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DVP exemption - CASS Provision: Difference between revisions
DVP exemption - CASS Provision (view source)
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{{anat|cass|}} | {{anat|cass|}}The [[DVP exemption]] allows a firm a waiver from the full rigours of the CASS [[safe custody]] and [[client money]] rules for money or assets delivered to the firm when settling a [[delivery versus payment]] transaction. | ||
The DVP exemption allows a firm a waiver from the full rigours of the CASS safe custody and [[client money]] | |||
the first thing to note is this covers money and financial instruments ''belonging to the client'' (see CASS [[6.1.1 - CASS Provision|6.1.1]]. There must be some kind of agency or trust arrangement here. If your brokerage functions as [[riskless principal]], as many do, moneys and assets in the hands of the [[broker]] [[owes]] the client assets of money under a transaction; in the settlement period before it delivers them it is not holding assets or money under some kind of [[bailment]] arrangement. | |||
There is a limited case where there is a kind of bailment: where the client has expressly pre-funded the broker with cash or assets so the broker can make a DVP transaction as its agent with the street, and when it has done so the broker is holding the resulting cash or assets on the client’s behalf. | |||
As long as the transaction takes place through a [[commercial settlement system]], is intended to settle within one business day of the client's payment or delivery, and actually does settle within the “[[DVP window]]” (a period from the intended settlement date to the close of business on the third business day thereafter). | |||
===The changes wrought by [[PS14/9]]=== | ===The changes wrought by [[PS14/9]]=== | ||