- NBP: the account doesn't go below zero. It protects against a debt to the broker, but not against losing the deposit.
- The compensation scheme: payouts if the broker collapses. It doesn't cover trading losses.
- In the EU, NBP is mandatory. At offshore entities it's a voluntary condition of the specific broker.
- In the shortlist's offshore jurisdictions there are no compensation funds.
Negative balance protection
A strong gap can jump over the stop-out level, and the position closes with a minus on the account: formally that's the client's debt to the broker. NBP means the broker zeroes out such a minus at its own expense. In the EU, negative balance protection has been mandatory for retail accounts since the ESMA measures of 2018; at offshore companies it's a voluntary condition each broker decides for itself. At some brokers in the shortlist NBP is on by default: this is visible on the cards. What NBP doesn't do: it doesn't save the deposit within the account, and trading losses stay yours.
The compensation scheme
This is protection against a different disaster: the broker has gone bankrupt or hasn't returned client money. In strict jurisdictions state funds operate: up to £85,000 per client in the UK (FSCS), up to €20,000 in Cyprus (ICF), up to AUD 150,000 in Australia (CSLR). In the offshore jurisdictions under which clients from Kazakhstan are served there are no such funds: on a broker's bankruptcy there's no guaranteed reimbursement, and protection rests only on the requirement to keep client money separate from the company's money. Details for each jurisdiction: the Regulators page.
The private analogue for members of The Financial Commission: the commission's fund, up to €20,000 per complaint, and only in the situation where a member broker has refused to comply with a dispute ruling.
Who protects against what
| Situation | What covers it |
|---|---|
| Trading loss on your own trades | Nothing. That's market risk |
| A minus on the account after a gap | NBP, if the broker has it |
| A FinaCom member broker doesn't comply with a dispute ruling | The FinaCom fund, up to €20,000 per complaint |
| Broker bankruptcy | The compensation scheme, if one exists in the licence's jurisdiction |
- ESMA: measures on CFDs (2018): mandatory NBP for retail accounts in the EU.
- The Financial Commission: Compensation Fund.
- The site's Regulators page: compensation schemes and limits for each jurisdiction.