What does broker insolvency mean for your money?
When a broker fails, what happens to client funds depends on segregation, the regulator and the compensation scheme. In some jurisdictions clients are protected up to a limit; in others, there is nothing.
Questions for the thread:
- what does your broker's jurisdiction offer?
- has anyone here lived through a broker failure?
- how should that risk shape where you keep your money?
The client money guide covers segregation and protection schemes.
Background: What happens to your money when a broker fails?
When a broker goes under, what happens to client money depends on segregation, the regulator and the compensation scheme. Here is the process, the protections and the gaps.
What happens to my money if my broker goes bankrupt?
It depends on segregation, the regulator and the compensation scheme. With a top-tier regulator, segregated client money is identified, ring-fenced and returned through a defined process, with the scheme covering shortfalls up to its cap.
Is client money safe if a broker fails?
In regulated jurisdictions, segregated client money is protected from the broker's own creditors — that is the point of segregation. In offshore jurisdictions, the protections are thin or absent, and recovery is uncertain.
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