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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