What Is the Difference between Segregated and Omnibus Accounts in Asset Custody?
In asset custody, a segregated account holds the assets of a single client, separate from the assets of other clients and the custodian itself. This provides the highest level of protection, as the assets are clearly identifiable as belonging to a specific client.
An omnibus account, on the other hand, pools the assets of multiple clients together. While this can be more efficient, it can also create complications in identifying individual ownership, especially during a bankruptcy proceeding.
Segregated accounts are generally considered the safer option for asset protection.
