Termination of title transfer collateral arrangements - CASS Provision

CASS Anatomy™ Go Premium In a Nutshell™ 7.11.9 If a client asks to terminate any existing TTCA the firm must keep the communication (or a record of it, if not in writing, including the date it was made), and keep it for five years. If it agrees to the termination, the firm must notify the client in writing, advising it of the effective date of termination and whether the firm will hold the client’s money as client money. If it does not agree to terminate, it must decline the request in writing. The firm must keep records of all such responses for five years. Template In full 7.11.9 Termination of title transfer collateral arrangements (1) If a client communicates to a firm that it wishes (whether pursuant to a contractual right or otherwise) to terminate a TTCA, and the client’s communication is not in writing, the firm must make a written record of the client’s communication, which also records the date the communication was received. (2) A firm must keep a client’s written communication, or a written record of the client's communication in (1), for five years starting from the date the communication was received by the firm. (3) (a) If a firm agrees to the termination of a TTCA, it must notify the client of its agreement in writing. The notification must state when the termination is to take effect and whether or not the client’s money will be treated as client money by the firm thereafter. (b) If a firm does not agree to terminate a TTCA, it must notify the client of its disagreement in writing. (4) A firm must keep a written record of any notification it makes to a client under (3) for a period of five years, starting from the date the notification was made. Template IMPORTANT: CASS changed quite a bit after MiFID II. This resource therefore may well be out of date, even if it was accurate once, which it might not have been. This is an article about the FCA’s custody and client money rules — client assets — and is fondly known by its chapter in the FCA SourcebookTable of Contents | 1 | 1A | 3 | 5 | 6 (custody rules) | 7 (client money rules) | 7A | 8 | 9 (PBDA) | 10 Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

A rule introduced in the wake of the financial meltdown of 2008 aimed to stop those with title transfer collatreral arrangements converting them to pledged arrangements at the last minute, just as the counterparty was turning to Vanillesoße, and thereby defeating perfectly ordinary creditors.

Introduces an extremely laborious and tiresome and practically impossible to enforce regime where if a customer even asks to convert a title transfer arrangement to a pledge, you have to log the request and your response to it - this was largely to help out administrators distributing the estate who otherwise couldn’t tell whether assets were title transferred, in which case part of the insolvency estate and apt to be liquidated, or pledged in which case the company’s right to them was only to satisfy its debt from them and return the balance.

Does a rather similar thing to the voidable preferences rules.

See also

• Voidable preferences