Quick answer: Forex broker client-money segregation connects the legal account structure, permitted uses, client ledgers, bank and payment records, discrepancy handling and management oversight. Naming an account “client account” does not establish the applicable legal protection. Determine the rules for the licensed entity and product before designing receipt, settlement, withdrawal and reconciliation processes.
This is general operational and compliance information, not legal advice. UK and Australian examples illustrate different regimes. Scope, permitted use and reporting deadlines depend on the relevant licence conditions and current local law.
Distinguish client money, operating cash and regulatory capital
Client deposits, shareholder funding, earned fees and liquidity-provider margin can appear within one business chain while having different legal characteristics. Classify them by contract, product, client status and applicable law rather than relying on platform labels or balance fields.
Establish who receives payment, who owes the client, where money sits, who authorises transfers and what happens on insolvency or an account freeze. Explain relationships where contracting, collecting and accounting entities differ and obtain appropriate legal advice. Client balances are not automatically available operating cash, and client accounts do not replace the firm’s own capital planning.
| Money category | Question to resolve | Control focus |
|---|---|---|
| Client deposits and withdrawable balances | When client-money treatment begins and which entity’s regime applies | Classification, account structure and individual records |
| Operating cash | Whether it has lawfully become firm revenue | Separate accounting and authorised spending |
| Shareholder funds and regulatory capital | Eligibility, source and availability | Calculate separately from client-money obligations |
| Liquidity-provider margin | Who funds it and whether that source is permitted | Use restrictions, contracts and exposures |
| PSP transit balances and reserves | Legal holder, settlement timing, deductions and freezes | Transaction tracking and recoverability |
Understand the rules before designing accounts
United Kingdom: segregation and records work together
The FCA’s CASS 7 client-money rules address segregation and records for firms within scope. Records distinguish each client’s money from others’ and the firm’s money. Internal reconciliation and comparison with independent bank records serve different purposes. Apply the relevant provisions on frequency, methods, exceptions and correcting shortfalls.
Australia: reportable client money has a specific regime
ASIC’s INFO 226 explains record-keeping, daily and monthly reconciliations and reporting for AFS licensees holding reportable client money. The scope relates to derivative retail client money with specific exclusions. That schedule is not a universal standard for every jurisdiction.
Offshore licences: similar labels can conceal different protections
Account, permitted-use, classification, audit and reporting requirements vary. Ask for the actual legal basis, bank documentation and executable process rather than relying on “segregated funds” marketing. Compare arrangements alongside the licensing-jurisdiction decision.
Map every step from deposit to withdrawal
Cover transfers, cards, payment intermediaries, refunds, chargebacks, fees and currency conversion. At every node, identify the legal holder, account type, client identifier, authorised signers, settlement cycle and evidence. Intragroup transfers need the same legal and reconciliation analysis even when systems are integrated.
Review account-opening documents, any applicable acknowledgement or trust arrangement, permissions and bank set-off terms. Marketing descriptions cannot establish the legal effect. A PSP sub-account, wallet or merchant balance is not automatically equivalent to the client bank account required by the broker’s regime.
Combine internal, external and platform reconciliation
Internal reconciliation establishes what the firm’s own books say should be held for clients. External reconciliation compares those books with independent institution records. Platform checks explain orders, fees, realised results and changes in client entitlements. Comparing two exported totals is not sufficient.
| Reconciliation layer | Core data | Differences to explain |
|---|---|---|
| Client detail to general ledger | Individual receipts, withdrawals, trades and fees | Omissions, duplicates and incorrect client mapping |
| Ledger to bank | Books and independent statements | Unreceived funds, charges and uncleared payments |
| Ledger to PSP | Merchant transactions, settlement batches, chargebacks and reserves | Delays, freezes, deductions and conversion |
| Platform to finance | Trades, positions, commissions and results | Time zones, cut-offs, logic and interface gaps |
| Currency and account aggregation | Balances, currencies, valuation and rules | Rates, entity boundaries and non-offsettable balances |
Each pack should identify the business date, cut-off, time zone, sources, calculation version, preparer, reviewer and open items. Automation still needs retained inputs, calculation evidence and change history. A green system indicator cannot replace assessment of exceptions.
Resolve discrepancies with evidence
Distinguish real funding deficits, data errors and timing differences. A timing item still needs evidence and an expected clearing date. Escalate potential shortfalls to finance and compliance and follow applicable funding and notification duties. Do not disguise a deficit using another client’s incoming deposit.
- Assign one discrepancy identifier with amount, currency, account and affected clients.
- Retain original statements, system records and calculation evidence.
- Set interim controls, an owner and a completion deadline.
- Assess regulator, bank, customer and contractual notifications separately.
- Close only against receipt of funds, corrected records and review evidence.
- Investigate recurring causes and improve interfaces, authority or procedures.
Put notification thresholds and deadlines into the regulatory reporting calendar. Assess whether an operating exception also constitutes a reportable breach rather than waiting for the annual audit.
Control withdrawals, providers and ongoing oversight
Verify identity, receiving accounts and authority changes in the withdrawal process, with risk-appropriate independent review. Track amendments to bank details, templates, bulk files and API permissions. Avoid allowing one person to alter details, approve payment and perform the final review. Protect privileged access with appropriate multi-factor authentication and restrictions.
Banks, PSPs and liquidity providers can suffer outages, restrictions, chargebacks and settlement discrepancies. Review concentration and availability and prepare alternatives whose legal status and opening conditions have already been checked. When disruption occurs, use the incident-response checklist to assess clients and money together.
| Owner | Recurring work | Management evidence |
|---|---|---|
| Finance and treasury | Reconcile, track settlements and investigate differences | Review sign-off, ageing and remediation |
| Compliance | Map scope, notifications and policy | Obligation matrix, reports and exception analysis |
| Technology | Maintain interfaces, data and access | Change history, alerts and recovery testing |
| Senior management | Resource controls, review risk and resolve issues | Funding indicators, concentration and open matters |
| Independent review or audit | Test design and operation within the applicable scope | Findings, sample evidence and remediation retesting |
Budget and test before launch
Budget for accounts and payment services, interfaces, reconciliation tools, finance staff, independent review, legal documents, audit and contingency funding. Which resources can address a shortfall or qualify as regulatory capital needs separate assessment. These are planning categories, not a universal jurisdictional quote.
Test the complete deposit-to-withdrawal chain with unidentified receipts, duplicate payments, PSP delays, exchange differences and outages. Confirm that each payment maps to an entity, client and ledger, then validate reconciliation, escalation and release authority. Retest fixes before closing launch findings.
Frequently asked questions
Does opening a client account complete segregation?
No. Verify legal status, use restrictions, client records, reconciliation, permissions and protection mechanisms. The account name is only one piece of information.
Does each client need a separate bank account?
That depends on the regime and account structure. Where pooling is permitted, individual entitlements must still be accurately identified and distinguished from the firm’s money.
Can client money pay ordinary company expenses?
Client balances should not be treated as freely available operating cash. Any withdrawal, fee transfer or other use needs a clear legal basis, contractual support and reconcilable records.
Is a PSP balance automatically a client bank balance?
No. Check the legal holder, status, settlement and freeze conditions, and how the balance is treated in the applicable client-money calculation.
Must every broker reconcile daily?
Frequency depends on applicable rules and business risk. UK CASS and Australian regimes have specific requirements; they do not establish identical rules for every licence.
Do timing differences need to be recorded?
Yes. Record the source, amount, date, expected clearing and owner. Escalate aged or unexplained items instead of repeatedly extending their expected completion.
Does segregation guarantee customers cannot lose money?
No. Bank risk, operational errors, legal structure, shortfalls and insolvency processes can affect the outcome. Describe the actual protections and limitations accurately.
To align client-money controls, bank onboarding, PSP settlement and licensing, contact our team with your jurisdiction, products, channels and current money flow.
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