Treatment of shortfalls - CASS Provision: Difference between revisions

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→‎{{cassprov|Qualifying money market fund}}s to fulfill the shortfall?

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 {{nuts|CASS|6.6.54}}
-==={{cassprov|Qualifying money market fund}}s to fulfill the shortfall?===
+==={{cassprov|Qualifying money market fund}}s to fulfill the [[Shortfall - CASS Provision|shortfall]]?===
-Setting aside cash with client money banks can be expensive init so vigilant [[prime broker]]s may wish to deploy [[money market funds]]. If they wish to do this as [[client money]] under [[CASS 7]] they must comply with the particular rules as to {{cassprov|qualifying money market fund}}s, including (cassprov|7.13.28}} (under which the client has the right to decline such an arrangement). But why would you want to do it as client mooney? Client money is a pain in the backside. And the good news is you ''don’t'' have to:  CASS {{cassprov|6.6.54}} allows a [[custodian]] to set aside its own assets, so one could deposit [[money market funds]] as [[Custody assets|custody]] under CASS 6, and would not be subject to the ''qualifying'' money market funds regime which only applies under CASS {{cassprov|7}}.
+Setting aside cash with [[client money bank|client money banks]] can be expensive init so vigilant [[prime broker]]s may wish to deploy [[money market funds]]. If they wish to do this as [[client money]] under [[CASS 7]] they must comply with the particular rules as to {{cassprov|qualifying money market fund}}s, including (cassprov|7.13.28}} (under which the client has the right to decline such an arrangement).
+You could apply [[money market fund|money market funds]] to plug a shortfall ''without'' relying on the client money rules and all this “qualifying” malarkey: CASS {{cassprov|6.6.54}} allows a [[custodian]] to set aside its own assets, so one could deposit [[money market funds]] as [[Custody assets|custody]] under CASS 6, and would not be subject to the ''qualifying'' money market funds regime which only applies under CASS {{cassprov|7}}.
+===Careful when mixing client money and client assets===
+Client money behaves differently to client assets when entities start going bust. In a nutshell, unless you have set up separate pools, client money losses are mutualised across all clients benefiting from client money protection; client asset losses  are (a) a lot less likely—even if your custodian has blown up you ''should'' still get all your custody assets back (unless there is a shortfall!), and (b) even where you don’t, and the assets have somehow been lost or stolen, losses are mutualised across only those clients who had an interest in the particular [[ISIN]] which has been lost.
+Another weird outcome is that if you have posted [[client money]] against a [[Treatment of shortfalls - CASS Provision|custody shortfall]], and there is a [[secondary pooling event]] amongst your client money banks, that shortfall cash will be mutualised across all beneficiaries of client money across your organisation—it isn't pegged away and held for the poor punter suffering the shortfall.
 ===But sir sir what about CASS {{cassprov|6.4.1}}?===