6.3.5 - CASS Provision

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CASS Anatomy


CASS 6.3.5: Subject to CASS 6.3.6R, in relation to a third party with which a firm deposits safe custody assets belonging to a client, a firm must ensure that any agreement with that third party relating to the custody of those assets does not include the grant to that party, or to any other person, of a lien or a right of retention or sale over the safe custody assets, or a right of set-off over any client money derived from those safe custody assets.


CASS 6.3.6: A firm may conclude an agreement with a third party relating to the custody of safe custody assets which confers on that party, or on another person instructed by that party to provide custody services for those assets, a lien, right of retention or sale, or right of set-off in favour of that party or that other person only if that lien or right:

(1) is confined to those safe custody assets held in an account with that third party or that other person and extends only to properly incurred charges and liabilities arising from the provision of custody services in respect of safe custody assets held in that account; or
(2) arises under the operating terms of a securities depository, securities settlement system or central counterparty in whose account safe custody assets are recorded or held, and provided that it does so for the purpose only of facilitating the settlement of trades involving the assets held in that account; or
(3) arises in relation to those safe custody assets held in a jurisdiction outside the United Kingdom, provided that:
(a) it does so as a result of local applicable law in that jurisdiction or is necessary for that firm to gain access to the local market in that jurisdiction; and
(b) in respect of each client to which those assets belong, either:
(i) the firm has taken reasonable steps to determine that holding those assets subject to that lien or right is in the best interests of that client; or
(ii) where a client is a professional client, the firm is instructed by that client to hold those assets in that jurisdiction notwithstanding the existence of that lien or right.


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 This resource therefore may well be out of date, even if it was accurate once, which it might not have been.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 Sourcebook Table of Contents | 1 | 1A | 3 | 5 | 6 (custody rules) | 7 (client money rules) | 7A | 8 | 9 (PBDA) | 10

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The part of the CASS rules which says a subcustodian can't take unreasonable security over, or reuse, sell of otherwise play with, safe custody assets it holds in for a CASS firm. Except for usual liens and security rights securing payment of its fees and expenses as detailed in 6.3.6.