Segregated account

An account opened in the firm's name but designated at the bank as holding client money, kept apart from the cash the firm runs its own business on. The firm's books record what is owed to each client, the designated balance is reconciled against the total of those records on a cycle the regulator sets, and any shortfall found in that reconciliation is made good from the firm's own resources rather than from another client's balance.

Most retail client money sits in a pooled account rather than an account per client, which is the detail that decides what the arrangement actually is. A client's claim is to a share of the pool, evidenced by the firm's records, so the quality of the protection rests on the accuracy of those records, the frequency of the reconciliation and the audit behind it, rather than on the existence of the word segregated. The purpose of the separation is identification: money that was never mixed with the firm's own can be identified as clients' money in an insolvency and returned to them rather than falling to the firm's general creditors.

What it does not do is where readers are misled, and the limits are specific. Segregation is not insurance, not a deposit guarantee and not a promise of repayment. 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 not immediate, because an administrator has to reconcile the pool first. The bank holding the pool can itself fail, and that loss is generally shared across the pool. And the arrangement is a statement about one licensed entity, so the entity named on the terms and the regulator that licensed it are what determine the rules that apply.