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When you make a deposit with a broker, where are your funds held?
You might ask yourself the question ‘where are my forex funds held after I make my initial deposit?’ If you trade through a regulated forex broker, your funds will be held in a segregated account.
Why is a segregated account important?
A segregated account is separate from the broker's main bank account(s).
A broker uses its main bank account to run its core business. This is paying its day-to-day expenses like wages, rent and running costs.
Under regulated rules, the company is not allowed to use a client's investment funds as working capital. This results in my forex funds being pooled in a segregated account with other clients.
This also results in the client funds being easier to identify should the broker fall into financial difficulties. With an increase in forex scams over the last decade, a segregated account is considered critical in deciding which broker to trade through.
Figure 1 forex trader
Is Pepperstone a regulated broker?
Pepperstone takes their professional standards and the safety of their client’s funds extremely seriously. The company includes regulated entities in various jurisdictions around the world including the Financial Conduct Authority in the UK (FCA), the Australian Securities and Investments Commission (ASIC) in Australia, the Capital Markets Authority in Kenya, the Dubai Financial Services Authority in Dubai and various others.
Pepperstone places clients’ funds across various major banks. These banks are regularly assessed to ensure further safety.
If you’d like to learn more about Pepperstone, please visit our website.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.