What happens to your money if your broker goes bankrupt? Few people ask this question — until it is too late. Here you learn which protection mechanisms apply and how to safeguard your capital.

Basic Principle: Segregated Assets

In the EU, securities in your depot are segregated assets. This means: Your stocks, ETFs, and bonds legally belong to you, not the broker. Even in a broker insolvency, they are not counted as part of the insolvency estate. You can transfer them to another broker.

However, this only applies to actual securities — not CFDs, contracts for difference, or crypto positions held in the broker name.

Deposit Insurance for Cash Balances

Money in the settlement account (not invested) is protected by statutory deposit insurance:

EU/Germany: Up to 100,000 euros per customer per bank (BaFin/EdB)
UK: Up to 85,000 GBP (FSCS)
USA: Up to $250,000 (FDIC) for cash, plus up to $500,000 (SIPC) for securities

Which Broker Offers What Protection?

Trade Republic: Deposit insurance via Deutsche Bank and J.P. Morgan (up to 100,000 euros). Securities as segregated assets at HSBC.
Scalable Capital: Deposit insurance via Baader Bank (100,000 euros + voluntary deposit insurance).
Interactive Brokers: SIPC protection up to $500,000 (including $250,000 cash). Additional insurance via Lloyds up to $30 million.
eToro: CySEC regulated, deposit insurance up to 20,000 euros — significantly less than German brokers.

Often Overlooked Risks

Securities Lending

Some brokers lend your shares to short sellers. Normally unproblematic, but during a crisis there could be complications. Trade Republic and Scalable Capital do not practice securities lending for retail investors.

Crypto Positions

Cryptocurrencies at brokers are often not covered by deposit insurance. At Trade Republic, cryptos are held via a trust solution — not in a dedicated wallet. The FTX debacle showed how important this distinction can be.

CFD Brokers Without Segregation

Some CFD brokers outside the EU do not segregate client funds. In insolvency, you are a normal creditor — your money is gone.

Your Checklist for Maximum Security

Only trade with regulated brokers (BaFin, FCA, SEC)
Keep cash balances under 100,000 euros per broker
Regularly download and archive account statements
For crypto: Transfer larger holdings to your own wallets
Do not use CFD brokers without proven segregation

Bottom Line: The German and European protection system is robust. But blind trust is inappropriate — understand the mechanisms and act accordingly.