If your broker fails, what actually happens to your ETFs?
The number everyone finds is €20,000, and it frightens people holding more than that. It is a real limit, but it answers a narrower question than most readers think they are asking. Your fund units are not sitting on your broker's balance sheet waiting to be shared out. They are held separately, in custody, and in an ordinary failure they are identified as yours and moved. Compensation covers the shortfall when that process fails, which is a different and much rarer event.
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What the scheme is for, and what it refuses
The Investor Compensation Company DAC is Ireland's statutory fund of last resort, set up under the Investor Compensation Act 1998. It pays out only after the Central Bank of Ireland determines that an authorised firm cannot meet its obligations to investors, or a court rules to that effect. Until one of those happens, there is nothing to claim.
The exclusions are where the misunderstanding usually lives. In the scheme's own words, you cannot claim for:
"losses arising from bad investment advice, poor investment management or misrepresentation"
"losses caused by a fall in the value of your investment because of market or other economic forces"
So if your global equity fund drops 30%, no scheme anywhere in the EU is relevant to you. Compensation exists for one narrow failure: a regulated firm going down and being unable to return the money or the instruments it was holding for you.
Why the €20,000 cap is rarely your real exposure
A broker holding your ETF units does not own them. They are held in custody, recorded as client assets and kept separate from the firm's own money. If the firm fails, an administrator's job is to identify those assets and transfer them, usually to another broker. The €20,000 cap applies to what cannot be returned, which in practice means a shortfall caused by fraud or serious record-keeping failure rather than insolvency on its own.
There is a second layer underneath that, specific to funds. A UCITS fund is required to place its assets with an independent depositary, separate from the fund manager. So the shares inside your S&P 500 fund are not held by your broker at all, and they are not held by the fund manager either.
The place the cap genuinely bites is uninvested cash sitting at a broker that is not a bank. That is the balance worth keeping small, and it is a good reason not to leave a large sum parked between contributions.
Which country's scheme covers your broker?
This is the part most people get wrong, and the Irish scheme is explicit about it: it does not cover foreign firms operating from outside Ireland. Nearly every broker Irish investors use is authorised somewhere else in the EU and passported into Ireland under MiFID, so the scheme you would claim from is that country's, not Ireland's.
| Broker | Authorised by | Protection |
|---|---|---|
| DEGIRO | flatexDEGIRO Bank SE (BaFin, Germany), via its Dutch branch (AFM/DNB conduct) — passported into Ireland under MiFID, not CBI-supervised | Cash up to €100,000 (German deposit guarantee); investments 90% up to €20,000 (German investor compensation) |
| Trading 212 | Trading 212 EU GmbH (BaFin, Germany) — passported into Ireland under MiFID, not CBI-supervised | Cash up to €100,000 (German deposit guarantee); 90% up to €20,000 investor compensation (EdW) |
| Davy Select IRISH | Central Bank of Ireland | 90% of net loss up to €20,000 (Irish Investor Compensation Scheme) |
| Interactive Brokers IRISH | Multiple — Irish clients via IBKR Ireland Ltd (CBI regulated) | €20,000 (Irish ICS); securities at IBKR LLC also SIPC-covered to $500k |
| Lightyear | Lightyear Europe AS — Estonian EFSA (EU/Irish customers); separate UK entity regulated by FCA | €20,000 (Estonian Investor Protection Sectoral Fund — EU customers) |
| XTB | XTB Ltd (CySEC, Cyprus — CIF licence 169/12), passported into Ireland under MiFID, not CBI-supervised | €20,000 investor compensation (Cyprus Investor Compensation Fund) |
| bunq | bunq B.V. — Dutch bank licensed by De Nederlandsche Bank (DNB) and supervised by the ECB; passported into Ireland, with the Central Bank of Ireland overseeing conduct of business. Investing provided via partners Ginmon and Upvest (Upvest Securities GmbH, BaFin-regulated, executes trades and holds the securities). | Cash up to €100,000 (Dutch Deposit Guarantee Scheme, equivalent to the Irish DGS); invested ETFs/shares held in segregated custody by the partner broker (Upvest) — client assets, not deposit-protected |
| IG | IG Europe GmbH — BaFin-regulated (Germany; reg. HRB 115624, BaFin no. 148759), passported into Ireland under MiFID. Not directly supervised by the Central Bank of Ireland. | €20,000 (German investor compensation scheme; IG Europe is not a bank so your cash is not deposit-guaranteed — keep only what you need) |
Regulator and protection details verified against each broker's own Irish-facing pages on 24 July 2026. Scheme rules from the Investor Compensation Company DAC, verified 4 August 2026.
In practice the headline investor-compensation figure is €20,000 almost everywhere, because that is the EU minimum and most member states simply adopt it. Choosing a broker on that number alone tells you very little. What differs is whether a deposit guarantee also applies to your cash, and how straightforward it would be to deal with a regulator in another language if something went wrong.
Cash and investments are two separate systems
These get conflated constantly, including by brokers in their own marketing. They are different schemes with different limits and different triggers.
Deposit guarantee: €100,000
Applies to cash held at a bank. DEGIRO reaches it through flatexDEGIRO Bank SE, Trading 212 through its German banking arrangements, bunq as a Dutch bank. If your broker is not a bank, this layer does not exist for you.
Investor compensation: €20,000
Applies when an investment firm cannot return client money or instruments. Ireland pays 90% of the loss up to that cap. This is the layer that covers your holdings, and the one that almost never has to be used.
What this should change about how you invest
Very little, which is the point. The €20,000 figure is not a cap on how much you can safely hold in ETFs, and reading it that way leads people into worse decisions: splitting across several brokers for no real gain, or avoiding investing entirely.
- Keep idle cash at the broker low. That is the balance the cap genuinely applies to.
- Check who authorises your broker, not just what the compensation number is. They are nearly all €20,000.
- Do not split brokers for compensation reasons alone. Splitting to protect fund units solves a problem the custody structure already handles, and it multiplies your tax paperwork at deemed disposal time.
- If Irish supervision matters to you specifically, Davy Select and Interactive Brokers Ireland are the Central Bank of Ireland options.