COBS 14.2.14 Segregation and portability

(a) Pursuant to section 4 of FSMR, an Authorised Person acts as trustee for all Client Money or Relevant Money, as applicable, received or held by it for the benefit of the Clients or Payment Service Users, as applicable, for whom that Client Money or Relevant Money is held, according to their respective interests in the relevant Statutory Trust.
(b) In line with MIR 4.12, an Authorised Person that is also a Clearing Member of a Recognised Clearing House, shall offer Clients whose Client Money or Safe Custody Assets are rehypothecated or re-used to fund margin at a Recognised Clearing House in relation to Client transactions, the choice to clear their positions through an Omnibus Client Account ("Omnibus Client Segregation") or an individually segregated Client Account ("Individual Client Segregation") maintained by the Authorised Person with that Recognised Clearing House.
(c) When a Client chooses Individual Client Segregation, any margin in excess of the Client's requirement shall also be transferred to the Recognised Clearing House and distinguished from the margins of other Clients of the Authorised Person and shall not be exposed to losses connected to positions recorded in another account.
(d) To segregate Client Money (that would otherwise be held in a single Statutory Trust as the general pool of Client Money held for all Clients of the Authorised Person) for a specific Client or group of Clients clearing positions through a particular Client account at a Recognised Clearing House, a Clearing Member firm may, in accordance with these rules, create a separate Statutory Trust for Client Money receivables relating to a particular Client Account at that Recognised Clearing House (as in Rule 14.2.15).
(e) An Authorised Person which creates a separate Statutory Trust as in (d), must notify all its Clients that it operates more than one Statutory Trust and must inform each Client of which Statutory Trust their Client Money forms part of and how it is identified.
(f) The principles of this Rule will apply equally to any positions or margin at a Non-Abu Dhabi Global Market Clearing House subject to such derogations and waivers as the Regulator may prescribe.