What segregation means
Under segregation, client funds are held in a separate account from the broker's operating capital, typically with a qualifying bank.
The aim is that, in theory, client money is not available to satisfy the broker's own creditors.
Why it matters
If a broker becomes insolvent, segregated funds are intended to be identifiable as clients' and returned, subject to the rules of the jurisdiction.
Segregation is a structural safeguard, but the exact protections and their limits depend on local law and the broker's arrangements.
- Separates your money from the broker's
- Reduces commingling risk
- May aid recovery in insolvency
What to confirm
Ask which bank holds client funds, whether an insolvency remotely affects them, and whether the broker is covered by a compensation scheme.
Regulation often mandates segregation; verify the broker actually follows it.
Segregation is not the same as guaranteed protection. Pair it with regulation and a compensation scheme for stronger safeguards.
Frequently asked questions
Does segregation mean my money is 100% safe?
No. It reduces misuse and commingling risk but does not remove all risk. Insolvency, fraud, or weak oversight can still cause loss.
How do I verify segregation?
Check the broker's legal disclosures and the regulator's requirements, and ask the broker directly how client money is held.