Segregated client accounts
Segregated client accounts are a rule that a broker keeps client money apart from its own funds. That makes it harder to spend on company costs or lose if the broker goes bankrupt.
How it works
When you fund a broker account, the money should land in a separate client account at a bank, not in the company's operating account. The broker cannot use it to pay salaries, rent or its own debts. This is called segregation of funds.
The point is protection in insolvency: if the broker fails, client money should not be used to pay its creditors. In practice getting it back can take months, and some of it may go on administrator costs. Some countries also run investor compensation schemes with a limit per client.
Rules vary a lot by country. In some places segregation is mandatory and audited, in others it is just a line on a website. What matters is which regulator licensed the broker and what that regulator actually requires.
You have $2,000 with a broker that holds $50 million of client money in a segregated account and owes $10 million. If it goes bankrupt, its creditors go after the broker's own assets, while the $50 million is, as a rule, returned to clients, including your $2,000.
A common mistake is trusting the phrase "funds are held in segregated accounts" without checking. An offshore broker can write that, but nobody enforces it. Look up the licence number in the regulator's register, see whether segregation and a compensation scheme apply, and do not keep more with the broker than you need for trading.
Questions and answers
What are segregated accounts in simple terms?
It means the broker keeps your money in a separate bank account, not mixed with its own. It is not allowed to spend it on company needs.
Do segregated accounts guarantee I get my money back?
No. They lower the risk of loss if the broker goes bust, but recovery can be slow and incomplete, especially if the rules were broken.
How do I check if a broker segregates client funds?
Find the broker in its regulator's official register and read what client money rules apply there. A promise on a website without a real licence means little.
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Updated: 2026-10-19