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Charles Schwab regulation: what happens if the firm fails

The licence is what decides where your money sits and who is obliged to do something about it. Here is who licenses Charles Schwab and what the protections are.

Facts last checked . Read the full Charles Schwab review.

Regulation and safety

Regulated by
SEC; FINRA; CFTC/NFA for futures and forex
Regulator tier
Tier 1
Register entry
FINRA BrokerCheck, CRD 5393
Client money segregated
Yes
Held at
Customer assets held under US SEC/FINRA customer-protection and custody requirements
Negative balance protection
No
Compensation scheme
SIPC up to $500,000, including $250,000 cash sublimit; excess SIPC insurance also maintained
Audited by
Deloitte & Touche LLP
Not available to
Country-dependent; international accounts only available to residents of qualifying jurisdictions and US sanctions restrictions apply

Check the licence yourself: FINRA BrokerCheck, NFA BASIC.

What this means

The licence is what decides where your money sits and who is obliged to do something about it.

Charles Schwab holds a tier-one authorisation from CFTC/NFA. That matters more than any headline spread: it determines your leverage cap, whether losses can exceed your deposit, and what happens to your money if the firm fails.

US retail forex is jointly overseen by the CFTC and NFA, with leverage capped near 1:50 and no CFD trading permitted.

Client money is held separately from the firm's own money, at Customer assets held under US SEC/FINRA customer-protection and custody requirements. That separation is what makes your balance recoverable if the company fails, rather than part of the pool its creditors divide up.

There is no negative balance protection. In a fast market a position can gap straight through your stop, and without this the resulting debt is legally yours - you can lose more than you deposited.

Covered by SIPC up to $500,000, including $250,000 cash sublimit; excess SIPC insurance also maintained, which pays eligible clients up to its limit if the firm fails owing client money.

Questions about Charles Schwab regulation

Is client money segregated at Charles Schwab?

Yes. Charles Schwab holds client money separately from its own funds, at Customer assets held under US SEC/FINRA customer-protection and custody requirements.

Does Charles Schwab offer negative balance protection?

Negative balance protection at Charles Schwab is recorded as: No.

Is there a compensation scheme at Charles Schwab?

Charles Schwab's compensation scheme is recorded as: SIPC up to $500,000, including $250,000 cash sublimit; excess SIPC insurance also maintained. A scheme covers the broker failing, not losses on your trades.

Regulation at brokers under the same regulator

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