The classification is also based on the size of your custodial assets, but since companies are required to complete a classification questionnaire each year, identifying your type of CASS will be evident in December. Here, however, we have focused on the CASS rules most likely to affect your company`s procedures: CASS 6.1 (which deals with the general application of retention rules in CASS 6) contains a provision (CASS 6.1.4R) that states: “The retention rules do not apply when a company acts on its behalf, but on behalf of the customer, if necessary due to nature. of the transaction and the customer agrees.” CASS has many registration requirements that are listed everywhere. 6.2.1: Obligation to protect clients` safekeeping assets An investment firm shall, when storing clients` safekeeping assets, take reasonable precautions to protect clients` property rights, in particular in the event of the firm`s insolvency, and to prevent the use of a client`s safekeeping assets for its own account, unless it has given its express consent. With regard to insurance, intermediation companies must follow the rules of CASS 5. In this case, the customer`s money includes premiums received from customers until payment to the insurer, as well as claims and refunds of premiums that must be refunded to customers. The rules take into account the impact on client funds held by a company in the event of liquidation. CASS 7A theoretically guarantees that all customers` money must be returned to them as long as the rules have been followed. When a secondary consolidation event occurs, there is a potential loss to customers – see CASS 7A.1.2 If CASS compliance remains at the forefront of regulation, a good balance sheet is essential. 1RS offers a CASS software solution that reduces costs, saves resources, and ensures your business complies with FCA rules on customer funds and custodial assets.
The FCA`s Client Assets Sourcebook (CASS) contains rules that companies must follow when holding or controlling client funds or custodial assets. CASS helps ensure the safety of clients` funds and assets when a company goes bankrupt and leaves the market. Smarsh, Inc. assumes no responsibility for the accuracy or completeness of this information. Please contact a lawyer for specific information about the specific rules and regulations and how they apply to your business. This rule recognizes that transactions must sometimes be made on behalf of customers on behalf of the company (for example. B because the counterparty in question may have problems with the solvency of the client) and this may require the company to hold relevant assets in its own accounts. The rule therefore appears to potentially cover the situation in which the company acquires assets as an agent for an undisclosed principal amount and, therefore, the transaction must be temporarily deposited in the company`s own accounts (before the assets in question are transferred to the client`s deposit account). The rules specifically relating to the holding of client funds can be found in CASS Section 7, the largest section of the source book. CASS 7.10 clearly defines who must comply with the rules and certain opt-outs.
When a financial service provider owns or controls client funds or assets, it must follow the rules set out in the FCA`s Client Asset Directory (CASS). These CASS rules were created to ensure the protection of customers` assets in the event of a company`s insolvency. The retention rules in Chapter 6 of the Financial Conduct Authority`s (FCA) Client Asset Directory (CASS) provide details on what an entity must do when carrying out the regulated activity of investment protection and management. For more information about this activity, see How-to: Securing and Managing Investments. The rules apply to custodial assets, which include custodial facilities (which are designated investments that a company receives or holds on behalf of a client) and any other assets held in the same portfolio as custodial facilities for the same client. An entity has the discretion to apply the custody rules to its custodial assets, which are not safe custody facilities, and must treat them in a manner appropriate to their nature and value. The CASS rules apply to all types of businesses listed above. However, the main difference is that if you are a small CASS business, you are NOT required to complete a CMAR, NOR to make a director or senior executive responsible for CASS. CASS Medium and large companies are required to do both.
A mandate gives an investment firm or MiFID firm (or insurance intermediary or debt management company) authority over its clients` money or assets to manage funds on its behalf. If casS 5 applies to you, your business must reconcile customer money every 25 business days. This confirms that the funds you have to reimburse customers are sufficient to repay what you owe. .