FSA has published Consultation Paper 10/9 on enhancing the Client Assets Sourcebook. The consultation focuses on the following proposals:

  • all prime brokerage agreements must contain a disclosure annex highlighting the contractual limit on re-hypothecation;
  • prime brokers must report daily on client money and assets holdings to their clients;
  • restricting the placement of client money deposits held in client bank accounts within a group to 20%;
  • prohibiting the use of general liens in custodial agreements;
  • creating a new controlled function with specific responsibility for client money and assets; and
  • introducing a client money and assets return (CMAR), which will be reviewed and authorised on a monthly basis for medium to large firms and twice a year for small firms.

The consultation period closes on 30 June 2010. FSA intends to finalise rules in a policy statement in the third quarter of 2010.