Coverage is jurisdiction-specific and applies to firm failure, not to trading losses. The UK scheme covers eligible claims up to £85,000 per person per firm; EU member states operate funds with their own limits, commonly EUR 20,000. Australia and most offshore centres have no equivalent for retail FX.
Because the cap is per firm, large balances are sometimes split across brokers. That does not remove counterparty-risk; it only limits how much is exposed to any one failure.
Example: a trader holding £150,000 at a single UK firm would be covered for £85,000 if it failed. Split across two firms at £75,000 each, both balances would fall inside the cap.
Related: segregated-funds, counterparty-risk, fca, offshore-broker