RISK
Principal Protection, Segregated Accounts and Custody Explained
A plain look at the three safeguards that sit behind every position opened on the platform.
KEY TAKEAWAYS
- Segregation separates client money from company money.
- Custody determines who physically holds the asset.
- Protection language should always be read alongside its limits.
Segregated accounts
Client funds are held apart from the operating accounts of the business. That separation means day to day company expenses never draw on investor capital, and client balances are identifiable as client property rather than general assets.
Custody
Custody answers a simple question: who is holding the asset. A custodian keeps records of ownership and controls settlement. Independent custody reduces the risk that a single failure removes both the asset and the record of who owns it.
What protection does not cover
No safeguard removes market risk. Segregation and custody protect against operational and counterparty failure. They do not stop an investment from falling in value. Reading those two categories separately is the single most useful habit an investor can build.
This note is published for information only. It is not personal investment advice, and the value of investments can fall as well as rise.