Client Assets (CASS) risks relating to money market deposits

In recent years a wide variety of firms have placed client money in Money Market Deposits (MMDs), ranging from large and medium sized asset managers to major investment banks, wholesale broker dealers and insurance brokers. Institutions choose MMDs to generate a higher return, which may be to the benefit of the firm rather than its clients.

The Financial Services Authority (FSA) believes there is a high risk that firms are failing to protect client money that is held in MMDs.

In its Client money and assets report of January 2010 the FSA stated that some firms could not locate trust acknowledgements for each of the firms’ client money accounts. Recently industry fines suggest that the problems associated with MMDs are wider and more complex than just a failure to obtain trust letters.

In this flyer we present the key risks and issues that firms need to consider in relation to MMDs, from trust letters to record keeping requirements. We outline the governance, systems and IT changes firms need to make to ensure compliance with the CASS rules.