COBS 15.4 COBS 15.4 Client Accounts in relation to Client Investments
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.
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.
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.
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.
Guidance1. 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.