Client money segregation: why does it matter to you?
Segregation means your money sits in a separate account from the broker's own funds, so a broker's bankruptcy doesn't automatically take your deposit with it. The detail matters: where the account is held, and under which regulator's rules.
Did you check this before depositing?
- what your broker's terms say about client money
- whether you've ever verified it on a regulator's register
- what happens to client money when a broker fails
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.
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