Related provisions for CASS 3.1.4
1 - 9 of 9 items.
This chapter (the custody rules) applies to:
1(1) a MiFID investment firm:1(a) when it holds financial instruments belonging to a client in the course of its MiFID business; or1(b) that opts to comply with the custody rules under this chapter in accordance with CASS 6.1.17R (1)1 (Opt-in to the MiFID custody rules); and1(2) a third country investment firm that opts to comply with the custody rules under this chapter in accordance with CASS 6.1.17R (2) (Opt-in to the MiFID client
(1) A firm need not treat this chapter as applying in respect of a delivery versus payment transaction through a commercial settlement system if it is intended that the
financial instrument
is either to be: (a) in respect of a client's purchase, due to the client within one business day following the client's fulfilment of a payment obligation; or(b) in respect of a client's sale, due to the firm within one business day following the fulfilment of a payment obligation;unless
The custody rules do not apply if a firm temporarily handles a
financial instrument
belonging to a client. A firm should temporarily handle
financial instrument
for no longer than is reasonably necessary. In most transactions this would be no longer than one business day, but it may be longer or shorter depending upon the transaction in question. For example, when a firm executes an order to sell shares which have not been registered on a de-materialised exchange, handling
When a firm temporarily handles a financial instrument, in order to comply with its obligation to act in accordance with Principle 10 (Clients' assets), the following are guides to good practice:(1) a firm should keep the
financial instrument
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; and(2) a firm should make and retain a record of the fact that the firm
A firm may register or record legal title to its own
financial instrument
in the same name as that in which legal title to a
financial instrument
is registered or recorded, but only if:(1) the firm'sfinancial instruments
are separately identified in the firm's records from the financial instruments; or(2) the firm registers or records a
financial instrument
in accordance with CASS 6.2.3R (4).
This chapter1 recognises the need to apply a differing level of regulatory protection to the assets which form the basis of the two different types of arrangement described in CASS 3.1.5 G. Under the bare security interest arrangement, the asset continues to belong to the client until the firm's right to realise that asset crystallises (that is, on the client's default). But under a "right to use arrangement", the client has transferred to the firm the legal title and associated
(1) CASS
5.8 applies to a firm (including
in its capacity as trustee under CASS
5.4) which in the course of insurance mediation activity takes into its
possession for safekeeping any client title documents (other than documents of
no value) or other tangible assets belonging to clients.(2) CASS
5.8 does not apply to a firm when: (a) carrying
on an insurance mediation activity which
is in respect of a reinsurance contract;
or(b) acting
in accordance with CASS 2 (Custody
rules)
The rules in
this section amplify the obligation in Principle 10
which requires a firm to arrange
adequate protection for client's assets. Firms carrying on insurance
mediation activities may hold, on a temporary or longer basis, client title documents such
as policy documents (other
than policy documents of no
value) and also items of physical property if, for example, a firm arranges for a valuation. The rules are intended to ensure that firms make adequate arrangements for
(1) A firm which has in its possession or control documents evidencing a client's title
to a contract of insurance or
other similar documents (other
than documents of no value) or which takes into its possession or control
tangible assets belonging to a client,
must take reasonable steps to ensure that any such documents or
items of property:(a) are
kept safe until they are delivered to the client;(b) are
not delivered or given to any other person except
in accordance with instructions
(1) Principle 10 (Clients' assets) requires a firm to arrange adequate protection for clients' assets when the firm is
responsible for them. An essential part of that protection is the proper accounting
and handling of client money.
The rules in CASS 5.1 to CASS
5.6 also give effect to the requirement in article 4.4 of the Insurance
Mediation Directive5 that all necessary measures should
be taken to protect clients against
the inability of an insurance intermediary to
transfer
Principles 6 (Customers' interests), 7 (Communications with clients), 8 (Conflicts of interest), 9 (Customers: relationships of trust) and 10 (Clients' assets) impose requirements on firms expressly in relation to their clients or customers. These requirements depend, in part, on the characteristics of the client or customer concerned. This is because what is "due regard" (in Principles 6 and 7), "fairly" (in Principles 6 and 8), "clear, fair and not misleading" (in Principle