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FSA consultation paper on maintaining client assets


    1. The purpose of this Consultation Paper (CP) is to seek views on our proposals for enhancing the Client Assets Sourcebook (CASS).
    2. The financial crisis has been well documented and we will not analyse it further in this paper. We have taken into account the issues highlighted by a number of insolvency appointments, including Lehman Brothers International (Europe) (LBIE). The focus of this paper is to consider proposals which will protect clients and consider market stability, in the event of a firm’s insolvency.
    3. During the past eighteen months we have observed a number of areas in which the CASS regime can be strengthened. We have engaged in pre-consultation with firms, trade associations, accounting firms and legal experts, through a combination of meetings, surveys and round-table discussions. We have also had the benefit of participating in HM Treasury’s (the Treasury) working groups, the views of which provided the basis for the publication of two CPs considering effective resolution arrangements for investment banks.1
    4. The Treasury has outlined a comprehensive package of proposals which considered legislative, regulatory and market-led solutions to address client money and assets, markets and investment firm resolution issues. This paper considers seven of the client money and assets proposals2 addressing:
  • increased re-hypothecation disclosure and transparency in the prime brokerage community;
  • enhanced client money and asset protection; and
  • increased CASS oversight.


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