Question for brokerage representatives: Cash/Margin Account Segregation

Discussion in 'Retail Brokers' started by rsi80, Feb 4, 2010.

  1. rsi80


    Hi, all

    I've a question regarding the segregation of the assets in brokerage cash and margin accounts, and wonder if any representative of brokerage firms on ET can provide an answer.

    As you know, account segregation means that a client's cash and assets in his brokerage account are segregated from the firm's assets, but not from other clients' assets. This means that, when a client takes a big hit and is unable to meet the shortfall, other clients' cash and assets may be used to plug the hole, after the brokerage firm's capital is exhausted.

    However, is there a distinction between cash and assets in a cash account and in a margin account for such purpose? In other words, would cash and assets in a client's cash account be used toward meeting any financial shortfall in the scenario described above?

    Thanks for your attention!