Authorised signatory lists
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Brokers, custodians and other service providers in the financial markets are often sent “authorised signatory lists” by their clients of personnel who are permitted by the client to submit instructions, orders, and so on. Usually these are couched with a warning:
- “We shall not be liable for any instructions unless given by authorised signatories as set out in schedule A, as amended from time to time.”
Now this might seem a sensible measure, from the client’s perspective, but brokers generally hate it, and with good reason. For what it really amounts to is the client’s admission that it doesn’t trust, or can’t control, its own employees.
As such, brokers routinely refuse to be bound by these lists. If you’re confronted with one, here's a ready made explanation of why it won't do:
- While we understand your need to ensure that your personnel comply with those of your internal policies, mandates and regulations which apply to them, ultimately it is your responsibility, and not ours, to make sure they do.
- Given the nature of our business and the way we price our offering, it is not practicable to verify on a trade-by-trade basis whether your employees have specific internal authorisation to commit your organisation to transactions with us.
- While we are a professional organisation and we do impose systems and controls to ensure that instructions are properly authorised and provided by persons generally empowered to issue them, we cannot police your policies on your behalf, much less underwrite your employees’ compliance with them, and we therefore do not accept any purported restriction on your liability to perform transactions instructed by your personnel purely because they happen to be in breach of your internal mandates or authorisations.
- As between us, therefore, the presumption must be that losses (or gains) that arising from any such unauthorised orders originating within your organisation will be for your account.