia and the US, and their limits.

Can I lose more than my deposit trading forex?

Retail clients of brokers regulated in the EU, UK and Australia have negative balance protection, which caps losses at the account balance. With brokers not bound by those rules, a large gap could leave you owing money.

Is my money protected if my broker goes bust?

It depends on the company's regulator. Client money should be segregated, and schemes such as the UK's FSCS (up to £85,000) or Cyprus's Investor Compensation Fund (up to €20,000) may cover eligible claims. US forex accounts aren't covered by SIPC.

Read the full guide

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