Cass Custody Agreement

For corporate customers, the FCA approach, if it results in increased restrictions on the use of TTCAs by businesses, would have both benefits and costs. If a company requires its customers to hold cash and assets outside of a TTCA, this will reduce the credit risk customers have for the business, but the higher costs the business would incur will likely be passed on to its customers. In addition, a company that does not offer money or asset custody to its clients may require its clients to undertake administrative procedures, such as. B the active transfer of the company`s cash and surplus assets. ACF visits are increasingly focused on agreements with third parties. This is an area where the lack of clarity on the liability of CASS can cause problems and where the regulatory authority takes note of this. Firms do not need to include in the retention agreement the provisions of CASS 2.4.2 R where the firm or custodian is unable to comply with the provision, for example due to legal requirements or custody practices imposed on a depositary or securities clearing system. This rule recognizes that transactions must sometimes be made on behalf of customers on behalf of the company (for example. B because the relevant counterparty could have solvency problems for the client) and this may lead the company to hold relevant assets in its own accounts. The rule therefore seems to cover the situation in which the company acquires assets as an agent for undisclosed capital and the transaction must therefore be temporarily transferred to the company`s accounts (before the corresponding assets are transferred to the client`s deposit). that the custodian bank owns or will register a custody facility of the enterprise`s customer (or, if the enterprise is a trust company, the trustees) separate from any designated facility of the company or custodian bank; The custody rules contained in Chapter 6 of the Financial Conduct Authority`s (FCA) Client Assets Sourcebook (CASS) contain details of what a company must do when carrying out the regulated activity of safeguarding and managing investments.

For more information on this activity, see Practical instructions: Safeguarding and managing investments. The rules apply to custody assets for which custody facilities (which are designated investments that a company receives or holds on behalf of a client) and all other assets held for the same client in the same portfolio as deposit investments. An entity shall have a margin of discretion in the application of the retention rules to its deposit-taking facilities, which are not secure investments, and shall treat them in a manner proportionate to their nature and value. Before holding an investment for or on behalf of a client with a custodian bank, the entity must agree in writing on appropriate terms with the custodian bank, including, where applicable, that a hybrid agreement is not necessarily a problem under those conditions, but that a lack of clarity on roles and responsibilities in the agreements may be problematic. the custodian of the enterprise makes a declaration on a date or date given by the enterprise, indicating the description and amounts of all deposits credited to the account; CASS 7.11 deals with the TTCA waiver of corporate money requirements. (CASS 6.1.6D contains equivalent provisions on deposit assets, such as for example. B titles.) CASS 7.11.4R provides that any agreement with third parties must take into account who, according to the customer, has his assets and whether this is sufficiently clearly reflected in the agreements concluded with third parties as well as in the general conditions of the customer. Consider whether, in the event of a collapse of the company or a third party, a receiver could determine who owns the estate. Would the customer finally be able to recover what belongs to him? the depositary does not assert a deposit right, a right of retention or a sale on an investment as a security guarantee, credited to an account per account established in accordance with (1), except: CASS deals with the management of client assets and cash.

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