What happens to my money if a broker goes bust?
Verdict
- It depends on which company holds your money. At Pepperstone, our pick, Singapore residents deal with its Bahamas entity: client money is segregated, but no investor compensation scheme is named.
- Segregation means your funds are held apart from the broker's own money; it improves your odds in an insolvency but is not a guarantee.
- Compensation schemes exist only for some entities: Pepperstone's UK clients have FSCS cover up to £85,000; its German and Cypriot entities offer up to €20,000 at 90% of claims.
- Negative-balance protection is a different thing: it stops you owing money after a market move, not losing money if the firm fails.
Broker failures are rare but not impossible, and what you recover depends on two things: whether client money was kept separate, and whether a compensation scheme covers your account. Both depend on the specific company you signed with, so the answer differs within one broker group.
Pepperstone's position for Singapore residents
Your account would sit with Pepperstone Markets Limited, licensed by the Securities Commission of The Bahamas (SIA-F217). Its protection page says segregated client money is 'covered by the requirements under Corporations Act 2001 (Cth)', an Australian law cited on the Bahamas entity's page as published. No compensation scheme is named. We still rank Pepperstone first for Singapore traders on cost and transparency, but you should size your balance knowing there is no safety net beyond segregation.
Affiliate link — we may earn a commission at no extra cost to you.
The same group, different protection
| Entity | Regulator | Compensation scheme |
|---|---|---|
| Pepperstone Limited (UK) | FCA | FSCS, eligible clients up to £85,000 |
| Pepperstone GmbH (Germany) | BaFin | EdW: 90% of claims, up to €20,000 |
| Pepperstone EU Limited (Cyprus) | CySEC | ICF: lower of 90% or €20,000, retail only |
| Pepperstone Group Limited (Australia) | ASIC | None named; 'no guarantee that all funds will be returned' |
| Pepperstone Markets Limited (Bahamas; serves Singapore) | SCB | None named |
Segregation, compensation, balance protection: what each does
- Segregation: client money sits in separate accounts, so creditors of the broker should not be able to claim it. Shortfalls can still happen.
- Compensation scheme: a fund that pays eligible clients up to a cap if segregated money falls short. None is named for the Bahamas entity.
- Negative-balance protection: under that entity's terms, retail clients are not liable for negative equity, so a gap in the market cannot leave you in debt. It does nothing in an insolvency.
How to limit the damage in practice
- Keep only the money you need for margin at the broker; leave the rest in your bank.
- Withdraw profits regularly instead of letting them build up.
- Record your balance and open positions periodically, so you can prove a claim.
- If a MAS-supervised firm matters to you, compare brokers that name a MAS-licensed Singapore company, such as IG, CMC Markets or Saxo.
Affiliate link — we may earn a commission at no extra cost to you.
Sources
Protection terms by Pepperstone entity.
Can a Singapore resident get FSCS cover through Pepperstone?
Not through the Bahamas entity that serves Singapore. FSCS cover applies to eligible clients of Pepperstone's UK company.
Are open positions protected if a broker fails?
A CFD is a contract with the broker itself, not an asset held in your name, so what you recover depends on segregation and any compensation scheme.
Does Pepperstone have a MAS licence?
No. A search of the MAS Financial Institutions Directory returns no Pepperstone entry.
Trading CFDs on leverage carries a high risk of rapid losses, and you can lose your whole deposit. Pepperstone's international site says 80% of retail investor accounts lose money when trading CFDs with this provider. Nothing here is investment advice; check every fee and term with the broker before you trade.