When you deposit money with a forex broker, you are trusting that broker to keep your funds separate from its own operating capital. This is called segregated account protection — and under EU law, it is mandatory for all MiFID II-authorised brokers.
This guide explains what segregation means, why it matters if a broker becomes insolvent, and how you can verify your broker actually uses segregated accounts before you deposit.
A segregated account is a bank account that holds only client funds — completely separate from the broker's own corporate funds. The broker cannot use client money to pay its own bills, staff, or debts.
If the broker becomes insolvent, the segregated funds belong to clients, not to the broker's creditors. Without segregation, client money becomes part of the insolvency estate and recovery can take years — or yield nothing.
Several high-profile broker collapses have demonstrated the difference between segregated and non-segregated funds. Clients of fully segregated brokers typically recovered their full balance. Clients of non-segregated or poorly compliant brokers lost significant sums.
Segregation does not eliminate trading risk — you can still lose money through CFDs or leveraged positions. But it does protect your deposited capital from the broker's own financial problems.
Find which EU/EEA authority issued the broker's MiFID II licence. It is always disclosed on the broker's website — usually in the footer or the "About / Legal" section. Common EU/EEA regulators:
| Country | Regulator | Register URL |
|---|---|---|
| Germany | BaFin | bafin.de/register |
| Cyprus | CySEC | cysec.gov.cy/en-GB/entities/investment-firms/cypriot/ |
| France | AMF | regafi.fr |
| Netherlands | AFM | afm.nl/en/registers |
| Sweden | FI | fi.se/en/our-registers/ |
| Ireland | CBI | centralbank.ie/regulation/registers |
| Malta | MFSA | mfsa.mt/investors/financial-services-register/ |
Go to the regulator's official website and search for the broker by name. You are looking for a current authorised status — not suspended, withdrawn, or under investigation.
Note the licence number shown on the register. Cross-check it against the number on the broker's own website. They must match exactly.
MiFID II authorisation is the specific licence that mandates client money segregation. On the register entry, look for authorisation under MiFID II / Directive 2014/65/EU.
If the broker is authorised only under a national intermediary or introducing broker licence — not full MiFID II — it may not be subject to the same segregation obligations.
Regulators require brokers to publish their Client Money Policy or equivalent disclosure. Find it in the broker's "Legal documents", "Risk disclosures", or "Regulatory information" section.
Confirm it explicitly states:
If the policy does not explicitly use the word "segregated" or equivalent, contact the broker's support and ask directly. A regulated broker will answer clearly.
Segregation protects your funds from the broker's insolvency. But if the segregated bank itself fails, EU member states also operate investor compensation schemes (ICF). In Cyprus (CySEC brokers), the ICF covers up to €20,000 per client. In Germany (BaFin brokers), EdW covers up to €20,000.
Compensation schemes are a backstop — they do not replace segregation. Always verify both.
All brokers on comparefx.co are verified for MiFID II authorisation and segregated client money policy before listing.
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