COBS 14.2.6 Exceptions to Holding Client Money in Client Accounts

Past version: effective from 21/10/2015 - 20/10/2015
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(a) The requirement for an Authorised Person to hold Client Money in a Client Account does not, subject to Rule 14.2.6(b), apply with respect to such Client Money:
(i) received in the form of cheque, or other payable order, until the Authorised Person, or a Person or account controlled by the Authorised Person, is in receipt of the proceeds of that cheque;
(ii) temporarily held by an Authorised Person before forwarding to a Person nominated by the Client; or
(iii) in connection with a Delivery Versus Payment Transaction where:
(A) in respect of a Client purchase, Client Money from the Client will be due to the Authorised Person within one day upon the fulfilment of a delivery obligation; or
(B) in respect of a Client sale, Client Money will be due to the Client within one day following the Client's fulfilment of a delivery obligation.
(b) An Authorised Person must pay Client Money received by it of the type described in Rule 14.2.6(a)(ii) or Rule 14.2.6(a)(iii) into a Client Account where it has not fulfilled its delivery or payment obligation within three days of receipt of the Money or Investments, unless in the case of the type of Client Money referred to in Rule 14.2.6(a)(iii)(B), it instead safeguards Client Investments at least equal to the value of such Client Money.
(c) An Authorised Person must maintain adequate records of all cheques and payment orders received in accordance with Rule 14.2.6(a)(i) including, in respect of each payment, the:
(i) date of receipt;
(ii) name of the Client for whom payment is to be credited; and
(iii) date when the cheque or payment order was presented to the Authorised Person's Third-Party Agent.
(d) The records must be kept for a minimum of six years.
(e) Cash held by an Authorised Firm that is a bank as a deposit in its capacity as a bank is not Client Money.
(f) Cash received under a title transfer collateral arrangement from a Market Counterparty or Professional Client is not Client Money.