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What protects your money

If your broker fails, your shares are still yours. Knowing why, and where the limits are, is worth ten minutes.

Kept apart

EU rules make a broker keep clients’ shares apart from its own. The shares are recorded at a central depository (Euroclear and Clearstream are two big ones). If the broker goes bust, they are handed back or moved to another broker.

If something is missing

If shares or cash cannot be handed back, for example after fraud, an investor compensation scheme pays at least €20,000 per person in every EU country. It covers missing assets, never a fall in prices.

Cash is different

Cash waiting at a broker may sit at a bank. Bank deposits are covered up to €100,000 per person per bank. Read where your broker keeps cash; some spread it over several banks or money market funds.

Check the licence

Every broker serving you must be authorised in the EU. Look it up in the register of its home regulator: CONSOB in Italy, BaFin in Germany, AMF in France. A firm that is not there should not get your money.

Key takeaways

  • Your shares are held apart from the broker’s own.
  • Compensation covers missing assets, at least €20,000, never losses from prices.
  • Check a broker in its regulator’s register before you send money.