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GLOSSARY

Segregated funds

Your deposit, walled off from the broker's own creditors — with limits worth knowing.

Updated 2026-09-07 · Educational content · No broker owns this site

Quick answer. Segregated funds means a regulated broker must hold client money in separate bank accounts, apart from its own cash, so it cannot fund the business. If the broker fails, that money is not the firm's asset — but segregated is not the same as guaranteed back in full.

Segregated funds — also called segregated client money — means a regulated broker must keep the money you deposit in bank accounts that are separate from the firm's own cash. It cannot be spent running the business, and if the broker collapses it is not treated as the firm's asset to be handed to its creditors.

What does "segregated" actually protect?

It draws a legal wall between two pots of money. On one side sits client money — your deposits, held in trust. On the other sits the broker's own operating money for salaries, rent and its own debts. Regulators write this down as an explicit rule: in the UK the FCA's CASS 7 client money rules require it; in Australia ASIC's client money reforms (18-089MR, commenced 4 April 2018) tightened how CFD deposits are held. The point is that a failing broker should not be able to reach into your pot to pay its own bills.

Client money in a segregated account versus the broker’s own moneyTwo labelled containers. The left holds client money in a separate bank account. The right holds the broker’s own operating money. An arrow shows that if the broker becomes insolvent, its creditors can reach the right container but the segregated client money on the left is not the firm’s asset to lose.Where segregation puts a wallRegulated client money is held in a separate bank account, apart from the firm’s own cash.Client money accountyour depositsheld in trust, separate banknot the firm’s assetsegregation wallBroker’s own moneysalaries, rent, debtscreditors reach thisif the firm fails
Segregation keeps your deposit on the far side of a wall from the broker’s own creditors — it does not, by itself, guarantee every penny comes back.

Segregated is not the same as "guaranteed back in full"

This is where marketing pages overstate it. Segregation protects your money from the broker's creditors; it does not protect you from fraud, from sloppy record-keeping that mixes the pots, or from a shortfall when the accounts are unwound. That second layer is a compensation scheme, and its limits are far smaller than most beginners assume:

  • United Kingdom — the FSCS covers eligible investment claims up to £85,000 per person, per failed firm.
  • Cyprus (CySEC) — the Investor Compensation Fund pays up to €20,000 per client.
  • United States and offshore — US retail forex has no equivalent deposit-insurance scheme for FX dealers, and offshore jurisdictions frequently have none at all.

So the honest reading is: segregation lowers the chance your money vanishes if the firm fails, and a compensation scheme may top up part of any shortfall — but only up to a capped amount, and only where such a scheme exists.

How do I check my money is actually segregated?

  • Confirm the licence on the regulator's own register, not the broker's site — the FCA register or your national equivalent. Segregation is a rule that binds regulated firms; an unregulated one owes you nothing.
  • Check which entity holds your money. A group can advertise a strong licence and then book your account with an offshore arm that has no CASS-style rule. The entity name is in the client agreement.
  • Know your compensation scheme and its cap before you deposit more than it covers. "Regulated" and "segregated" tell you the wall exists; the scheme limit tells you what is behind it.

Reading these for yourself is the core of any real broker due diligence — and the reason withdrawal problems so often trace back to firms that were never holding client money properly in the first place.

Frequently asked questions

Does segregated mean my money is guaranteed if the broker goes bust?

No. Segregation keeps client money apart from the broker's own creditors, which lowers the risk of loss. Getting money back after a failure depends on the records being correct and on a compensation scheme — for example the FSCS up to £85,000 in the UK or the CySEC fund up to €20,000 — which is capped and does not exist everywhere.

How can I tell if a broker segregates client funds?

Check the firm's licence on the regulator's own register, confirm which legal entity actually holds your account, and read the client agreement. Segregation is a rule that binds regulated entities, so it only protects you if the entity holding your money is the regulated one.

Is segregation the same as negative balance protection?

No. Segregation is about where your deposit is held while the broker is trading. Negative balance protection is about capping your loss on a trade so you cannot owe more than your deposit. A well-regulated retail account usually has both, but they solve different problems.

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Sources

How to read a broker's regulation

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