Allocated but unclaimed safe custody assets - CASS Provision

CASS Anatomy™ Go Premium To see the current text of CASS 6.2.10 in the FCA handbook, click here. 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 This resource therefore may well be out of date, even if it was accurate once, which it might not have been.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 “don’t go there if you really can humanly avoid it” scenario. If your client has gone awol, then be prepared to stick around for yonks before you can do anything with their assets.

Ok, normally their liquidator should be on top of this, but do not underestimate the incompetence of the professional classes. In any case, there are times when a fund is voluntarily wound down and it is holding, say, distressed equities, or contingent value rights or something like that, which have no present value but might, just might, have a value in the future, but in the mean time are illiquid (it may not even be permitted to transfer them) — a fund manager might say, “oh hang it” and leave them on the table.

If you are the custodian when one does, make sure you do something: either have the fund gift them to you, or buy them at a nominal value, so you can close out your CASS obligation okay? If for no other reason do this for the mercy of the poor soul who will succeed you — it might still be you, if that start-up fin tech project doesn’t work out, after all — who will otherwise have to give the happy news to the CF10a of the future that you are stuck with these goddamn pointless things for the foreseeable future, and the regulator will punish you merrily should you get any part of the holding worthless assets for an insolvent entity wrong.