Chapter 2: Designation and Registration 

Designation

  1. Where an investment firm has limited capacity in its financial records to record the full title of an account as a ‘client asset account’, an abbreviation is acceptable, but it should be a distinguishable relevant title.
  2. The designation should be in the name field of the third party client asset account and not in the address field or any other field within the investment firm’s books and records.

    Funds facilities and financial instruments facilities agreements

  3. The funds facilities agreement and financial instruments facilities agreement referred to in Regulation 54 and 55 of the Client Asset Requirements (CAR) should be regarded as master agreements, entered into at the outset of the business relationship between the investment firm and the third party. Once a facilities agreement is in place, the intention is that the terms of that agreement will apply to any client asset account subsequently opened with that third party.
  4. Funds facilities agreements and financial instruments facilities agreements should be reviewed and amended as necessary where there is a change to the relationship between the investment firm and a third party.
  5. An investment firm should ensure that funds facilities agreements and financial instruments facilities agreement are signed and duly executed by individuals with the appropriate authority, so that a legally binding agreement exists between the investment firm and the third party.
  6. An investment firm may have other legal agreements with a third party for the purpose of providing custodial services. An investment firm should ensure that such legal agreements do not contradict/contravene the provisions contained in the CAR or MiFID II safeguarding of client asset rules, in particular, Regulations 54 and 55 of the CAR.

    Verification and third party confirmations

  7. The Central Bank expects the verification of a third party client asset account required by Regulation 56(1) of the CAR to take the form of a bank statement, custodian statement or other form of verification from the third party. This verification may be in electronic form.
  8. The verification process should be followed each time a third party client asset account is opened.
  9. An investment firm should ensure that each confirmation required under Regulation 56(2) of the CAR clearly documents the applicable third party client asset account number. Where third party client asset accounts are opened simultaneously (on the same day) with the same third party, one confirmation may be obtained but the investment firm should ensure that the confirmation from the third party lists all applicable third party client asset account numbers. This confirmation may be in electronic form.
  10. Where a third party client asset account is closed, an investment firm should retain a record of the confirmation obtained pursuant to Regulation 56(3) of the CAR for six years.

Issued: 4 July 2023

Last revision: 4 July 2023