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  • COBS 15.4 COBS 15.4 Client Accounts in relation to Client Investments

    • COBS 15.4.1

      An Authorised Person which Provides Custody or holds or controls Client Investments must register or record all Safe Custody Investments in an account that is:

      (a) a Client Account in relation to Client Investments; or
      (b) an account in the name of the Authorised Person where, due to the nature of the law or market practice, it is not feasible to do otherwise, also labelled as a Client Account where legally possible.

    • COBS 15.4.2

      A Client Account in relation to Client Investments is an account which:

      (a) is held with a Third-Party Agent or by an Authorised Person which is authorised under its Financial Services Permission to Provide Custody;
      (b) is established to hold Client Assets;
      (c) when held by a Third-Party Agent, is maintained in the name of:
      (i) if an Authorised Person in the form of a Domestic Firm, the Authorised Person; or
      (ii) if an Authorised Person in the form of a Branch, a Nominee Company controlled by the Authorised Person; and
      (d) includes the words "Client Account" in its title.
      Amended on (3 February, 2020).

    • COBS 15.4.3

      (a) An Authorised Person must maintain a master list of all Client Accounts and accounts referred to in Rules 15.4.1–15.4.2.
      (b) The master list must detail:
      (i) the name of the account;
      (ii) the account number;
      (iii) the custodian, sub-custodian or depository (if not the Authorised Person itself);
      (iv) the banker of the account;
      (v) whether the account is currently open or closed; and
      (vi) the date of opening or closure.
      (c) The details of the master list must be documented and maintained for a minimum period of six years following the closure of an account.

    • COBS 15.4.4

      An Authorised Person must not use a Client's Safe Custody Investment for its own purpose or that of another Person without that Client's prior written permission.

    • COBS 15.4.5

      An Authorised Person which intends to use a Client's Safe Custody Investments for its own purpose or that of another Person, must have systems and controls in place to ensure that:

      (a) it obtains that Client's prior written permission;
      (b) adequate records are maintained to protect Safe Custody Investments which are applied as collateral or used for stock lending activities;
      (c) the equivalent assets are returned to the Client Account of the Client; and
      (d) the Client is not disadvantaged by the use of his Safe Custody Investments.

    • Guidance

      1. An Authorised Person may record, register or hold a Client's Investment in a Client Account solely for that Client. Alternatively, an Authorised Person may choose to pool that Client's Investment in a Client Account containing Investments of more than one Client.
      2. The purpose of recording, registering or holding Investments in a Client Account is to ensure that Investments belonging to Clients are readily identifiable from Investments belonging to the Authorised Person such that, following a Pooling Event, any subsequent distribution of Investments may be made in proportion to each Client's valid claim over those Investments.
      3. Following a Pooling Event, a Client may not have a valid claim over Investments registered, recorded or held in a Client Account if that Client Account was not established to register, record or hold Investments for that Client or a pool of Clients of which that Client was a part.