7 minute read · Ultimo Research Desk · Reviewed 5 Sept 2026
Segregated Client Funds Explained: What the Term Does and Does Not Mean
"Segregated client funds" means your money sits in a bank account held apart from the broker's own operating money, so the broker cannot spend it on rent, salaries or its own trading. Ultimo holds client money that way; the undertaking is section 18 of the Client Agreement and the regulation page describes it. That is what the phrase means. Here is what it does not mean, because the phrase gets loaded with hopes it cannot carry.
Four terms that are not the same thing
| Term | What it is about | What it does not do |
|---|---|---|
| Segregation | Where client money is held | Refund trading losses, guarantee instant withdrawal |
| Margin | Collateral reserved against open positions | Cap the loss on those positions |
| Negative-balance protection | Whether you can owe the broker after a loss | Prevent ordinary losses |
| Compensation scheme | A fund that pays out if a firm fails | Exist everywhere — at Ultimo it does not |
At Ultimo: funds are segregated; there is no negative-balance guarantee; there is no statutory compensation scheme. All three are on the regulation page and in the risk disclosure. A sentence about segregation never overrides the other two.
Segregation and losing money are unrelated
Deposit USD 2,000. Trade, pay some spread and swap, and equity is USD 1,750. Segregation did not fail; you lost USD 250 in the market. Where the money is held has nothing to do with what the market does to it. The same is true in the other direction: a profitable month says nothing about how the broker holds cash.
A balance is not a withdrawal amount
Your account shows balance, equity, margin used and free margin, and they are different numbers. With equity of USD 2,000 and USD 600 reserved as margin against open positions:
Free margin = 2,000 − 600 = USD 1,400
That is roughly what could be withdrawn — roughly because open positions keep moving, a pending withdrawal reserves the amount, and verification has to be complete. Ultimo's funding page describes how a withdrawal is reserved and returned to an account in your own name. The biggest number on the screen is not cash you can take out this minute.
Why the phrase exists at all
The reason regulators require segregation is history: brokers that kept client cash in the same account as their own money, ran into trouble, and spent it. Segregation makes that specific failure harder — the money is in a different account, at a bank, in a form the broker's own creditors are not meant to reach. It is a real protection against one real problem. It was never designed to protect against the other things people hope it covers, and reading more into it than that is how a good rule becomes a false comfort.
What to ask when a broker says "segregated"
Ask which company holds your relationship, which bank holds the money, whether the arrangement differs by product or client category, and how account records are reconciled against the bank. Those are requests for documents — the client agreement and the client-money terms — not for reassurance. If the broker's answer is "trust us", that is an answer.
"Segregated" also does not mean a bank account in your name. It is a pooled client account in the broker's name, held on trust or under contract for clients. If having your own account matters to you, ask specifically.
The question this guide will not answer
What happens to segregated money if the broker or its bank fails is a question of the agreement and of insolvency law, and nobody should answer it in a blog post. Ultimo's undertaking is that client money is held separately and is not the company's to use; how that plays out in a failure depends on the legal process at the time. Read the documents, and take advice if it matters to your decision.
Frequently asked questions
Does segregation stop my trades losing money? No. It is about where cash sits, not what positions do.
Is margin a fee paid to the broker? No. It is collateral, released when the position closes. Spread, commission and swap are the costs.
Does a segregated account mean instant withdrawals? No. Open positions, reservations and verification still apply.
Can I assume the same protections as at my last broker? No. Entity by entity. A broker in one jurisdiction may have a compensation scheme and negative-balance protection; Ultimo has neither, and says so.
Educational content, not legal or investment advice. Client-money arrangements do not remove market, banking or counterparty risk.
Sources
Written by the Ultimo Research Desk and checked against our own contract specifications and client agreement before publication; reviewed again when those change. Educational only — nothing here is a recommendation to trade. Spotted an error? Tell us.
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