How is my cash protected?

When you invest, you naturally start to take risk in the shares and other assets you buy. It’s a key element of your investment journey - after all, the relationship between risk and return is fundamental to setting up a portfolio that suits you.

Getting to grips with the risk/reward balance you are comfortable with is essential but you shouldn’t have to worry about the platform you are using presenting its own risk.

Brokerage firm failures are rare. If it does happen, the SIPC is there to help. The US non-profit corporation (of which Robinhood Securities, LLC is a member) oversees the liquidation of firms that close when they are bankrupt or face financial troubles. The SIPC will protect the securities in your brokerage account up to a value of $500,000, including up to $250,000 in cash.

As Robinhood Securities, LLC provides brokerage clearing services from the US to you as a UK customer, you fall under the protection rules above rather than the Financial Services Compensation Scheme, which protects UK brokerage customers up to £85,000 in the UK.

At Robinhood, we also have an additional insurance policy for accounts held by Robinhood Securities, LLC further to SIPC protection, which becomes available to customers in the event that SIPC limits are exhausted. This additional insurance policy provides protection for securities and cash up to an aggregate of $1bn, and is limited to a combined return to any customer of $50m in securities, including $1.9m in cash.

Keep in mind, though, this is solely to do with a brokerage going out of business or getting into financial troubles, and doesn’t protect against a loss in the market value of securities, like stocks.

But wait, there’s more. When you join Robinhood in the UK, you take part in the brokerage cash sweep program. This puts any cash that hasn't been invested yet into a network of banks, where it becomes eligible for Federal Deposit Insurance Corporation (FDIC) insurance up to a value of $2.5m.

Robinhood UK and Robinhood Securities, LLC are not FDIC-insured banks. Deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through FDIC deposit insurance coverage to apply.

There may be reasons why you choose not to earn interest on uninvested cash. For those customers, we provide the option to opt out of the interest-earning brokerage cash sweep program through the program banks, in which case the money will be held in a brokerage account at Robinhood Securities, LLC that is protected up to $250,000 under SIPC, not FDIC.

Important information

When you invest your capital is at risk. Past performance is not a reliable guide to future gains. Your investments and the income you receive from them may go down as well as up so you may get back less than you invest.

Make sure to do your own research on what investments are right for you before investing or consider seeking expert advice.

We don't charge commission fees when you buy or sell stocks but other costs apply. See our fee schedule.