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Regulation & safety

Client Fund Segregation

By Jarosław Wasiński • Published: • Updated:
The separation of client money from a firm’s own money under the rules that apply to that legal entity and service. It is an important safeguard, but not a universal guarantee of full or immediate repayment if a broker fails.
Example. A statement showing USD 5,000 of client money is not the same as an unconditional USD 5,000 repayment guarantee. An insolvency process may need to reconcile claims and address a shortfall before distributions are made.

What to verify

Check the exact contracting entity, regulator, client classification and client-money terms. Do not assume that every company using the same trading brand offers identical protection, or that rules from one country apply worldwide.

Common mistake: confusing three protections

Segregation concerns how client money is held. Compensation arrangements may cover eligible losses after a firm fails, subject to their own conditions. Negative balance protection concerns certain trading deficits. These are different safeguards.

Sources and limits

For the UK investment-firm context, see the FCA CASS 7 client-money rules and the FCA review of client-money distribution and special administration. Other jurisdictions and client arrangements require separate checks.

Insolvency and a claim

Distinguish a platform entry, actual client money and distribution rules. Reconciliation, a possible shortfall and the relevant procedure affect recovery timing. Shared branding does not create one protected pool across all jurisdictions.

Primary source checked 11 October 2026: handbook.fca.org.uk.

FAQ

Does segregation insure market losses?

No. It separates client money from a firm's own money under applicable rules without removing position losses.

Is segregation the same as negative balance protection?

No. One concerns holding funds, the other specified trading deficits.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

  • Creator and editor-in-chief of MyBank.pl, providing reliable financial education since 2004.
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All content is educational and informational only – it does not constitute investment advice or a recommendation. Remember: leveraged trading (Forex/CFD) carries a high risk of rapid capital loss.