Forex brokers with segregated accounts

Forex brokers with segregated accounts – does it matter?

Segregated Forex accounts – a protective measure to keep clients’ funds safe and separated from broker’s own capital. But does this guarantee full protection? The answer is: it depends on the country and its laws. Traders as investors have the right to receive compensation in case of company liquidation/bankruptcy, but the amount of compensation (same as with bank deposits) will depend on the financial rules and regulations specific for each country.

Therefore, it’s not enough to say that a broker offers segregated accounts, because what matters in the end is How much you’ll be able to recover should things go wrong.

Forex brokers that offer segregated accounts:

Do you know another Forex broker with segregated accounts?
Please suggest by adding a comment below.

Rank
Broker
Special Offer
Min Deposit
Spreads From
Rating
Max Leverage
Regulations
Support
Start Trading
1
No commissions
$50
0.8 PIPs
30:1
CIMA, NFA, CFTC, FCA, IIROC, ASIC, FFA Japan, MAS, SFC of Hong Kong
Forex trading involves significant risk of loss and is not suitable for all investors.
1
Spreads From 0.8 PIPs
Max Leverage 30:1
Min Deposit $50
2
Rapid Crypto Transactions
$10
0.8 PIPs
500:1
2
Spreads From 0.8 PIPs
Max Leverage 500:1
Min Deposit $10
3
Lifetime demo account
$250
0.1 PIPs
30:1
CFTC
3
Spreads From 0.1 PIPs
Max Leverage 30:1
Min Deposit $250
4
Same Day withdrawals
$10
1.2 PIPs
500:1
4
Spreads From 1.2 PIPs
Max Leverage 500:1
Min Deposit $10
5
EUR/USD from 0.5 pips
$200
0.5 PIPs
30:1
CySEC, FCA
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
5
Spreads From 0.5 PIPs
Max Leverage 30:1
Min Deposit $200

What is a segregated account?

Segregated accounts – dedicated client accounts which allow keeping client funds separated (segregated) from the company funds.
Talking about Forex industry, brokers can either opt for or be obliged (by their regulatory bodies) to open segregated accounts for their clients.

Currently US law doesn’t allow holding Forex funds in segregated accounts. Oversees brokers, however, are able to offer this option.

Segregated accounts can either be opened in the name of each individual client or can be Joint for all clients. Usually in retail Forex industry it’s going to be the second case (one bank account for all clients, opened in company name), unless negotiated individually for large investors.

The purpose of segregated accounts in Forex

The main purpose of a Forex segregated account is to shield client investments from possible company risks by keeping such investments “unavailable” for the company to be used in the course of their business when facilitating own risks, expenses and obligations. Should the company account become overdrawn, the company or its bank cannot use client funds.

While trading in the Forex market, Forex brokers with no account segregation are able to engage client funds as margin against their own positions which are being opened to hedge against client trades; at the same time, brokers who work based on a segregated account scheme must use own funds to do the same.
Should a non-segregated account broker face difficulties getting out of his hedged positions, clients funds will constantly remain under the risk. This is never the case when client funds are segregated.

Segregated accounts – broker bankruptcy case

In the event bankruptcy, clients’ funds will be treated based on the laws and regulations set for countries in which brokers operate and hold accounts.

In the UK clients’ funds remain protected, neither bank no company liquidators, no its main creditors are eligible to access and be compensated through those funds. Clients will be paid based on a compensation scheme approved according to existing regulatory requirements. It is a duty of each individual investor to inquire about existing compensation schemes available for his broker. As an example, review the compensation scheme for the FSA regulated brokers.

According to the Swiss law, the liquidator mostly appointed by the federal banking commission will rank the client assets as a general unsecured creditor of failed company. Again, this is only relevant when the company goes bankrupt or is put in liquidation.
Such scheme is also practiced in most banks world wide. Be sure to learn about the level of protection of your funds.

Before opening an account with any Forex broker, go over Trading Terms & Conditions in the Client Agreement form. It always says about level of protection of client funds and financial liabilities of a broker in case of bankruptcy.

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