Segregated funds and broker solvency: the risk behind the execution

[Amanhasnoname]

Execution quality is only part of the broker question. Whether the money is safe matters more.

Reputable firms keep client funds in segregated accounts, separate from the company's money. If the broker goes insolvent, client funds should be protected from creditors. That's a legal requirement in many jurisdictions, but enforcement varies widely.

Regulatory status offers clues. Brokers regulated by strong authorities face capital requirements and audits. Some also participate in compensation schemes that cover losses up to a limit.

Offshore entities often offer higher leverage and fewer rules, with less recourse if something goes wrong.

Practical steps include checking the regulator's register to confirm the licence, reading which entity the account is opened with, and keeping only the capital needed for trading with the broker. Withdrawing profits regularly reduces exposure.

An excellent fill record doesn't help if the funds can't be withdrawn.

How do you assess the safety of a broker, beyond spreads and platform?