Forex glossary
Segregated accounts
Segregation separates client funds from a provider's own money under applicable client-asset rules. It is intended to reduce firm-failure risk, but does not eliminate possible shortfalls, recovery costs or delays. It does not protect against trading losses; scope depends on jurisdiction, assets and client status.
Illustrative example
How does it work in practice?
In hypothetical records, a provider holds 500,000 EUR of its own funds separately from 100,000 EUR of client money. That separation does not prevent a client's 200 EUR loss on their own trade.
A case to work through
Separate funds and a trading loss
Model: a client’s 2,000 EUR deposit is separately recorded; a later trade result is −300 EUR.
- Segregation describes how funds are held.
- The trade loss still reduces the modeled client entitlement to 1,700 EUR.
What follows? Check applicable asset rules, entity and records.
Example boundary: Segregation does not guarantee full or immediate recovery after insolvency.
A useful distinction
Segregated accounts / Negative balance protection
Balance protection concerns additional debt; segregation concerns separation of funds.
Check your understanding
Separate money records from investment performance.
Show the answer and explanation
Mixing client funds with the firm’s own money
Separation of funds is its function.
Entity, obligations and client protection
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Read the fuller explanation
Related terms
Sources and documentation
- FCA Handbook — CASS 7: client money
UK client-money scope and sections 7.13.12–13: separate fund identification and the bank-account counterparty. This is not a guarantee of full recovery or protection from trading losses.
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The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.