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  • CL-2.4 CL-2.4 Client Statements

    • CL-2.4.1

      Before investment firm licensees provide safe custody services to a client, they must notify the client as to the appropriate terms and conditions which apply to this service. These must cover, at a minimum, the following matters, wherever applicable:

      (a) The registration of the safe custody financial instruments, if these are not registered in the investment firm licensee clients' name;
      (b) The extent of the investment firm licensees' liability in the event of default by a custodian, except that the investment firm licensee must accept the same level of responsibility to its client for any nominee company controlled by the investment firm licensee or its affiliated company as for itself and may not disclaim responsibility for losses arising from the fraud, wilful default or negligence of the firm;
      (c) The circumstances in which the investment firm licensee may realise a safe custody financial instrument held as collateral to meet the client's liabilities;
      (d) The claiming and receiving of dividends, interest payments and other entitlements accruing to the client;
      (e) Dealing with takeovers, other offers or capital reorganisations and exercising voting, conversion and subscription rights;
      (f) Arrangements for the distribution of entitlements to shares and any other benefits arising from corporate events, where client balances have been pooled;
      (g) Arrangements for the provision of information to the client relating to the safe custody financial instruments which the investment firm licensee, or its nominee company, holds on behalf of the client;
      (h) How often a statement of custody assets will be sent to the client and the basis on which the assets shown on the statement are valued;
      (i) Fees and costs for safe custody services to the extent that they are not notified to the client elsewhere; and
      (j) If the firm intends to pool a safe custody financial instrument with that of one or more other clients, notification of its intention and, if the client is a retail client, an explanation of the effects of pooling to that retail client.
      Amended: January 2007

    • CL-2.4.2

      All statements produced by or on behalf of an investment firm licensee must list all safe custody assets held for the client and for which the investment firm licensee is accountable and:

      (a) Identify any safe custody financial instruments registered in the client's own name separately from those registered in any other name;
      (b) Identify any safe custody assets which are being used as collateral or have been pledged to third parties, separately from any custody assets;
      (c) Show the market value of any collateral held, as at the date of the statement;
      (d) For a retail client, base the statement on either trade date or settlement date information for cash balances and safe custody investment and notify the basis to the retail client; and
      (e) Details of movements of each client asset.
      Amended: January 2007