CASS 1.4 Application: particular activities

1. (1)

   The custody chapter and the client money chapter apply in respect of any stock lending activity that is undertaken with or for a client3 by a firm. 1

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2. (2)

   The collateral rules apply, where relevant, in respect of stock lending activity.1

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1. (1)

   The custody chapter and the client money chapter apply in respect of corporate finance business that is undertaken by a firm.1

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2. (2)

   The collateral rules apply, where relevant, in respect of corporate finance business.1

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1. (1)

   The custody chapter and the client money chapter apply in respect of oil market activity and other energy market activity that is undertaken by a firm.1

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2. (2)

   The collateral rules apply, where relevant, in respect of energy market activity.1

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1. (1)

   Although CASS does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of CASS, anything done or omitted by a firm's1 appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act1). Equally, CASS does not apply directly to tied agents. A MiFID investment firm will be fully and unconditionally responsible for the acts and omission of the tied agents that it appoints. 2

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2. (2)

   Firms should also refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives and tied agents2.

5Firms acting as trustee or depositary of an AIF are reminded of the obligations in FUND 3.11 (Depositaries) and Chapter IV (Depositary) of the AIFMD level 2 regulation which apply in addition to those in CASS.

4The effect of CASS 1.4.10 R is that when a firm makes an election in accordance with CASS 1.4.9 R:

1. (1)

   a two-day emissions spot falls within the scope of each chapter in CASS (save for CASS 5), for example:

   1. (a)

      the reference in CASS 6.1.1 R (1)(b) to safeguarding and administering investments is modified to include the activity of safeguarding and administering a two-day emissions spot; and

   2. (b)

      any money that the firm receives or holds for or on behalf of a client in the course of or in connection with its auction regulation bidding activities will be treated as client money and so will need to be dealt with in accordance with the client money rules; and

2. (2)

   that election also has effect in relation to rules and guidance elsewhere in the Handbook, including:

   1. (a)

      COBS 3 (Client categorisation);

   2. (b)

      COBS 6.1.7 R (Information concerning safeguarding of designated investments belonging to clients and client money);

   3. (c)

      COBS 6.1.11 R (Timing of disclosure);

   4. (d)

      COBS 16.4 (Statements of client designated investments or client money);

   5. (e)

      SUP 3 (Auditors);

   6. (f)

      SUP 10A.4.4 R (the table of controlled functions) and SUP 10A.7.9 R (CASS operational oversight function (CF10a));8

   7. (fa)

      SUP 10C.4.3R (Table of FCA controlled functions for relevant authorised persons), SYSC 5.2.30R (Table: FCA-specified significant-harm functions) and SYSC 5.2.32R (CASS oversight and the certification regime); and8

   8. (g)

      SUP 16.14 (Client money and asset return).

4The option to elect to comply with CASS set out in CASS 1.4.9 R only applies to the extent the firm is carrying on auction regulation bidding. Where a firm is carrying on MiFID business bidding, CASS applies to it in accordance with the general application rules in CASS for a firm that is carrying on MiFID business.

1. (1)

   6The debt management client money chapter applies to CASS debt management firms receiving or holding client money.

2. (2)

   The mandate rules apply, where relevant, to CASS debt management firms carrying on debt management activity.