Broker Insolvency
Brokers & RegulationWhen a broker fails, segregated money is pooled and any shortfall shared. What follows — a claims process, compensation, or nothing — depends on the entity.
Broker insolvency is the event every client-money rule exists to survive: the firm fails, an administrator is appointed and trading stops. Segregated funds are pooled and returned to clients ahead of general creditors, but pooling also means any shortfall is shared proportionally rather than falling on whoever withdrew last.
What happens next depends on the entity. Under a tier-1 regime an administrator publishes a claims process, the compensation scheme tops the shortfall up to its statutory limit, and open positions are closed at recorded prices. Under an offshore licence there may be no scheme, no funded administrator and no practical route for a foreign client to file at all. The history of failed FX brokers is mostly a record of how long clients waited.