What Is ‘Commingling Risk’ and Why Is It Associated with Omnibus Accounts?
Commingling risk is the danger that a client's assets are mixed with the broker's proprietary assets or the assets of other clients, making them difficult to distinguish. This risk is inherent in omnibus accounts, where multiple clients' funds are pooled.
If the broker becomes insolvent, the commingled assets may be treated as part of the broker's estate, leading to delays or losses for clients trying to reclaim their specific funds.
