Which brokers keep client money in segregated accounts?
Verdict
- Pepperstone keeps client money in segregated accounts across its entities, including Pepperstone Markets Limited, the Bahamas company (SCB, SIA-F217) that serves Hong Kong, and it is our pick.
- What sits on top of segregation differs by entity: UK clients get FSCS cover up to £85,000, German clients the EdW scheme, while Hong Kong clients of the Bahamas entity have no named compensation scheme.
- Segregation separates your money from the broker's own, but Pepperstone's Australian page notes there is 'no guarantee that all funds will be returned' if a firm fails.
- Capital.com and XS, our second and third picks for Hong Kong, publish no segregation details in our data; ask them before depositing.
Segregated accounts keep client money apart from the broker's operating cash, so it should not be used to pay the broker's creditors. Most regulated brokers say they do it; the useful detail is which company holds your money, under which law, and what backs it up. Here is that detail for Pepperstone, our first choice in Hong Kong.
How Pepperstone holds a Hong Kong client's money
Hong Kong residents open accounts with Pepperstone Markets Limited in Nassau, licensed by the Securities Commission of The Bahamas. Pepperstone holds no SFC licence. That entity's protection page says client money is segregated and, as published, 'covered by the requirements under Corporations Act 2001 (Cth)', which is Australian law cited on a Bahamas entity's page. No compensation scheme is named. Retail clients also get negative balance protection under clause 6 of the Bahamas terms, so a market gap cannot leave you owing money. Day to day, the account can be held in HKD and funded from $10.
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Pepperstone's client-money protection by entity
Segregation is the common base; the safety net on top depends on which company you contract with.
| Entity (regulator) | Segregation | Compensation scheme |
|---|---|---|
| Pepperstone Markets Limited (SCB Bahamas) – Hong Kong clients | Yes | None named |
| Pepperstone Limited (FCA, UK) | Yes, top-tier banks | FSCS, up to £85,000 for eligible clients |
| Pepperstone GmbH (BaFin, Germany) | Yes, trust accounts | EdW: 90% of claims, up to €20,000 |
| Pepperstone EU Limited (CySEC) | Yes, EU banks | Investor Compensation Fund: lower of 90% or €20,000 |
| Pepperstone Group Limited (ASIC, Australia) | Yes, top-tier banks | None named; no guarantee all funds are returned |
What segregation does not protect you from
- Trading losses: segregated money is still your margin and can be lost on trades.
- Shortfalls in a failure: if client accounts are short, clients may share the loss; that is what compensation schemes exist for.
- Bank failure at the holding bank, unless a deposit insurance scheme applies.
- Money sent to anyone other than the regulated company itself.
Questions to ask Capital.com, XS or any broker
- Which company will hold my money, and under which regulator?
- Are client funds segregated, and at which banks?
- Is any compensation scheme available to a Hong Kong resident of that entity?
- Is negative balance protection in the client agreement?
Sources
Does a Hong Kong resident get FSCS protection at Pepperstone?
No. FSCS covers eligible clients of Pepperstone's UK company. Hong Kong clients are served by the Bahamas entity, which names no compensation scheme.
Is segregated money the same as insured money?
No. Segregation keeps it separate from the broker's funds; insurance or a compensation scheme is an extra layer that may or may not exist.
Do Capital.com and XS segregate client funds?
Our data does not include their segregation terms for Hong Kong clients. Ask them, and check the clause in the client agreement.
Can I choose which Pepperstone entity I join?
Generally no; it depends on where you live. Hong Kong residents are routed to the international site and its Bahamas company.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. This page is not investment advice; broker terms change, so check them on the broker's own site before you open an account.