The proposed changes to CASS 6 (‘Custody rules’) and CASS 7 (‘Client money rules’) mentioned in Regulatory Roundup 17 came into force on 1 December.
The changes impact the title transfer collateral arrangements (‘TTCA’) in those two chapters. The changes come about as a result of focussed FSA visits to spread betting and CFD providers which led to the discovery that some of these firms were using the current TTCA provisions to indiscriminately remove clients’ money from the client money protection regime in CASS. Following 1 December the TTCA arrangements now only apply to non-retail clients.
The FSA has also produced guidance on ‘money due and payable to the firm’. The guidance arises from a further discovery that some firms are incorrectly using the ‘money due and payable to the firm’ provisions to reduce the amount of money they segregate as client money – see CASS 7.2.10A using the link.
Firms that have retail clients and make use of TTCA will need to ensure that adequate procedures are in place to ensure that client money and assets are afforded the protections set out in CASS.
