Customer asset protection
Investor concerns about the safety of their assets maintained at custodians achieved new heights during the financial downturn.
Since then, customers have questioned the safety of their assets, regulation has increased and customers are more aware of how their assets are being handled.
This publication provides a summary of existing rules as well as changes or proposed changes to enhance reporting requirements and further promote customer asset protection aligned to three broad themes: accountability, transparency, and risk management.
As broker-dealers and futures commission merchants (FCMs) move forward in the continued effort to protect their customers’ assets, it may be helpful to understand previous rule making actions, where regulation may be heading and potential governance structure adaptations. The customer asset protection rules were designed to safeguard customer assets against insolvency by requiring broker-dealers and FCMs to segregate and report customer assets they hold.
Read this publication for a summary of both the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) rule set around the SEC’s possession or control and reserve formula requirements and the CFTC’s segregation and secured amount requirements. It also outlines some changes or proposed changes to enhance reporting requirements and further promote customer asset protection aligned to three broad themes: accountability, transparency, and risk management.