With the exception of this chapter and the chapter on insurance customers' money, CASS does not apply to:. The chapter on insurance customers' money does not apply to an authorized professional firm in relation to its unusual regulated activities, which are insurance distribution activities, if:.
Application for affiliates
In general, the customer categories of retail customers, professional customers, as well as eligible counterparties, have no relevance for credit-related regulated activities, including debt management activities.
Investments and money held under different regimes
General application: where?
UK establishments: general
Application: particular activities
Occupational pension scheme firms (OPS firms)
Stock lending activity with or for clients
Corporate finance business
Oil market activity and energy market activity
Appointed representatives and tied agents
Depositaries
Auction regulation bidding
Debt management activities
Application: electronic media and E- Commerce
Application to electronic media
1A.1 Application
1A.2 CASS firm classification
One of the consequences of ■CASS 1A.2.2 is that a company that defines itself as a CASS small company or a CASS medium-sized company will at least exceed one of the limits in CASS 1A during the calendar year. .2.5 R gives the company the possibility of selection into the higher category of "CASS company type".
1A.3 Responsibility for CASS operational oversight
Collateral
- Application and Purpose
Application
Purpose
Requirements
If the firm has the right to use the client's asset under a "right of use". Where the firm uses global netting arrangements, a statement of assets held on this basis will suffice.
Client money: insurance
- Application
- Holding money as agent of an insurance undertaking
In addition to complying with (1), a firm must ensure that an account in which money held in accordance with a trust fund referred to in section 42(3) of the 1987 Act or an account held in accordance with the rules of RICS meets the requirements in ■ CASS 5.5.49 R To the extent that the firm will hold money as a trustee or otherwise on behalf of its clients. ■CASS 5.1.5A R) otherwise agreed, for the purposes of ■CASS 5.1to■CASS 5.6, an insurance undertaking (when acting as such) with which a firm carries on the activity of distributing insurance shall not be treated as a customer of the firm.
Introduction
Requirement for written agreement before acting as agent of an insurance undertaking
Statutory trust
In the event of a bankruptcy of the company, costs associated with the distribution of the client's money may be borne by the trust. A company (other than a company acting in accordance with■CASS 5.4) receives and holds client money as a trustee (or in Scotland as an agent) under the following conditions:.
Non-statutory client money trust
Voluntary nature of this section
Conditions for using the non-statutory client money trust
Client money to be received under the non-statutory client money trust
Contents of trust deed
Segregation and the operation of client money accounts
Divorce, in the event of a company bankruptcy, is important to the effective functioning of the trust created to protect the client's money. The aim is to clarify the difference between customer money and general rights of creditors in case of bankruptcy of the company.
Requirement to segregate
Unless otherwise stated, each provision in ■CASS 5.5 applies to companies operating under ■CASS 5.3 (statutory trust) or ■CASS 5.4 (non-statutory trust). One of the purposes of ■CASS 5.5 is to ensure that customer money is kept separate from the company's own money, unless otherwise permitted.
Money due to a client from a firm
Segregation
A firm must not keep money other than client money in a client bank account unless it is:. If client money is received by the Company in the form of an automated transfer, the Company shall take reasonable steps to ensure that:.
Non-statutory trust - segregation of designated investments
A firm holds all client money in general client bank accounts for its clients as part of a common pool of money so that these particular clients do not have a claim against a particular amount in a specific account; they only have one claim on the customer's money in general. A firm holds client money in the bank accounts of specific clients for those clients who have requested that their client money be part of a particular pool of money, so that these particular clients have a claim to a particular amount in a specific account; they do not have a claim on the client's money generally unless a primary merger event occurs.
Withdrawal of commission and mixed remittance
However, such permission is unlikely to be necessary if merely a power to invest is given, but the deed provides that the funds may only be managed at the discretion of another company (which has the necessary permission). Such an arrangement would not preclude the firm holding client money as trustee appointing another firm (or firms) as manager and determining a.
Appointed representatives, field representatives and other agents
Immediate segregation
V 5.5.21 . should be treated as customer money while the company takes steps to match the transfer to a transaction as quickly as possible. appointed representatives, field representatives and other agents .. those of the company) until the customer's money is deposited into a bank account of the customer or sent to the company.
Periodic segregation and reconciliation
Client entitlements
Interest and investment returns
Transfer of client money to a third party
Client bank accounts
Accordingly, customers whose money is held in a designated customer bank account will not share in any shortfall due to a failure of the type described in (a) or (b). Accordingly, clients whose money is held in a designated client bank account will share in any shortfall resulting from a failure of the firm.
A firm's selection of a bank
Group banks
If a client has notified a firm in writing that it does not wish its money to be held in a bank in the same group as the firm, the firm must either:
Notification and acknowledgement of trust (banks)
Notification to clients: use of an approved bank outside the United Kingdom
Notification to consumers: use of broker or settlement agent outside the United Kingdom
If a customer has notified a firm prior to entering into a transaction that he does not wish his money to be transferred to another broker or settlement agent in a particular jurisdiction, the firm must either:.
Notification to the FCA: failure of a bank, broker or settlement agent
Client money calculation and reconciliation
Notification to the FCA: bankruptcy of a bank, broker or settlement agent. refers to the cash balances of individual customers; the second to aggregate client money amounts recorded in a company's ledgers. ■CASS 5.5.68 R) all amounts attributable to customer money received by its appointed representatives, field representatives or other agents and which, at the date of calculation, must be segregated in accordance with ■ CASS 5.5.19 R. 2 ) A Company must, within ten Business Days of the calculation in (a), reconcile the balance in each Customer's bank account, as recorded by the Company, with the balance in that account as set forth in the statement or any other form of confirmation used by the bank holding that account.
Client money resource
Client money (client balance) requirement
Client money (accruals) requirement
Failure to perform calculations or reconciliation
Discharge of fiduciary duty
Records
Client money distribution
In the event of any conflict between the terms of the trust as required by ■CASS 5.4.7 R (1)(c) and the terms of ■DASS 5.6, the latter shall apply. In this case the UK branch of the firm can be treated as if the branch itself were a free-standing entity subject to the client money (insurance) distribution rules. 2) Companies acting in accordance with ■CASS 5.4 (Non-statutory trust) are reminded that the client money (insurance) distribution rules must be implemented in the trust provisions required by ■CASS 5.4.
Failure of the authorised firm: primary pooling event
1) ■CASS 5.6 (the rules for the distribution of customer money (insurance)) applies to a company that is subject to ■CASS 5.3 (statutory trust) or■CASS 5.4 (non- legal trust) when a primary pooling event or a secondary pooling event occurs. The rules for the distribution of customer money (insurance) aim to facilitate the timely return of customer money to a customer in the event of bankruptcy of a company or a third party where the company holds customer money.
Pooling and distribution
Client money received after the failure of the firm
Customer money received after the primary pooling event related to an uncompleted transaction must be used to complete that transaction. Where possible, the Company should attempt to split a mixed transfer before crediting the relevant accounts.
Failure of a bank, other broker or settlement agent: secondary pooling events
Failure of a bank
Failure of a bank: pooling
The term 'should have been held' is a reference to the failed bank's failure (and elsewhere, as appropriate, is a reference to the other failed third party's failure) to hold the customer money at the time of the pooling event . A client whose money is held, or should have been held, in a designated client bank account with a failed bank is not entitled to claim in respect of that money against any other client bank account or client transaction account of the firm .
Client money received after the failure of a bank
Failure of an intermediate broker or settlement agent: pooling
Client money received after the failure of a broker or settlement agent
Whenever possible, the firm should seek to separate a mixed shipment before the respective accounts are credited. a) by written instruction of the client, transferred to a third party, different from the one that failed; or. b) return to the customer as soon as possible.
Notification on the failure of a bank, other broker or settlement agent
Mandates
Safe keeping of client's documents and other assets
Requirement
5Segregation of designated investments: permitted investments, general
Custody rules
- Application
1A) when holding financial instruments belonging to a client during its MiFID activity; 1B) when protecting and managing investments, in activities that are not MiFID business; 1C) when acting as trustee or depositor of an AIF;. 1D) when acting as trustee or depositary of a UK UCITS; and. 1E) in relation to any arrangement for a client to transfer full ownership of a safe custody asset (or an asset that would be a safe custody asset but for the arrangement) to a firm which is:. a) during, or in connection with, the firm's particular investment business; and. The regulated activity of investment custody and administration covers both the custody and administration of assets (unregulated). and regulating the safekeeping and administration of assets, when those assets are either safe investments in safekeeping or custody assets. investment is, in summary, a specific investment that a firm receives or holds on behalf of a client.
Business in the name of the firm
Title transfer collateral arrangements
For example, the conditions referenced in■CASS 6.1.6BR(2)(b) may include conditions under which the arrangement relating to the transfer of full ownership of the deposited asset to the Company is not in effect from time to time , or depends on some other condition. Firms are reminded of the client-interest rule, which requires them to act honestly, fairly and professionally in accordance with the best interests of their clients when structuring their business, particularly with regard to the effect of that structure on the obligations of firms under this chapter.
Termination of title transfer collateral arrangements
Firms are reminded that, in certain cases, the collateral rules apply where a firm receives collateral from a client to secure the client's obligations.
Prime brokerage agreements
Affiliated companies - MiFID business
Affiliated companies - non-MiFID business
Delivery versus payment transaction exemption
A company cannot, in respect of a particular delivery versus payment transaction, make use of the exception under ■CASS 6.1.12 Rin one or both of the following circumstances:. ■CASS 6.1.12 R), with regard to:. a) a customer's purchase, the custody rules apply to the relevant custody asset that the company receives on settlement; and. b) a customer's sale, the rules for customer money will apply to the relevant money received at settlement.
Temporary handling of safe custody assets
Exemptions which do not apply to MiFID business
Managers of AIFs and UCITS
Personal investment firms
Trustees and depositaries (except depositaries of AIFs and UCITS)
The reasonable steps referred to in ■DASS 6.1.16FR (2) may include obtaining an appropriate legal opinion.
Depositaries of AIFs
A custodial company or depository that only takes care of the safekeeping and management of assets can also take advantage of the exemption v.
Depositaries of UCITS
Arrangers
General purpose
Holding of client assets
Requirement to protect clients' safe custody assets
Requirement to have adequate organisational arrangements
Registration and recording of legal title
A firm may register or register the title to its own relevant asset in the same name as that in which the legal title to a customer's custody asset is registered or registered only if the company's relevant asset is separately identified from the customer's custody asset in the company's records, and one of or both conditions in (1) and (2) are met. A company must ensure that all documents of title to relevant assets in bearer form belonging to the company and of which it is in physical possession are.
Allocated but unclaimed safe custody assets
When a firm liquidates a safekeeping asset under ■CASS 6.2.10 R, it must pay the proceeds to charity as soon as possible. The firm must unconditionally undertake to pay to the client in question an amount equal to the value of the safe custody asset. the time it is liquidated or paid in case the client wants to claim the safe custody asset in the future.
Costs associated with divesting allocated but unclaimed client assets
Depositing assets and arranging for assets to be deposited with third
Depositing safe custody assets with third parties
The firm must make the record on the date it makes the election or appointment and must keep it from that date until five years after the firm ceases to use the third party to hold safekeeping assets belonging to clients. The firm must make the record on the date it completes the review and must keep it from that date until five years after the firm ceases to use the third party to keep safe custody assets belonging to clients.
Third-party custody agreements
Use of safe custody assets
A firm must take appropriate measures to prevent the unauthorised use of safe custody assets for its own account or the account of any other person, such as:. A firm must adopt specific arrangements for all clients to ensure that the borrower of client safe custody assets provides the appropriate collateral and that the firm monitors the continued appropriateness of such collateral and.
Records, accounts and reconciliations
Records and accounts
Right to use agreements
General record-keeping
Policies and procedures
Internal custody record checks
A company must perform an audit of its internal custody records using the internal custody reconciliation method or the internal system review method. A company may use its internal records (for example, its depository and customer-specific ledgers for assets under custody or other internal records) only to conduct an audit of its internal custody records.
The internal custody reconciliation method for internal custody record checks
The internal system evaluation method for internal custody record checks
Physical asset reconciliations
If a firm completes an active physical reconciliation in two or more stages, such that the firm: The documents under ■CASS 6.6.30R (1) must, for example, cover the systems and controls that the firm will have in place to mitigate the risk of 'fill and load' in relation to all safe physical storage assets held by the firm . for clients and across all the firm's business lines.
External custody reconciliations
If a firm acting as an administrator or depositary for an AIF that is an authorized AIF deposits custody assets belonging to a client with a third party pursuant to Article 89(1) AIFMD Level 2 Regulation, the firm should seek to ensure that the third party provides the firm with sufficient information (for example in the form of a statement) on a date or dates specified by the firm which describes the description and amounts of all the custody assets that are credited to the account(s) and that this information is provided in sufficient time to allow the company to carry out the periodic reconciliations required under Article 89(1). ) in the AIFMD level 2 regulation. If a firm acting as administrator or depositary of a UK UCITS deposits custody assets belonging to a client with a third party under Article 13(1)(c).
Frequency of checks and reconciliations under this section
External custodial reconciliations must be performed for each custodial asset that the firm holds for its customers, except for physical custodial assets. Reconciliation of transactions involving trust funds, rather than trust funds themselves, will not satisfy the requirement under.
Frequency of checks and reconciliations after failure
For each review a firm undertakes under (1), it shall record the date and the actions taken by it in reviewing the frequency of its internal custody controls, reconciliations of physical assets and external custody reconciliations.
Independence of person performing checks and reconciliations
Resolution of discrepancies
When a company identifies a discrepancy outside its processes for an internal custodial review, physical asset reconciliation, or external custodial reconciliation, the company must: . Items recorded or held in a suspense or error account are subject to the discrepancies in this section.
Treatment of shortfalls
Entries recorded in a firm's books and accounts that are no longer recorded by relevant third parties (such as 'liquidated stocks') are also included within the scope of discrepancies in this section. the value of the shortfall, hold it for the relevant customer as customer money under the customer money rules and, in doing so:. i) ensure that the money is allocated according to CASS 7.13. Allocation of client money) and recorded as held for the relevant client under CASS 7.15 (Records, accounts and reconciliations); ii) keep a record of the actions the firm has taken under this rule, which includes a description of the shortfall, identifies the relevant customers affected and specifies the amount of money the firm has allocated to cover the shortfall; iii) update the records made under (ii) whenever the discrepancy is resolved and the firm has reappropriated the money; or (c) acquire a number of applicable assets in accordance with (a).
Notification requirements
Annual audit of compliance with the custody rules
Treatment of custody assets after a failure
Disposal of safe custody assets
For the purposes of ■CASS 6.7.4E(1)(a), a firm may use any means available to determine the correct contact details for the relevant customer, including:. If the firm undertook a tracing exercise for the purposes of ■CASS 6.2.10R(4) (Allocated but unclaimed safekeeping assets) before its failure but had not. made a charitable payment under that rule up to the time of its failure, then the findings of that exercise may be relied upon for the purposes of.
Transfers of safe custody assets
Client money rules
- Application and purpose
This chapter applies to a firm that receives money from or holds money for or on behalf of a client in the course of or in connection with its:. A business is reminded that when■CASS 7.10.1 applies, it must handle customer money appropriately so that, for example:.
Opt-in to the client money rules
The consent to customer money rules under ■CASS 7.10.3R do not apply to money held by the business outside:. If a company has elected to comply with this chapter in accordance with ■CASS 7.10.3R, the insurance customer money chapter will not apply to the activities for which the election applies.
Loan-based crowdfunding
After an election made by a firm under ■CASS 7.10.7AR becomes effective and until it ceases to be effective:. If a firm that has made an election under ■CASS 7.10.7AR subsequently decides to revoke that election:.
Money that is not client money: 'opt outs' for any business other than insurance distribution activity
Money other than customer money: 'opt-out' of any business other than insurance distribution activities.
Professional client opt-out
Subject to■CASS 7.10.12 R, money is not client money when a firm (other than a sole trader) holds that money on behalf of, or receives it from, a professional client, other than in the course of insurance distribution activity, and the firm has obtained written acknowledgement from the professional client that:.
Opt-outs' for non-IDD business
Credit institutions and approved banks
If a CRD credit institution or an approved bank that is not a CRD credit institution wishes to hold customer money for a customer (instead of holding the money in one of the ways described in ■CASS 7.10.16 R) it must , before providing certain investment business services to the client, disclose the following information to the client:. A CRD credit institution or an approved bank that is not a CRD credit institution must, in relation to any client money held in connection with its specified investment business that is not a MiFID business, comply with the obligations referred to in ■COBS 6.1.16 R (Compensation Information).
Affiliated companies: MiFID business
This must be done no later than ten working days after the firm receives the money. Firms carrying on MiFID business are reminded of their obligation to provide investor compensation scheme information to clients under■COBS 6.1.16 Ror.
Affiliated companies: non-MiFID business
Coins
Solicitors
Long term insurers and friendly societies
Contracts of insurance
Life assurance business
However, a company may not elect to comply with the insurance client money chapter with respect to client money that it receives and holds in connection with any part of its designated investment business that does not involve an insurance distribution activity.
Trustee firms
Treatment of client money
If a firm agrees to the termination of a TTCA, it must notify the client of its agreement in writing. If a TTCA is then terminated, unless otherwise permitted under the customer fee rules and notified to the customer under
Money due and payable to the firm
Commission rebate
Interest
Client money which the firm places with another authorized central party in connection with a regulated clearing arrangement ceases to be client money for that firm if, as part of the default management process thereof. Client money that the firm places with another CCP in connection with a regulated clearing arrangement ceases to be client money if, as part of that CCP's default management process in relation to a default by the firm, they are paid directly. to the client from the authorized central party in accordance with the procedure described in Article 48(7) of EMIR.
Transfer of business
Customer money received or stored by the company for a sub-pool ceases to be customer money for the company in question to the extent that such customer money is transferred by the company to an authorized central counterparty or a clearing member as a result of porting. A company may not deposit client money into a client's bank account that has been opened without the client's consent.
Transfer of business: de minimis sums
Transfer of business: client notifications
When considering how and whether to implement the written agreement referred to in ■CASS 7.11.42 R(3), firms should take into account all relevant obligations to clients, including requirements under the Unfair Terms Regime. 3) that the customer can choose to get back the amount transferred from the customer as soon as possible at the request of the customer. The Company must notify the FCA of its intention to transfer customer money under either or both of ■CASS 7.11.42 Rand■CASS 7.11.44 Rat at least seven days before transferring the customer's money in question.
Allocated but unclaimed client money
For the purpose of■DASS 7.11.52 E (1)(a), a firm may use any means available to determine the correct contact details for the relevant customer, including the customer's telephone, search of internal records, media advertisements,. public records search, death screening, use of credit reference agencies or tracking agents. a) the firm must unconditionally undertake to pay an amount equal to the balance paid away to charity to the relevant client if the client wishes to claim the balance in the future;.
De minimis amounts of unclaimed client money
Costs associated with paying away allocated but unclaimed client money
Organisational requirements
Requirement to protect client money
Segregation of client money
Application and purpose
Depositing client money
Approaches for the segregation of client money
The normal approach
Selection, appointment and review of third parties
A designated customer bank account may only be used for a customer if that customer has consented to the use of that account. If a firm deposits clients' money into a designated client bank account then, in the event of a.
Diversification of client money
In complying with the requirement in■DASS 7.13.22 R to periodically check whether diversification (or further diversification) is appropriate, a firm must take into account:. The firm must make the record on the date it completes the review and must keep it from that date until five years after the firm ceases to use that particular person for the purposes of depositing client money under ■DASS 7.13.3 R. 3) A firm must make a record of each periodic review it makes under ■ DASS 7.13.22 R, its considerations and conclusions.
Qualifying money market funds
The FCA will use this information to monitor compliance with the diversification rule i■CASS 7.13.20 R. 1) A firm must make a record of the grounds on which it considers whether it is appropriate to select and appoint a bank or a bank. a qualified money market fund under ■CASS 7.13.8 R. The firm must make the record on the date it makes the election or appointment and must keep it from that date until five years after the firm ceases to use the person concerned for the purposes of paying client money under ■CASS 7.13.3 R. 2) A firm must make a record of each periodic review of its selection and appointment of a bank or a qualified money market fund that it carries out under ■CASS 7.13.8 R, its considerations and conclusions. A firm may comply with■CASS 7.13.28 R(1) by informing the client that units or shares of the qualified money market fund will be held as custody assets.
Segregation in different currency
Mixed remittance
Physical receipts of client money
When a business receives money from a customer in the form of a check dated in the future, unless the business returns the check, it must:
Appointed representatives, tied agents, field representatives and other agents
Allocation of client money receipts
If a firm receives money (either in a customer bank account or in its own account) which it is unable to immediately identify as customer money or its own money, it must:. If a firm is unable to identify the money it has received as customer money or its own money under ■CASS 7.13.37 R, it should consider whether it would be appropriate to return the money to the person who sent it or source. where it was taken from (for example, the banking institution).
Prudent segregation
Money retained by the firm in a client bank account under this rule is client money for the purposes of the client money rules and the client money distribution and transfer rules. The firm's written policy must not conflict with the client money rules or the client money distribution and transfer rules.
Prudent segregation record
To the extent that the firm no longer considers it prudent to hold money in its client's bank account in accordance with ■CASS 7.13.41 Rin to ensure that the client's money is protected, the firm may cease to treat that money as the customer. A careful record of the allocation must be kept for five years after the firm ceases to hold money as client money in accordance with ■CASS 7.13.41 R.
The alternative approach to client money segregation
3) (a) Subject to (c), on reaching its determination under (2) of the amount of money that will be sufficient to address the risks referred to in (2) for the coming three months, a firm must in takes into account the following in respect of each line of business for which it uses the alternative approach, and for at least the previous three months:. i) the firm's client money requirement over the course of that previous period (excluding any amount that had to be segregated in terms of this rule during that previous period for the purposes of alternative approach mandatory prudential segregation);. ii) the daily adjustment payments that the firm made into its client bank account in terms of ■DASS 7.13.62 R (3) during that previous period; and. iii) the amount of money received by the firm in its own bank account which it did not initially identify as part of its customer money requirement, but which subsequently, and during that previous period, became part of its customer money requirement;. as indicated in its internal records. The alternative approach mandatory prudent segregation record must be retained for five years after the firm ceases to segregate any money in accordance with■DASS 7.13.65 R.
Use of the normal approach in relation to certain regulated clearing arrangements
The amount set aside by a company in its customer's bank account under this rule is customer money within the meaning of the rules for customer money and the rules for the distribution and transfer of customer money. A company must, at regular intervals, which are at least quarterly, repeat and complete the combined process of: i) determining the amount to be sequestered for the purposes of mandatory prudent segregation of clearing agreements under (2) and (3); ii) making necessary adjustments to its records to reflect any changes in its client's monetary needs in accordance with. iii) depositing additional amounts of its own money into its client's bank account to increase the firm's clearing.
Clearing arrangement mandatory prudent segregation record
Client money held by a third party
Similarly, this section applies where a firm allows an intermediary to hold client money in connection with non-margin transactions of the firm's client, again without performing its fiduciary duty to that client. Client money that a firm allows another person to hold under ■CASS 7.14.2 R: (1) must be held only for transactions that are likely to occur (and for
Client money arising from, or in connection with, safe custody assets
Records, accounts and reconciliations
A firm shall keep such records and accounts as are necessary to enable it to distinguish at all times and without delay customer money held for one customer from customer money held for any other customer and its own money. A firm must maintain its records and accounts in a manner that ensures their accuracy, and in particular their correspondence with the client money held for clients, and that they can be used as an audit trail.
Record keeping
Therefore, any records that fall under these requirements must be maintained by the company and must be separate from any records that the company may have. obtained from any third party such as those with whom or through whom it may have deposited or otherwise permitted to hold the customer's money. For each internal reconciliation of client money and reconciliation of external client money carried out by the firm, it must ensure that it records:
Receipts of client money
Companies are reminded that under ■SYSC 6.1.1 R they must establish, implement and maintain adequate policies and procedures to ensure. the company's compliance with the rules in this chapter.
Payments made to discharge fiduciary duty
Internal client money reconciliations
DASS 7A.2.4R(1) and (1A) (Pool and distribution or transmission) are correctly constructed and maintained, and are treated separately;.
Non-standard method of internal client money reconciliation
A company is reminded that according to SUP 3.4.2 R it must take reasonable steps to ensure that its auditor has the required skills, resources and experience to perform its function.
External client money reconciliations
Frequency of external client money reconciliations
In most circumstances, firms that undertake daily transactions must perform an external client funds reconciliation every business day. For each review that a firm undertakes under (1), it must record the date and the actions it took to review the frequency of its external client money reconciliations.
Frequency of external reconciliations after a primary pooling event
In determining the frequency with which it will perform external client financial reconciliations under■CASS 7.15.26AR(2) following a primary pooling event, an firm should consider:. An external reconciliation of money from a customer requires that a company:. a) the balance, currency by currency, in each customer's bank account registered by the Company, as set forth in the most recent statement or other form of confirmation issued by the bank at which those accounts are held; And.
Reconciliation discrepancies
Annual audit of compliance with the client money rules
The standard methods of internal client money reconciliation
Regardless of whether a company follows one of the standard methods of reconciling internal customer money or a non-standard method of reconciling internal customer money, it is reminded that it must maintain its records so that it is able to immediately reconcile the total calculate the amount of the bills. client money it should hold for each client (see■CASS 7.15.15 R(1)). Firms are reminded that the internal reconciliation of client funds should achieve the goals set out in ■CASS 7.15.14 G. 1) A firm using the normal approach to segregating client funds (■CASS 7.13.6 R) will use methods in this section to verify that customer funds are properly segregated in its customers' bank accounts.
Client money requirement
A CASS 7 loan-based crowdfunding firm may not use the individual client balance method under this section. 3) ■DASS 7.16.12 R does not prevent a CASS loan-based crowdfunding firm from adopting the individual customer balance method as part of a non-standard method of internal customer money reconciliation.
Client money requirement calculation: individual client balance method
Client money requirement calculation: net negative add-back method
Calculation of customer demand for money: individual customer balance method. closing of business on the previous business day without. taking any additional steps to determine the balances in the bank accounts of the firm's customers. For the purposes of ■CASS 7.16.17 R, a firm must take into account any amount that is segregated as client money in the firm's records under either or both ■CASS 7.13.50 R (prudent segregation record) and CASS 7.13 .66 R (alternative mandatory prudential segregation approach).
Non-margined transactions (eg, securities): individual client balance
A firm must calculate an individual customer balance using the contract value of any customer purchases or sales, being the value the customer would be contractually entitled to receive or contractually obligated to pay. If a firm calculates each individual customer balance on a product-by-product or line-of-business basis in terms of ■DASS 7.16.22 E (1)(b), the result should be that the firm does not net customer positions not. across all products and accounts.
Other requirements for calculating the client money requirement
Margined transactions (eg, derivatives): equity balances
Margined transactions (eg, derivatives): margined transaction requirement
By this calculation, a firm's margin transaction requirement should represent, if the positions are unbundled, the firm's gross liabilities to clients entitled to protection under the client money rules for margin transactions. If a firm's total marginal transaction demand is negative, the firm must treat it as zero for the purposes of calculating its customer's demand for money.
LME bond arrangements
Reduced client money requirement option
Statutory trust
This section creates a fiduciary relationship between the firm and its client whereby client money is in the legal ownership of the firm but remains in the beneficial ownership of the client. Subject to■DASS 7.17.3 In relation to a trustee firm a firm receives and holds client money as trustee on the following conditions:.
Acknowledgment letters
Client bank account acknowledgment letters
Client transaction account acknowledgement letters
Authorised central counterparty acknowledgment letters
Acknowledgement letters in general
