CASS

On Tuesday 01 March, Thomas Murray hosted a half day event in London entitled Post-Trade Risk Roundtable. The event sought to explore the regulatory hurdles being faced by those involved with the funds industry, and how firms can prepare to clear these challenges in their post-trade networks.

Topics discussed on the day included: 

They make up one chapter out of 12 in a set of recently revised rules published by just one regulator. Yet it would not be hyperbolic to describe the new client money rules set out in the Client Asset Sourcebook (CASS) of the United Kingdom Financial Conduct Authority (FCA) as one of the most excruciatingly detailed and prescriptive set of operational obligations imposed on investment firms, including asset managers, of any introduced since the financial crisis.

The £126 million fine levied by the UK Financial Conduct Authority (FCA) on BNY Mellon in April for breaches of the rules on the safekeeping of client assets was the latest in a series of similar sanctions.  The fine was the eighteenth penalty levied in four years on UK financial institutions for breaches of the UK’s custody rules (or “CASS”) regime, apparently highlighting a widespread industry problem.

The record fine imposed by the UK’s Financial Conduct Authority (FCA) on US bank BNY Mellon’s UK entities - BNY Mellon London branch (BNYMLB) and Bank of New York Mellon International Ltd (BNYMIL) - for breaches of the rules on the safekeeping of client assets signals an aggressive new stance by the UK regulator. The FCA’s findings could prompt reviews of business models and management processes at other custodians. Meanwhile, investors need to take a close look at the robustness of their existing custody arrangements.