The FCA has published Consultation Paper 17/2: Client asset sourcebook 7A & the Special Administration Regime Review (CP17/2).

CP17/2 consults on changes to the Client Assets sourcebook (CASS) in relation to an investment firm failure and their interaction with the Special Administration Regime (SAR). Collectively, the proposed aim of the proposals is to speed up the distribution of client assets, improve customer outcomes and reduce the market impact of an investment failure.

In particular, the FCA:

  • seeks feedback on proposed changes to the CASS rules affecting the return of client assets, against the backdrop of the amendments to the Investment Bank Special Administration Regulations 2011 (SAR Regulations) as published by HM Treasury;
  • explains why certain other proposals in Consultation Paper 13/5: Review of the client assets regime for investment business and Discussion Paper 16/2: CASS 7A and the Special Administration Regime Review are not being taken forward; and
  • seeks feedback on minor consequential changes to the client money rules in CASS 7 and 7A to address the forthcoming indirect clearing requirements under the European Markets Infrastructure Regulation (EMIR) and Markets in Financial Instruments Regulation (MiFIR) regulatory technical standards.

CP 17/2 seeks feedback on the following CASS proposals which have been shaped in line with HM Treasury’s amendments to the SAR Regulations:

  • amendments to allow certain transfers of the client money pool (CMP) not permitted in the current rules;
  • requirements that, where relevant, work with the bar date mechanisms in the SAR Regulations to ensure an appropriate level of client protection prior to a final distributions of client assets;
  • applying hindsight to the valuation of cleared margined transactions for the purpose of determining a client’s entitlement to the CMP;
  • setting out the rule which CASS requirements cease to apply or are modified following firm failures and other primary pooling events; and
  • other amendments to ensure that CASS is aligned with the SAR Regulations, while recognising that some firm failures will not be subject to the SAR.

The deadline for comments on the EMIR and MiFIR related proposals is 23 February 2017. The deadline for the rest of the proposals is 24 April 2017.

View FCA consults on changes to CASS in light of SAR review, 23 January 2017