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Segregated client funds

Client deposits held in bank accounts separate from the broker's own money, so they are not part of the firm's assets if it fails.

US rules require an fcm to hold customer futures money in segregated accounts and to top up any shortfall from its own capital daily. Unlike securities accounts, there is no SIPC-style insurance behind it: segregation is the protection.

Segregated status also means that in a broker bankruptcy customer positions and collateral can be ported to another FCM rather than becoming part of the estate — as long as the money is actually there.

Example: an FCM reporting $1.2 billion of segregated requirement and $1.26 billion held has $60 million of excess segregated funds. A negative number is the warning sign regulators look for.

Related: fcm, clearing-house, cftc, introducing-broker, guaranty-fund

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