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: 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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