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{{fullanat2|cass|nominee company||6.2.4|}} | {{fullanat2|cass|nominee company||6.2.4|}}{{d|Nominee company|/ˌnɒmɪˈniː/ /ˈkʌmpəni/|n|}} | ||
A wholly-owned subsidiary of a [[custodian]] used as a nominee company to hold legal title to client investments (other than cash). This common structure in the UK custody | A wholly-owned subsidiary of a [[custodian]] used as a nominee company to hold legal title to client investments (other than cash). | ||
Under [[CASS Rules|CASS 6]], a [[custodian]] must not hold its own house positions ''in the same legal entity'' as its clients’ assets. A nominee, therefore, dedicated entity that a custodian sets up to hold its clients’, and ''only'' its clients’ assets. The nominee is not the custodian per se, but a legal entity in its custody chain that acts as a total firebreak between the custodian’s credit risk and its clients’ assets: a dedicated entity which does nothing other than acting as a registered owned of shares for third parties. | |||
Thus, should the Custodian go, as they say in Mallorca, “[[tetas arriba]]”, then its insolvency administrator has no licence, no justification, no ''excuse';' for poking around in its client assets looking for baubles and trinkets it can share with the custodian’s unsecured creditors. It’s a clean, segregated ledger, ring-fenced with the deep magic of [[corporate personality]]. | |||
This common structure in the UK custody market was endorsed by Peter Bloxham's ''[https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/271040/PU1560_SAR.pdf Final review of the Investment Bank Special Administration Regulations 2011]'' in January 2014, the third recommendation of which was: | |||
{{quote| | {{quote| | ||
===Use of Nominee Companies=== | ===Use of Nominee Companies=== | ||
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The report noted: | The report noted: | ||
“ | {{quote|“... the rapid transfer of client positions to a solvent successor firm was facilitated by the fact that the failed firm held substantially all its (UK) {{cassprov|custody asset}}s in the name of a separate {{cassprov|nominee company}} {{tag|subsidiary}}. It was possible to transfer the shares in that {{cassprov|nominee company}} as part of the transfer of client positions. The transfer of the shares in the {{cassprov|nominee company}} was sufficient to produce the result that all the client holdings registered in that nominee passed into the control of the transferee, without the need for transfers of individual holdings. I recommend that consideration be given by the FCA to encouraging this practice.”}} | ||
{{sa}} | |||
*[[Custody]] | |||
*[[CASS rules |