Related provisions for CASS 5.5.12
1 - 8 of 8 items.
CASS 5.5.34 R sets
out the requirements a firm must
comply with when it transfers client money to
another person without discharging
its fiduciary duty owed to that client.
Such circumstances arise when, for example, a firm passes client money to another broker for the purposes
of the client's transaction
being effected. A firm can only
discharge itself from its fiduciary duty by acting in accordance with, and
in the circumstances permitted by, CASS 5.5.80 R.
(1) A firm may operate as many client accounts
as it wishes.(2) A firm is not obliged to offer its clients the facility of a designated
client bank account.(3) Where
a firm holds money in
a designated client bank account,
the effect upon either:(a) the failure of a bank where any other client bank account is held; or(b) the failure of a third party to whom money has been transferred out of any other client bank account in accordance with CASS 5.5.34 R;(each of which is a secondary
If a client has
notified a firm before entering
into a transaction that he does not wish his money to
be passed to another broker or settlement
agent located in a particular jurisdiction, the firm must either:(1) hold
the client money in a client bank account in the United
Kingdom or a jurisdiction to which the money has
not objected and pay its own money to
the firm's own account with
the broker, agent or counterparty; or(2) return
the money to, or to the order
of, the clien
(1) A firm which pays professional fees (for example
to a loss adjuster or valuer) on behalf of a client may
do so in accordance with CASS
5.5.80 R (2) where this is done on the instruction
of or with the consent of the client.(2) When
a firm wishes to transfer client money balances to a third party in
the course of transferring its business to another firm,
it should do so in compliance with CASS 5.5.80 R and a transferee firm will come under an obligation to treat
any client
If a primary pooling event occurs:(1) 1all client money held in a client bank account or a client transaction account1 of the firm is treated as pooled (forming a notional pool) except for client money held in a client transaction account at an authorised central counterparty;3 or a clearing member which is, in either case, held as part of regulated clearing arrangement;3(2) the firm must distribute client money comprising the notional pool in accordance with CASS 7.7.2 R, so
(1) 1Under EMIR, where a firm that is a clearing memberof an authorised central counterparty defaults, the authorised central counterparty may:(a) portclient positions where possible; and(b) after the completion of the default management process:(i) return any balance due directly to those clients for whom the positions are held, if they are known to the authorised central counterparty; or(ii) remit any balance to the firm for the account of its clients if the clients are not
(-1) 1Each client'sclient equity balance must be reduced by:(a) any amount paid by:3(i) an authorised central counterparty to a clearing member other than the firm in connection with a porting arrangement in accordance with
CASS 7.2.15R (6)
in respect of that client; (ii) a clearing member to another clearing member or firm (other than the firm) in connection with a transfer in accordance CASS 7.2.15R (8);(b) any amount paid by:3(i) an authorised central counterparty directly
When client
money is transferred to a third party, a firm continues
to owe a fiduciary duty to the client.
However, consistent with a fiduciary's responsibility (whether as agent or
trustee) for third parties under general law, a firm will
not be held responsible for a shortfall in client money caused by a third party failure if it has complied with those duties.
Client
money received by the firm after
the failure of a bank, that
would otherwise have been paid into a client
bank account at that bank:(1) must
not be transferred to the failed bank
unless specifically instructed by the client in
order to settle an obligation of that client to
the failed bank; and(2) must
be, subject to (1), placed in a separate client
bank account that has been opened after the secondary
pooling event and either:(a) on
the written instruction of the client,
transferred
Client
money received by the firm after
the failure of another broker
or settlement agent, to whom
the firm has transferred client money that would otherwise have been
paid into a client bank account at
that broker or settlement agent:(1) must
not be transferred to the failed thirty
party unless specifically instructed by the client in
order to settle an obligation of that client to
the failed broker or settlement agent; and(2) must
be, subject to (1), placed in a separate client
bank
The client money distribution rules seek to ensure that clients who have previously specified that they are not willing to accept the risk of the bank that has failed, and who therefore requested that their client money be placed in a designated client bank account at a different bank, should not suffer the loss of the bank that has failed.
Client money received by the firm after the failure of a bank, that would otherwise have been paid into a client bank account at that bank :(1) must not be transferred to the failed bank unless specifically instructed by the client in order to settle an obligation of that client to the failed bank; and(2) must be, subject to (1), placed in a separate client bank account that has been opened after the secondary pooling event and either:(a) on the written instruction of the client,
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) 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