Client money segregation

Money a firm holds for its clients rather than for itself. A licensed firm keeps it in accounts identified at the bank as client accounts, separate from its own operating cash, and reconciles what is held against what is owed on a regular cycle. A shortfall is made good from the firm's own resources, never from another client's balance. The accounts are held with banks the firm must assess and disclose, and the rules are set by the regulator that licensed the firm rather than by the firm itself.

The purpose is identification in an insolvency. Because the money was never mixed with the firm's own, it is capable of being identified as belonging to clients and returned to them rather than falling to the firm's general creditors. That is the whole of the protection, and it is a real one.

What it does not do is where readers are misled. Segregation is not insurance and not a guarantee of return: it protects money from the firm's creditors, not from market losses, and an amount owed on an open position is netted before anything is returned. Return is also not immediate, since an administrator has to reconcile the pool first. And segregation is a statement about the specific licensed entity a client contracted with, so the relevant questions are which entity is named on the terms, which regulator licensed it, and how the reconciliation is audited.