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Treatment of shortfalls - CASS Provision: Difference between revisions
Treatment of shortfalls - CASS Provision (view source)
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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. | 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 | 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}}?=== | ===But sir sir what about CASS {{cassprov|6.4.1}}?=== | ||