• MIR 2.10 MIR 2.10 Custody

    • MIR 2.10.1

      The Recognised Body must ensure that where its facilities include making provision for the safeguarding and administration of assets belonging to users of those facilities, satisfactory arrangements are made for that purpose with an appropriate custodian or settlement facility and clear terms of agreement between the users of the facility and the Recognised Body.

    • MIR 2.10.2

      In determining whether a Recognised Body has made satisfactory arrangements for the safeguarding and administration of assets belonging to the users of its facilities, the Regulator may have regard to:

      (a) the level of protection which the arrangements provide against the risk of theft or other types or causes of loss;
      (b) whether the arrangements ensure that assets are only used or transferred in accordance with the instructions of the owner of those assets or in accordance with the terms of the agreement by which the Recognised Body undertook to safeguard and administer those assets;
      (c) whether the arrangements ensure that the assets are not transferred to the Recognised Body or to any other Person to settle the debts of the owner (or other Person with the appropriate rights over the assets) except in accordance with valid instructions from a Person entitled to give those instructions, or in accordance with the terms of the agreement by which the Recognised Body undertook to safeguard and administer those assets;
      (d) whether the arrangements include satisfactory procedures to ensure that any rights arising in relation to the assets held as a result of any actions by the issuers of those assets (or other relevant Persons) are held, transferred or acted upon in a timely and accurate manner in accordance with the instructions of the owner of those assets or in accordance with the terms of the agreement by which the Recognised Body undertook to safeguard and administer those assets;
      (e) whether there are adequate arrangements to ensure the proper segregation of assets belonging to the Recognised Body (or to undertakings in the same group) from those belonging to the users of its facilities for the safeguarding and administration of assets;
      (f) whether the arrangements include satisfactory procedures for the selection, oversight and review of custodians or sub-custodians used to hold the assets;
      (g) whether the agreements by which the Recognised Body undertakes to safeguard and administer assets belonging to users of its facilities include appropriate information regarding the terms and conditions of that service and the obligations of the Recognised Body to the user of the service and of the user of the service to the Recognised Body;
      (h) whether the records kept of those assets and the operation of the safeguarding services provide sufficient accurate and timely information:
      (i) to identify the legal and beneficial owners of the assets and of any Persons who have charges over, or other interests in, the assets;
      (ii) to record separately any additions, reductions and transfers in each account of assets held for safeguarding or administration; and
      (iii) to identify separately the assets owned by (or, where appropriate, on behalf of) different Persons, including, where appropriate, the assets owned by Members of the Recognised Body and their clients;
      (i) the frequency of reconciliation of the assets held by (or on behalf of) the Recognised Body with the accounts held with the Recognised Body by the users of its safeguarding and administration services and the extent of the arrangements for resolving a shortfall identified in any reconciliation; and
      (j) the frequency with which statements of their holdings are provided to the users of the safeguarding and administration services, to the owners of the assets held and to other appropriate Persons in accordance with the terms of the agreement by which the Recognised Body undertook to safeguard and administer those assets.

    • MIR 2.10.3

      This Rule 2.10 does not apply to collateral taken under title transfer arrangements.