What is a segregated account? Does it really secure your funds?

Before going into the details of the segregated account, it should be noted that this is about online brokers. These brokers through which traders pass to invest in the stock markets

Investors entrust them with the money they use for transactions and their profits also flow through these brokers. It is therefore essential that they can be reassured about the security of their funds… Here comes the notion of segregation of accounts… What is it then?

Definition of a segregated account

First of all, it should be noted that this is about your account with an online broker. This account where you deposit the money you will use for your transactions and where your possible winnings will be stored. When your account is segregated, it means that it is separated from the broker’s own account where you are registered. This way, you have a guarantee that your funds are protected. In practice, your money is kept in an account that is segregated with a reliable, third party banking institution.

As long as your funds are stored in a segregated account, if something happens to the broker, such as a bankruptcy, all the money that has been deposited and earned is returned to its owners. It may not be seized by the creditors of the broker in question. It should also be noted that client funds are never included on the broker’s balance sheet.

account segregation

An obligation for regulated brokers

It is interesting to note that the adoption of segregation of accounts is an obligation for regulated operators wishing to legally offer their services in France or, globally, in Europe. This is one of the criteria for selecting regulatory bodies such as CySEC: the broker’s accounts and those of its clients must be very separate.

On a regular basis, these regulatory bodies carry out audits of brokers to ensure that they all meet the criteria essential for a good broker. Otherwise, brokers may find themselves on the black list of operators to avoid.

If a broker mixes his own funds with his clients’ money, there is a significant risk that he will start drawing on funds that do not belong to him… It is better not to take that risk. All brokers on this site offer segregated accounts and for good reason, we only choose regulated brokers such as Interactive Option or OptionWeb for example.