Client Asset Regulations

Question 1

CASS 6 Name

Answer 1

Custody Rules

Question 2

CASS 7 Name

Answer 2

Client Money

Question 3

Purpose of Client Money + custody rules

Answer 3

• Adequate protection for client assets and client money
• PRIN 10
• CASS applies to FCA only, no PRA

Question 4

Clients Assets

Answer 4

Segregation from the firms own money and assets

Hold registration in a different legal name to that of the firm

Question 5

Clients Money

Answer 5

Segregation from the firms own money and assets

Hold money in approved bank account - in account separate from account holding firms own money

Question 6

Regular Reconciliations

Answer 6

Bookkeeping + reporting ( 5 years)

Excess/ shortfall corrected as soon as possible (firm’s expense)

Cannot reconcile - FCA informed without delay

Question 7

Custody Rules

Answer 7

Binding on both MIFID + non - MIFID Firms

Client agreement - terms + conditions
Retail = if stock lent out must be covered by collateral

Custody Agreement -
Assets separate from firm/custodian

Question 8

Client Asset Reconciliations

Answer 8

Reconcile each client accounts (internal + external )

Often as necessary ;

Internal reconciliation - At least every 6 months

External reconciliation - At least 1 a month

Shortfalls corrected as soon as possible

Question 9

Meaning of Custody Assets

Answer 9

CASS 6

MIFID Instruments

Non - MIFID Instruments

Any other asset held in same portfolio as designated investments

Question 10

Client Money Rules

Answer 10

CASS 7

Segregation of Firms accounts and client money account

Mixed Remittances = all funds client account first then remove firms fee after cleared

Interest paid on Client Money account = belongs to client - client money

Question 11

Client Money Reconciliations

Answer 11

Internal reconciliation = every day

External reconciliation = at least once a month

Question 12

Meaning of Client Money

Answer 12

Approved Bank

• List of approved banks maintained by FCA
• Risk/suitability assessment of bank by the firm
• Client Money held in trust by bank
• Bank outside of UK - only ok if client notified and risk warning given

Question 13

CASS Audit

Answer 13

Client assest protection
Lehmans Brother’s collapse

Required annually + submitted to FCA within 4 months of audit

Client Asset Assurance standard set by ARGA (audit, reporting, and governance authority)

Firm explain any breach

Question 14

CASS Stratification of Firms

Answer 14

Large
Medium
Small

Question 15

CMAR

Answer 15

Client Money & Assets return

Electronic return of relevant CASS data to be submitted to FCA

Monthly - by large and medium firms

not required for small firms

Question 16

CASS Oversight Function

Answer 16

Certified Function

Required for large and medium firm s

Small firms held by any fit and proper certified function employee performing certified role