. . . . In the letter, the FCA indicated that it had recently identified examples of inappropriate use of the TTCA, including: (8) While some securities financing transactions may require the transfer of ownership of clients` assets, investment firms should not be able to enter into agreements prohibited by Article 16, paragraph 10, of the 2014/65/EU Directive. While the FCA acknowledged that companies agreed to take TTCs with customers to allow them to use cash or related securities to secure this client`s obligations, it reaffirmed the importance of companies complying with existing case rules, including obligations related to the use of TTCs. In this context, the ACF found that: It has recently identified examples of inappropriate use of TTCs, of which: – The guarantee of the amount of money from customers or assets submitted to the TTCA does not substantially exceed the responsibility of the customer, In light of the letter from the ACF, we would like to highlight the key areas that companies wish to consider: Historically, most TCTs with private clients linked to the difference contracts (CFDs), Spreadbetting and Rolling for Spotex. If you would like to discuss the content of Dear`s Letter, or if you need assistance to consider your TTCA documentation, operating procedures, TTCA adequacy policies or cases in general, please contact Luke Whitmore and Laura Bates. c. if all of the customer`s money is subject to the TTCs regardless of the customer`s obligation to the company. . The impact on businesses and their customers of limiting the use of MiFID II TTC requires companies to take into account the TTCA adequacy of non-small customers (Article 6 of the MiFID II Implementing Directive), including: . According to MIFID, a concerted main transaction is a transaction in which the intermediary between the buyer and the seller is involved in the transaction in such a way that he himself is never exposed to market risk throughout the execution of the transaction, both parties are executed simultaneously and when the transaction is concluded at a price in which the intermediary does not make any profit or loss, with the exception of a commission, commission or commission previously disclosed.
If the ACF approach results in a greater restriction on the use of TCCs by businesses, it would have benefits and costs for business customers. When a company requires its customers to hold cash and assets other than a TTCA, it reduces the credit risk that customers have for the business, but the higher costs it would face will, in all likelihood, be passed on to its customers. In addition, a company that does not offer money or secure asset retention to the client may require its clients to take administrative action, such as the active transfer of .B company.B cash and surplus assets. On July 24, 2020, the FCA issued a letter to the “Dear CEO” and reminded companies that practice in the wholesale financial markets (including countervailing and premium brokers) of their securities guarantee obligations (TTCA). CASS manages clients` assets and cash. CASS 6 processes client documents called warranty custodians. CASS 7 handles customer money and imposes a general requirement that businesses that do not have a banking licence must place all of the money received or held in a customer`s account with an appropriate third party, such as the . B of a bank. CASS 7 imposes a significant number of obligations on companies regarding their treatment of the customer`s money. CASS 7A handles the return of customers` money as a result of a business failure or a third party that holds the customers` money. These CASS 7 and 7A rules are generally described as the rules of customer money. b.
the extent to which the amount subject to a TTCA is greater than the client`s obligations (including when the TTCA applies to all funds from the company`s point of entry) and if the customer cannot have any obligation to the business; and – prevent the automatic and flat-rate use of TTCs for all customers,