client assets - cass bovill briefing march 2015
TRANSCRIPT
Client Money and Assets
Still more to do …
Bovill Briefing
March 2015
Richard Scrivener
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The final hurdle?
Key dates – PS 14/9
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1st July 2014
Limited, immediate changes not
requiring significant lead time or
infrastructure changes
1st December 2014
Requirements around the provision
of information to, or obtaining the
agreement of new clients and
documentation standards with any
new counterparties.
1st June 2015
Implementation of all new rules,
including new contract wording for
all clients
• Name matters!
• Keep firm assets entirely separate
• UNLESS facilitating a client transaction
Registering client assets
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Rule ref: CASS 6.2.3R-CASS6.2.6G
• Selecting
• Appointing
• Periodically reviewing
• Due diligence is key!
• Don’t just rely on one source of information
Appointing a custodian
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Rule ref: CASS 6.3.1R – CASS 6.3.4A-1R
• Wholesale changes
• Internal records – separate from records held by
external parties
• Records of reconciliations
• Policies and procedures
• Minimum reconciliation frequency
Custody reconciliations (1)
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• Changes to available methods – internal custody
reconciliation method or internal system evaluation
method
• Separate physical reconciliations
• External reconciliations
• Dealing with shortfalls
Custody reconciliations (2)
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Rule ref: CASS 6.6
• More detail – methods that can be used
• Record keeping –
• Reconciliations carried out
• Rationale for the chosen frequency of
reconciliations
Reconciling client money
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Rule ref: CASS 7.15 and CASS 7.16
• How do you treat title transfer collateral arrangement
requests?
• Record keeping is key
• Dealing with the transfer
• Treatment of assets afterwards
Title Transfer Collateral Arrangements
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Rule ref: CASS 6.1.8AR – CASS 6.1.8EG and CASS 7.11.1R – CASS 7.11.13G
• Amended rules
• Now includes authorised fund managers
when settling transaction relating to units in a
regulated fund
• Remember – client agreement needed!
Delivery versus Payment
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Rule ref: CASS 7.11.14R – CASS 7.11.24R
• More robust requirements
• Periodic assessment of diversification
• Periodic review of due diligence on bank
Due diligence on banks
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Rule ref: CASS 7.13.8R – CASS 7.13.11G
and CASS 7.13.20R – CASS 7.13.25R
• Receive straight into client account
• Timescales for banking of physical receipts
• Securing physical receipts before banking
• Future dated cheques
Segregating client money
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Rule ref: CASS 7.13.3R – CASS 7.13.7G
CASS 7.13.32 – CASS 7.13.38G
• Not using client money for own account – more!
• Don’t use one client’s money to fund another’s
transaction
• Monitoring clearing is key
Organisational requirements
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Rule ref: CASS 7.12.3G
• Will it impact more firms?
• Do you need to use prudent segregation?
• If so – policy, Board sign off, implementation and
monitoring are key
• Record keeping
Segregating prudently
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Rule ref: CASS 7.13.41R – CASS 7.13.53R
• New rules
• What happens to money generated from safe
custody assets deposited with a third party?
• Client account or client transaction account
• Dividends etc
Client money from safe custody assets
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Rule ref: CASS 7.14.5G to 7.14.9G
• New templates
• Make sure terms of business don’t conflict
• Need to remember to review and update
periodically
Acknowledgement letters – existing business
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Rule ref: CASS 7.18, Annex 2R, Annex 3R,
Annex 4R and Annex 5G
Questions?
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Take aways
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• As always – the creation and retention of records is
paramount
• Increased operational demands
• Ongoing review of existing controls and processes
• IT requirements, governance arrangements, policies
and procedures