Hedging across two brokers: compliance and execution risks people underestimate

[FXS London Scalper]

Every few months someone suggests the "free money" version: long at broker A, short at broker B, collect a bonus or exploit a latency difference, and the net exposure is zero. I want to list why this is far riskier than it looks, even if you're not doing anything shady.

Terms of business. Many brokers explicitly ban hedging across accounts or entities, and some extend that to accounts held with other brokers if they can detect it. Profits can be cancelled after the fact.

Different prices. Your two positions are not a perfect hedge. During spikes, one broker may slip you 5 pips and the other 1. "Flat" can still lose money.

Margin and stop-out. Each account is margined separately. A large move can stop out one leg while the other is in profit, leaving you with open directional risk on the remaining account.

Swap and financing. Hold overnight and you pay two sets of swaps.

Operational risk. One platform freezing is enough to break the hedge.

There are legitimate uses for multiple brokers, such as a backup broker for outages or separating strategies. Deliberately hedging between them is a different thing.

Has anyone had profits reversed for cross-broker hedging? I've only heard second-hand stories and would like to know how the brokers detected it.