NB! The protections mentioned in this article do not cover poor investment performance. It’s important to always remember that markets may go up or down, so you should never invest more than you can afford to lose.
Trusting us with your investments is not something we take for granted. Lightyear Europe AS is a licensed investment firm and as such is bound by strict regulatory obligations in how we handle and protect your assets. We do this via a process known as safeguarding.
Safeguarding means that, by law:
- Uninvested customer funds are stored separately from our business funds with regulated EU credit institutions and highest rated money market funds. The primary institutions where we hold uninvested customer funds are ABN AMRO Bank in the Netherlands and AS LHV Bank in Estonia, and in BlackRock money market funds rated AAA/mmf by Moody’s, S&P and Fitch.
- Invested assets are held with authorised custodians, which you can read more about in our “Who is the owner of the securities I buy?” help article.
- All customers assets are inaccessible by our creditors and they would be returned to customers in the unlikely event of Lightyears insolvency.
Are Lightyear customers covered by EU wide asset guarantee schemes?
Yes, should Lightyear Europe default, all our customers have their assets covered up to the amount of 20,000 EUR by the Estonian Investor Protection Sectoral Fund. Read more about this fund here.
Am I covered by the Securities Investor Protection Corporation (SIPC) protection in the US?
Your US securities are held with our partner Alpaca, who is FINRA regulated and a registered member of the SIPC. This means your US securities are protected up to the value of $500,000 should Alpaca fail. You can read more about this directly on the SIPC website.
Do UK users benefit from Financial Services Compensation Scheme (FSCS) protection?
Lightyear customers are not covered by FSCS protection as funds are currently held under our EU entity that provides brokerage services to customers resident in the UK. Access to FSCS protection will be reviewed once Lightyear is directly authorised by the FCA. Our direct authorisation application is currently with the FCA and we are working hard to finalise proceedings. You can read more about this in our How is Lightyear regulated? help article.
What is a money market fund?
Money Market funds (MMFs) are a type of mutual fund that invests only in highly liquid, short-term debt from the likes of governments and financial institutions. These funds offer high liquidity with a very low level of risk and EU/UK regulations allow for brokerages to hold customer money in them. In addition to offering protection via diversification, MMFs provide a return which we pass on to customers in the form of interest payments on uninvested cash you hold in your Lightyear account.
To opt-out from keeping your money in a MMF, you can opt-out of interest in the app.