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Template:Client money and cash brokerage: Difference between revisions
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, 12 August 2016→Client money and cash brokerage
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===Client money and cash brokerage=== | ===Client money and cash brokerage=== | ||
Should an investment manager ask an {{tag|executing broker}} bank to offer it {{tag|client money}} protection, consider the following: | Should an investment manager ask an {{tag|executing broker}} bank to offer it {{tag|client money}} protection, consider the following: | ||
*regulated [[credit institution]]s ([[Bank]]s, to you and me) are not required to hold customer cash as client money under the CASS rules (CASS {{cassprov|7.10.16}}) – banks hold | *regulated [[credit institution]]s ([[Bank]]s, to you and me) are not required to hold customer cash as client money under the CASS rules (CASS {{cassprov|7.10.16}}) – banks hold “as banker” and not as trustee for their clients. | ||
*If a bank were to treat cash as {{tag|client money}} (it could in theory do this, though it doesn't make a lot of sense): | *If a bank were to treat cash as {{tag|client money}} (it could in theory do this, though it doesn't make a lot of sense): | ||
**The bank would have to deposit the cash with ''another'' bank. | **The bank would have to deposit the cash with ''another'' bank. | ||
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*When an {{tag|investment manager}} instructs a broker to execute an order for a client it does so as agent for the client, but in the client’s own name. | *When an {{tag|investment manager}} instructs a broker to execute an order for a client it does so as agent for the client, but in the client’s own name. | ||
**The broker will book the order against the underlying client directly and not against “investment manager as trustee for Client XYZ”. | **The broker will book the order against the underlying client directly and not against “investment manager as trustee for Client XYZ”. | ||
**Therefore, at the moment when the manager pays the “client money” to the broker, the investment manager ceases to hold it as client money at all. (Again, see CASS {{cassprov|7.11.25}}) The IM pays the cash to discharge the client’s obligation to the broker. | **Therefore, at the moment when the manager pays the “client money” to the [[broker]], the investment manager ceases to hold it as client money at all. (Again, see CASS {{cassprov|7.11.25}}) The IM pays the cash to discharge the client’s obligation to the [[broker]]. | ||