Treatment of shortfalls - CASS Provision: Difference between revisions

Treatment of shortfalls - CASS Provision (view source)

117 bytes added , 2 April 2015

no edit summary

82,882

edits

@@ Line 1: / Line 1: @@
-the following is being introduced to the CASS rules as of 1 June 2015 - essentially, upon a shortfall arising a custodian or prime broker must set aside “{{fcaprov|applicable assets}}” in a custody account to cover the potential loss each client would suffer if it were to go insolvent before resolving the shortfall.
+''Here is the [https://www.fca.org.uk/static/documents/policy-statements/ps14-09.pdf FCA Policy Statement PS14/9]''
+The following is being introduced to the CASS rules as of 1 June 2015 - essentially, upon a shortfall arising a custodian or prime broker must set aside “{{fcaprov|applicable assets}}” in a custody account to cover the potential loss each client would suffer if it were to go insolvent before resolving the shortfall.
 Given typical omnibus segregation, where counterparty to a prime brokerage customer fails to settle into the {{tag|prime broker}} while simultaneously the {{tag|prime broker}} delivers a quantity of the same security out on behalf of a different customer, but in reliance on the purchased asset coming in, a shortfall will happen. Usually it will be quickly remediated, but where not (probably 3-5 business days) the PB will, under the new rules, need to take some action to mitigate the credit exposure its customers have to it as a result of the shortfall.