What to do if your stockbroker goes bust

What happens to your money and your shareholdings if your stockbroker goes bust? What safeguards are there for your own trading account, and how do you reduce your risks? Tim Bennett explains.

What happens to your money and your shareholdings if your stockbroker goes bust? The question is far from academic. One of the highest-profile casualties of the eurozone crisis so far was brokerage MF Global, which went bust after its $6.3bn bet on troubled European bonds backfired. The firms' commodity-trading customers now face a shortfall of about $593m, says Bloomberg Businessweek. So what safeguards are there for your own trading account, and how do you reduce your risks?

Segregation is supposed to save you

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.