Related provisions for CASS 7.15.11
1 - 20 of 69 items.
(1) A firm must ensure that any arrangement relating to the transfer of full ownership of a client'smoney to the firm for the purposes set out in CASS 7.11.1 R (1) and CASS 7.11.2 R (1) is the subject of a written agreement made on a durable medium between the firm and the client.(2) Regardless of the form of the written agreement in (1) (which may have additional commercial purposes), it must cover the client's agreement to:(a) the terms for the arrangement relating to the transfer
(1) If a client communicates to a firm that it wishes (whether pursuant to a contractual right or otherwise) to terminate an arrangement relating to the transfer of full ownership of its money to the firm for the purposes set out in CASS 7.11.1 R (1) and CASS 7.11.2 R (1), and the client's communication is not in writing, the firm must make a written record of the client's communication, which also records the date the communication was received.(2) A firm must keep a client's
When a firm notifies a client under CASS 7.11.9 R (3)(a) of when the termination of an arrangement relating to the transfer of full ownership of the client's money to the firm is to take effect, it should take into account:(1) any relevant terms relating to such a termination that have been agreed with the client; and(2) the period of time it reasonably requires to return the money to the client, or to update its records under CASS 7.15 (Records, accounts and reconciliations)
(1) If a firm makes use of the exemption under CASS 7.11.14 R, it must obtain the client's written agreement to the firm's use of the exemption.(2) In respect of each client, the record created in (1) must be retained during the time that the firm makes use, or intends to make use, of the exemption under CASS 7.11.14 R in respect of that client's monies.
(1) If a firm makes use of the exemption under CASS 7.11.21 R, it must obtain the client's written agreement to the firm's use of the exemption.(2) In respect of each client, the record created in (1) must be retained for the duration of the time that the firm makes use of the exemption under CASS 7.11.21 R in respect of that client's money.
(1) If a firm pays away client money under CASS 7.11.50 R (4) it must make and retain, or where the firm already has such records, retain: (a) records of all balances released from client bank accounts under CASS 7.11.50 R (including details of the amounts and the identity of the client to whom the money was allocated); (b) all relevant documentation (including charity receipts); and(c) details of the communications the firm had or attempted to make with the client concerned pursuant
A firm may pay away to a registered charity of its choice a client money balance which is allocated to a client and if it does so the released balance will cease to be client money under CASS 7.11.34 R (10):(1) the balance in question is (i) for a retail client, in aggregate, £25 or less, or (ii) for a professional client, in aggregate, £100 or less; (2) the firm held the balance concerned for at least six years following the last movement on the client's account (disregarding
9When a firm notifies a client under CASS 6.1.8AR (3)(a) of when the termination of an arrangement relating to the transfer of full ownership of the safe custody asset to a firm is to take effect, it should take into account:(1) any relevant terms relating to such a termination that have been agreed with the client; and(2) the period of time it reasonably requires to return the safe custody asset to the client or to update the registration under (Holding of client assets) CASS
(1) 9Following the termination of an arrangement relating to the transfer of full ownership of safe custody assets to a firm for the purposes set out in CASS 6.1.6R (1) and CASS 6.1.6AR (1), where a firm does not immediately return the safe custody assets to the client the firm should consider whether the custody rules apply in respect of the safe custody assets pursuant to CASS 6.1.1R (1A) to CASS 6.1.1R (1C).(2) Where the custody rules apply to a firm for safe custody assets
(1) Subject to (2) and CASS 6.1.12B R and with the written agreement of the relevant client, a9firm need not treat this chapter as applying in respect of a delivery versus payment transaction through a commercial settlement system if:9929(a) in respect of a client's purchase, the firm intends for the asset in question to be due to the client within one business day following the client's fulfilment of its payment obligation to the firm;9 or9(b) in respect of a client's sale, the
When a firm temporarily handles a safe custody asset,2 in order to comply with its obligation to act in accordance with Principle 10 (Clients' assets), the following are guides to good practice:2(1) a firm should keep the
safe custody asset2
secure, record it as belonging to that client, and forward it to the client or in accordance with the client's instructions as soon as practicable after receiving it; and2(2) a firm should make and retain a record of the fact that the firm
2The custody rules do not apply to a personal investment firm when it temporarily holds a designated investment, other than in bearer form, belonging to a client, if the firm:(1) keeps it secure, records it as belonging to that client, and forwards it to the client or in accordance with the client's instructions, as soon as practicable after receiving it; (2) retains the designated investment for no longer than the firm has taken reasonable steps to determine is necessary to check
(1) 1Under CASS 7.17.2R(2)2, a firm acts as trustee for all client money received or held by it for the benefit of the clients for whom that client money is held, according to their respective interests in it.(2) A firm that is also a clearing member of an authorised central counterparty may wish to segregate client money specifically for the benefit of a group of clients who have chosen to clear positions through a net margined omnibus client account maintained by the firm with
(1) The records maintained for a sub-pool under CASS 7.19.4 R must identify all the client beneficiaries of that sub-pool.(2) The beneficiaries of each sub-pool are those clients:(a) from whom the firm has received a signed sub-pool disclosure document in accordance with CASS 7.19.11 R;(b) for whom the firm maintains, previously maintained or is in the process of establishing a margined transaction(s) in the relevant net margined omnibus client account at the authorised central
(1) A firm wishing to establish a sub-pool must prepare a sub-pool disclosure document for each sub-pool.(2) The sub-pool disclosure document for each sub-pool must:(a) identify the sub-pool by name, as stated in its records under CASS 7.19.7 R, the net margined omnibus client account and the authorised central counterparty to which the sub-pool disclosure document relates;(b) contain a statement that the client consents to the firm receiving and holding the client'sclient money
(1) Before receiving or holding client money for a client for a sub-pool, a firm must:(a) provide to the client a copy of the sub-pool disclosure document applicable to that sub-pool; and(b) obtain a signed copy of that sub-pool disclosure document from the client.(2) A firm must provide the beneficiary of a sub-pool with a copy of its signed sub-pool disclosure document applicable to that sub-pool upon the beneficiary's request.
(1) A firm must not hold client money for a sub-pool in a client bank account or a client transaction account used for holding client money for any other sub-pool or the general pool.(2) A firm that establishes a sub-pool must ensure that the name of each client bank account and each client transaction account (other than the net margined omnibus client account) maintained for that sub-pool includes a unique identifying reference or descriptor that enables the account to be identified
A firm should keep in mind its obligations under CASS 7.19.11 R (1)(b) (before receiving or holding client money for a client in a sub-pool, a firm must obtain a signed copy of the sub-pool disclosure document from the client) when making a material change to a sub-pool. A firm is also reminded of the conditions under CASS 7.19.13 R (5)(b) (when a client of the firm who is a beneficiary of a sub-pool ceases to be a beneficiary of that sub-pool) if a material change proposed to
The records maintained under this section, including the sub-pool disclosure documents, are a record of the firm that must be kept in a durable medium for at least five years following the date on which client money was last held by the firm for a sub-pool to which those records or the sub-pool disclosure document applied.
(1) A firm must allocate any client money it receives to an individual client promptly and, in any case, no later than ten business days following the receipt (or where subsequent to the receipt of money it has identified that the money, or part of it, is client money under CASS 7.13.37 R, no later than ten business days following that identification). (2) Pending a firm's allocation of a client money receipt to an individual client under (1), it must record the received client
(1) Subject
to (4), a 2firm must
in relation to each of its appointed representatives, field representatives and other agents comply
with CASS 5.5.19 R to CASS
5.5.21 R (Immediate segregation) or with CASS 5.5.23 R (Periodic
segregation and reconciliation).(2) A firm must in relation to each representative or other agent keep a record
of whether it is complying with CASS 5.5.19 R to CASS 5.5.21 R or
with CASS 5.5.23 R.(3) A firm is, but without affecting the application
of CASS
(1) A firm should ensure that the amount it reflects in its internal client money reconciliation as its client money resource is equal to the aggregate balance on its client bank accounts. For example, if:(a) a firm holds client money received as cash, cheques or payment orders but not yet deposited in a client bank account (in accordance with CASS 7.13.32 R); and(b) that firm records all receipts from clients, whether or not yet deposited with a bank, in its cashbook (see CASS
Subject to CASS 7.16.25 R and CASS 7.16.37 R, under this method the client money requirement must be calculated by taking the sum of, for all clients and across all products and accounts: (1) the individual client balances calculated under CASS 7.16.21 R, excluding:(a) individual client balances which are negative (ie, debtors); and(b) clients' equity balances;(2) the total margined transaction requirement (calculated under CASS 7.16.32 R); and(3) any amounts that have been segregated
Subject to CASS 7.16.25 R, under this method the client money requirement must be calculated by taking the sum of, for each client bank account: (1) the amount which the firm's internal records show as held on that account; and(2) an amount that offsets each negative net amount which the firm's internal records show attributed to that account for an individual client.
- (1)
A firm may calculate either:
- (a)
one individual client balance for each client,1 based on the total of the firm's holdings for that1client; or
- (b)
a number of individual client balances for each client, equal to the number of products or business lines the firm operates for that client and each balance based on the total of the firm's holdings for that client in respect of the particular product or business line.1
- (a)
- (2)
Each individual client balance for a client should be calculated in accordance with this table:
Individual client balance calculation
Free money (sums held for a client free of sale or purchase (eg, see (3)(a)) and
A
sale proceeds due to the client:
(a)
for principal deals when the client has delivered the designated investments; and
B
(b)
for agency deals, when:
(i)
the sale proceeds have been received by the firm and the client has delivered the designated investments; or
C1
(ii)
the firm holds the designated investments for the client; and
C2
the cost of purchases:
(c)
for principal deals, paid for by the client when the firm has not delivered the designated investments to the client; and
D
(d)
(i)
the firm has not remitted the money to, or to the order of, the counterparty; or
E1
(ii)
the designated investments have been received by the firm but have not been delivered to the client;
E2
Less
money owed by the client for unpaid purchases by, or for, the client if delivery of those designated investments has been made to the client; and
F
proceeds remitted to the client for sales transactions by, or for, the client if the client has not delivered the designated investments.
G
Individual client balance 'X' = (A+B+C1+C2+D+E1+E2)-F-G
X
- (3)
When calculating an individual client balance for each client, a firm should also:
- (a)
ensure it includes:
- (i)
client money consisting of dividends received and interest earned and allocated (see CASS 7.11.32 R);
- (ii)
client money consisting of dividends (actual or payments in lieu), stock lending fees and other payments received and allocated (see CASS 6.1.2 G);
- (iii)
money the firm appropriates and segregates as client money to cover an unresolved shortfall in safe custody assets it identifies in its internal records which is attributable to an individual client (see CASS 6.6.54R (2)); and
- (iv)
money the firm segregates as client money instead of an individual client's safe custody asset until such time as the relevant delivery versus payment transaction settles under CASS 6.1.12R (2); and
- (i)
- (b)
deduct any amounts due and payable by the client to the firm (see CASS 7.11.25 R).
- (a)
- (4)
Compliance with (1), (2) and (3)1 may be relied on as tending to establish compliance with CASS 7.16.21 R.
(1) To meet the total margin transaction requirement3, a firm may appropriate and use its own approved collateral, provided it meets the requirements in (2). (2) The firm must hold the approved collateral in a way which ensures that, in accordance with CASS 7A.2.3A R, the approved collateral will be liquidated on the occurrence of a primary pooling event and the proceeds paid into a client bank account, and in so doing:(a) ensure the approved collateral is clearly identifiable
So that a CASS debt management firm may check that it has sufficient money segregated in its client bank accounts to meet its obligations to clients for whom it is undertaking debt management activity, it is required periodically to carry out reconciliations of its internal records and accounts to check that the total amount of client money that it should have segregated in client bank accounts is equal to the total amount of client money it actually has segregated in client bank
The checks that a CASS small debt management firm is required to undertake under CASS 11.11.8 R include checking that its internal records and accounts accurately record the balances of client money held in respect of individual clients, and that the aggregate of those individual client money balances are equal to the total client money segregated in its client bank accounts. In undertaking the comparison between the internal records of balances of client money and the client
(1) A physical asset reconciliation is a separate process to the internal custody record check. Firms that hold physical safe custody assets for clients are required to perform both processes. (2) The purpose of a physical asset reconciliation is to check that a firm's internal records and accounts of the physical safe custody assets kept by the firm for clients are accurate and complete, and to ensure any discrepancies are investigated and resolved.
(1) This rule applies where a firm identifies a discrepancy as a result of, or that reveals, a shortfall, which the firm has not yet resolved.(2) Subject to paragraphs (3) and (4)7, until the discrepancy is resolved a firm must do one of the following:(a) appropriate a sufficient number of its own applicable assets to cover the value of the shortfall and hold them for the relevant clients under the custody rules in such a way that the applicable assets, or the proceeds of their
Subject to CASS 6.2.3A-1R, a9firm must effect appropriate registration or recording of legal title to a
safe custody asset2
belonging to a client8 in the name of:62(1) the client, unless the client is an authorised person acting on behalf of its client, in which case it may be registered in the name of the client of that authorised person;6(2) a nominee company which is controlled by:(a) the firm;(b) an affiliated company;(c) a recognised investment exchange; or5(d) a third party
A firm may only6 register or record legal title to its own
applicable asset6
in the same name as that in which legal title to a
client's6safe custody asset2
is registered or recorded if the firm'sapplicable asset is separately identified from the client'ssafe custody asset in the firm's records, and either or both of the conditions in (1) and (2) are met.6262(1) The firm's holding of its own applicable asset arises incidentally to:66(a) designated investment business it carries
6(1) Consistent with a firm's requirements to protect clients'safe custody assets and have adequate organisation arrangements in place (CASS 6.2.1 R and CASS 6.2.2 R), before a firm registers or records legal title to its own applicable asset in the same name as that in which legal title to a client'ssafe custody asset is registered or recorded under CASS 6.2.5 R, it should consider whether there are any means to avoid doing so.(2) Examples of where the conditions under CASS 6.2.5R
(1) 6If a firm pays away a client's unclaimed safe custody assets to charity or liquidates a client's unclaimed safe custody assets and pays the proceeds to charity under CASS 6.2.10 R it must make and retain, or where the firm already has such records, retain:(a) records of all safe custody assets divested under CASS 6.2.10 R (including details of the value of each asset at that time and the identity of the client to whom the asset was allocated); (b) all relevant documentation
Money held
in each general client bank account of
the firm must be treated as
pooled and:(1) any shortfall in client
money held, or which should have been held, in general client bank accounts, that has arisen
as a result of the failure of
the bank, must be borne by all the clients whose client money is held in a general
client bank account of the firm,
rateably in accordance with their entitlements;(2) a
new client money entitlement
must be calculated for each client by
the firm,
For each client with
a designated client bank account held
at the failed bank:(1) any shortfall in client
money held, or which should have been held, in designated client bank accounts that has
arisen as a result of the failure,
must be borne by all the clients whose client money is held in a designated
client bank account of the firm at
the failed bank, rateably in
accordance with their entitlements;(2) a
new client money entitlement
must be calculated for each of the relevant
Money held
in each general client bank account of
the firm must be treated as
pooled and:(1) any shortfall in client
money held, or which should have been held, in general client bank accounts, that has arisen
as a result of the failure,
must be borne by all the clients whose client money is held in a general
client bank account of the firm,
rateably in accordance with their entitlements;(2) a
new client money entitlement
must be calculated for each client by
the firm, to reflect
If a primary pooling event occurs, then4:(1) (a) in respect of a sub-pool,4 the following is treated as a single notional pool of client money for the beneficiaries of that pool:45(i) any client money held in a client bank account of the firm relating to that sub-pool; and5(ii) any client money held in a client transaction account of the firm relating to that sub-pool, except for client money held in a client transaction account at an authorised central counterparty3 or a clearing
(1) 7Before a firm ceases to treat a balance of client money in a notional pool as client money by transferring it to itself under CASS 7.17.2R(5) it must:(a) (subject to paragraph (2)) attempt to distribute the balance to the relevant client or transfer it to another person for safekeeping on behalf of the client in accordance with CASS 7A.2.4R (Pooling and distribution or transfer); (b) (subject to paragraph (3)) take reasonable steps to notify any client in respect of whom
(1) 7A firm must make a record of any balance under CASS 7A.2.6AR(1)(c)(i) or (ii) which is to be applied towards any costs or towards any shortfall in the relevant notional pool in accordance with CASS 7A.2.6AR(1)(c) or (d) respectively, immediately before taking such steps.(2) The record under paragraph (1) must state:(a) the amount of the balance of client money;(b) the name and contact details of any client to whom that balance was allocated according to the firm’s records
In discharging its obligations under CASS 6.3.1 R,6 a firm should also consider, as appropriate,6 together with any other relevant matters:6(1) the third party's performance of its services to the firm;6(2) the arrangements that the third party has in place for holding and safeguarding the safe custody asset;22(3) current industry standard reports, for example "Assurance reports on internal controls of services organisations made available to third parties" made in line with Technical
(1) 6A firm must make a record of the grounds upon which it satisfies itself as to the appropriateness of its selection and appointment of a third party under CASS 6.3.1 R. The firm must make the record on the date it makes the selection or appointment and must keep it from that date until five years after the firm ceases to use the third party to hold safe custody assets belonging to clients.(2) A firm must make a record of each periodic review of its selection and appointment
6A firm should consider carefully the terms of any agreement entered into with a third party under CASS 6.3.4A R. The following terms are examples of the issues that should be addressed in these agreements (where relevant):(1) that the title of the account in the third party's books and records indicates that any safe custody asset credited to it does not belong to the firm;(2) that the third party will hold or record a safe custody asset belonging to the firm'sclient separately
CASS 7A.3.6 R to CASS 7A.3.12AR3 do not apply if, on the failure of the relevant person:3(1) there is no secondary pooling shortfall; or3(2) where there is a secondary pooling shortfall, the firm pays an amount equal to the amount of client money which would have been held at that person if a secondary pooling shortfall had not occurred either:3(a) to its clients in the appropriate amounts such that they are compensated by the amount of the secondary pooling shortfall that they
Money Subject to CASS 7A.3.8AR, if a secondary pooling event occurs as a result of the failure of a bank, intermediate broker, settlement agent, OTC counterparty, exchange or clearing house, money3 held in each general client bank account and client transaction account of the firm for the general pool or a sub-pool2must be treated as pooled and:(1) any secondary pooling shortfall3 in client money held, or which should have been held, in general client bank accounts and client
3If a secondary pooling event occurs as a result of the failure of an authorised central counterparty: (1) any money held in a client transaction account that is an individual client account at the failedauthorised central counterparty is not pooled by the firm with any of its other client money;(2) any money held in a client transaction account that is an omnibus client account at the failedauthorised central counterparty is not pooled by the firm with any of its other client
For each client with a designated client bank account maintained by the firm for the general pool or a particular sub-pool and2 held at the failed bank:(1) any secondary pooling shortfall3 in client money held, or which should have been held, in designated client bank accounts that has arisen as a result of the failure, must be borne by all the clients of the relevant pool2 whose client money is held in a designated client bank account of the firm at the failed bank, rateably
Money held by the firm2 in each designated client fund account for the general pool or a particular sub-pool with the failedbank must be treated as pooled with any other designated client fund accounts for the general pool or a particular sub-pool as the case may be2 which contain part of the same designated fund and:2(1) any secondary pooling shortfall3 in client money held, or which should have been held, in designated client fund accounts that has arisen as a result of the
The records and internal controls required by CASS 8.3.1 R must include:(1) an up-to-date list of each mandate that the firm has obtained, including a record of any conditions placed by the client or the firm's management on the use of the mandate and, where a mandate was received in non-written form in the course of, or in connection with, its designated investment business, the details required under CASS 8.3.2C R1;(2) a record of each transaction entered into under each mandate
1An entry in a firm's list of mandates underCASS 8.3.2 R (1) that relates to a mandate that was received in non-written form (eg in a telephone call) in the course of, or in connection with, its designated investment business must, as well as the information referred to at CASS 8.3.2 R (1), include the following details:(1) the nature of the mandate (eg debit card details);(2) the purpose of the mandate (eg collecting insurance premiums);(3) how the mandate was obtained (eg by
1When keeping its list of mandates under CASS 8.3.2 R (1) up to date:(1) a firm should create a new entry in the list each time the firm obtains a new mandate;(2) if, for an existing entry on its list, a firm obtains the same information meeting the conditions in CASS 8.2.1 R again (eg in a written confirmation following a paperless direct debit), the additional mandate is not a new mandate and the firm should not create another entry on the list; but(3) the firm should, for every
An internal client money reconciliation should:(1) be one of the steps a firm takes to arrange adequate protection for clients' assets when the firm is responsible for them (see Principle 10 (Clients' assets), as it relates to client money);(2) be one of the steps a firm takes to satisfy its obligations under CASS 7.12.2 R and CASS 7.15.3 R and, where relevant, SYSC 4.1.1R (1) and SYSC 6.1.1 R, to ensure the accuracy of the firm's records and accounts;(3) for the normal approach
(1) Before using a non-standard method of internal client money reconciliation, a firm must:(a) establish and document in writing its reasons for concluding that the method of internal client money reconciliation it proposes to use will:(i) (for the normal approach to segregating client money) check whether the amount of client money recorded in the firm's records as being segregated in client bank accounts meets the firm's obligation to its clients under the client money rules
A common platform firm and a management company5 must keep and regularly update a record of the kinds of service or activity carried out by or on behalf of that5firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing service or activity, may arise.[Note:article 23 of MiFID implementing Directiveand article 20(1) of the UCITS implementing Directive]55
Money held in each client bank account of the firm must be treated as pooled and:(1) any shortfall in client money held, or which should have been held, in client bank accounts, that has arisen as a result of the failure of the approved bank, must be borne by all clients whose client money is held in a client bank account of the firm, rateably in accordance with their entitlements to the pool;(2) a new client money entitlement must be calculated for each client by the firm, to
(1) A CASS debt management firm must allocate in its books and records any client money it receives to an individual client promptly and, in any case, no later than five business days following the receipt. (2) Pending a CASS debt management firm's allocation of a client money receipt to an individual client under (1), it must record the received client money in its books and records as "unallocated client money".
Where a firm uses
safe custody assets2
as permitted in this section, the records of the firm must include details of the client on whose instructions the use of the
safe custody assets2
has been effected, as well as the number of
safe custody assets2
used belonging to each client who has given consent, so as to enable the correct allocation of any loss.[Note: article 19(2) of the MiFID implementing Directive]222