• INMA Part 5.6 INMA Part 5.6 Disapplication of client money protection rules

    • INMA 5.6.1 When client money protection rules do not apply — business customers and market counterparties

      (1) The client money protection rules do not apply to money held by an investment business firm on behalf of a business customer if:
      (a) the customer has opted-out of the protection conferred by those rules; and

      Note For how to opt-out — see rule 5.6.2.
      (b) the firm has notified the customer in writing:
      (i) that the customer's money will not be subject to the protections conferred by those rules;
      (ii) that the customer's money will not be segregated from the firm's money;
      (iii) that the customer will rank only as a general unsecured creditor of the firm for that money; and
      (iv) if the firm proposes to provide discretionary investment management services to the customer:
      (A) that the firm will have significant control over the amount of unsecured credit risk that the customer is taking on the firm; and
      (B) that the customer should consider that risk carefully before commencing business on that basis with the firm.
      (2) The notification required by paragraph (1) (b) may be in the firm's terms of business.

      Note Under CIPR, Parts 4.4 and 5.2, an investment business firm must give a customer a statement, in writing, of the terms and conditions on which the firm will conduct investment business for the customer.
      (3) The client money protection rules do not apply to money held by an investment business firm on behalf of a customer that is an eligible counterparty, unless the firm has agreed to treat money held by or on behalf of the customer in accordance with those rules.
      Amended by QFCRA RM/2019-4 (as from 1st January 2020).
      Amended by QFCRA RM/2020-1 (as from 15th August 2020)

    • INMA 5.6.2 How business customers opt-out of protections

      A business customer of an investment business firm opts-out of the protections conferred by the client money protection rules by giving the firm a written acknowledgement of the firm's notification under rule 5.6.1(1)(b).

      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 5.6.3 When client money protection rules do not apply — delivery-versus-payment transactions through commercial settlement systems

      (1) Subject to subrule (3), the client money protection rules do not apply to money received from a customer of an investment business firm in relation to a delivery-versus-payment transaction through a commercial settlement system if:
      (a) the firm has elected not to treat money from that customer as client money;
      (b) the firm has given the customer a notification under rule 5.6.1(1)(b);
      (c) in the case of a customer purchase, the money will be due to the firm within 1 business day after the firm delivers the investments; and
      (d) in the case of a customer sale, the money will be due to the customer within 1 business day after the customer delivers the investments.
      (2) The notification required by subrule (1) (b) may be in the firm's terms of business.
      (3) Money about which an election has been made in accordance with subrule (1) (a) must be treated as client money if the delivery or payment by the firm does not occur within 3 business days after the date of the payment or delivery of the investments by the customer.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).