Client money and CASS 7 with FCA rule and the Continuous Game Changing of Basel III
The FCA released its consultation paper regarding the loosening of restrictions on client monies in unbreakable deposits. This comes after ongoing lobbying from the asset management and banking industry to come to a commercial resolution that works for the industry as well as for clients of the asset management industry.
The result of the consultation, which extends investment in unbreakable deposits and money market products from 30 days to 95 days, provides a significant opportunity for the asset management and investment management industries, as well banks and funds, to benefit from these managers’ investment.
The industry lobbied for this change to address the stalemate that the 30-day investment limit in unbreakable deposits had inadvertently created.
Regulators require banks to have a liquidity coverage ratio (LCR) of 100% by either acquiring high quality liquid assets (HQLA) to cover at least a 30-day market stress or to reduce their intake of deposits from SMEs and investment firms.
However, investment firms were restricted to a maximum deposit of 30 days, which directly impacted on the bank’s LCR. The extension to 95 days should hopefully increase the banks’ appetite for cash from the asset and investment managers. Compounded with an increasing rates environment, asset and investment managers will hopefully benefit from actively managing cash, ensuring capital preservation through strongly rated banks’ deposits, as well as for immediate liquidity needs triple A money market fund compliance with CASS7 compliant.
However, to really take advantage of this extension, asset and investment managers must gain full access to specialised professional firms to provide appropriate advice and guidance. Akoni is well positioned to assist these clients as our platform provides portfolio management for cash that complies with cash management, including both money market and deposits. Akoni has strong financial institution relations, and vast experience in governance and operating with FIs/ regulated entities, including a board with over 150 years’ experience in financial services. Our Chairman Duncan Goldie-Morrison was previously Chairman of Newedge, Head of BoA Global Markets, Director Icap and in the Risk Hall of fame; our Deputy Chairman Yann Gindre was previously CEO of Natixis London and NYC and our CEO Felicia Meyerowitz is an FCA approved person. We are also working with a leading law firm should clients require assistance in the set-up of the omnibus account relating to specific legalities.
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