• INMA Chapter 6 INMA Chapter 6 Providing custody services

    • INMA 6.1.1 Application of Chapter 6

      (1) Subject to subrules (2) and (3), this Chapter applies to an INMA firm that has an authorisation for providing custody services or arranging the provision of custody services.
      (2) This Chapter does not apply to the holding, by an INMA firm, of relevant investments under an arrangement described in Chapter 7 (Use of customers' investments as collateral).
      (3) This Chapter does not apply to an INMA firm when it safeguards and administers a relevant investment for another firm in the same corporate group, unless the other firm has notified the INMA firm, in writing, that the other firm holds the investment for an entity that is not part of the group.
      Note For audit and reporting requirements in relation to custody services — see GENE, rules 9.5.1 and 9.5.3.


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

    • INMA 6.1.2 Chapter 6 application to QFC schemes

      (1) This Chapter applies to:
      (a) the independent entity of a QFC scheme that is not a private placement scheme, and
      (b) the operator of a QFC scheme that is a private placement scheme;
      in relation to the safeguarding of the scheme property as if:
      (c) a reference to the customer were a reference to the scheme; and
      (d) all other necessary changes were made.
      (2) This Chapter does not apply in any other way to the operator of a QFC scheme in relation to the scheme.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.3 Eligible custodian

      (1) A person is an eligible custodian in relation to a customer of an INMA firm if the person is:
      (a) an INMA firm that has an authorisation for providing custody services;
      (b) an eligible bank;
      (c) an entity to which subrule (2) applies;
      (d) a central securities depository to which subrule (3) applies;
      (e) an eligible clearing house;

      Note Eligible clearing house is defined in the Glossary.
      (f) an entity to which subrule (4) applies.
      (2) This subrule applies to an entity if:
      (a) it is regulated by an overseas regulator;
      (b) the Regulatory Authority has not, by notice published on an approved website, declared that this subrule does not apply to the regulator's jurisdiction;
      (c) the entity's regulatory authorisation (however described) in the jurisdiction covers carrying on activities that are broadly equivalent to providing custody services;
      (d) the entity is required to prepare audited accounts;
      (e) it has assets of QR1.8 million or more;

      Note The specification of a sum of money in a particular currency is also taken to specify the equivalent sum in any other currency at the relevant time — see rule 3.3.2.
      (f) it has a surplus of revenue over expenditure for its last 2 financial years; and
      (g) its latest annual audit report is not materially qualified.
      Note Approved website, jurisdiction and overseas regulator are defined in the glossary.
      (3) This subrule applies to a central securities depository if:
      (a) its custody services are regulated by an overseas regulator;
      (b) the Regulatory Authority has not, by notice published on an approved website, declared that this subrule does not apply to the regulator's jurisdiction;
      (c) the depository is required to prepare audited accounts;
      (d) it has assets of QR35 million or more;
      (e) it has a surplus of revenue over expenditure for its last 2 financial years; and
      (f) its latest annual audit report is not materially qualified.
      (4) This subrule applies to an entity in relation to a customer of an INMA firm if:
      (a) the entity is not a person mentioned in subrule (1) (a) to (e);
      (b) the entity's business includes the provision of custodial services;
      (c) the firm believes, on reasonable grounds, that:
      (i) it is not feasible for the firm to use an entity mentioned in any of subrules (1) (a) to (e) to provide custodial services for the customer;
      (ii) the entity can provide appropriate custodial services for the customer; and
      (iii) it is in the customer's best interests for the firm to use the entity to provide custodial services for the customer; and
      (d) the firm's use of the entity to provide custodial services for the customer otherwise complies with these rules.
      Amended by QFCRA RM/2019-4 (as from 1st January 2020).

    • INMA 6.1.4 Custody investment

      A custody investment of an INMA firm is a relevant investment, belonging to a customer, for which the firm provides custody services, or arranges the provision of custody services, in or from the QFC.

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

    • INMA 6.1.5 Holding custody investments

      (1) An INMA firm holds or controls custody investments if:
      (a) the investments are directly held by the firm;
      (b) they are held in an account in the firm’s name; or
      (c) they are held by a person, or in an account in the name of a person, controlled by the firm.
      (2) For subrule (1):
      (a) a person holds a custody investment if the document of title for the investment is in the person’s physical possession, or legal title to the investment is registered in the person’s name;
      (b) a person controls an account if the account is operated in accordance with the person’s instructions; and
      (c) an INMA firm controls a person if the person is inclined to act in accordance with the firm’s instructions.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.6 Nominee

      A nominee is a body corporate whose business consists solely of acting as a nominee holder of relevant investments or other property.

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

    • INMA 6.1.7 Investments not treated as custody investments — delivery-versus-payment transactions

      (1) An INMA firm need not treat a customer’s relevant investment as a custody investment in relation to a delivery-versus-payment transaction if:
      (a) in the case of a customer’s purchase — the investment is to be due to the customer within 1 business day after the customer fulfils a payment obligation; or
      (b) in the case of a customer’s sale — the investment is to be due to the firm within 1 business day after a payment obligation is fulfilled;
      unless the delivery or payment by the firm does not occur by the close of business within 3 business days after the date of payment or delivery of the investment by the customer.
      (2) Until a transaction described in subrule (1) is settled, an INMA firm may segregate money (in accordance with the client money protection rules) instead of the investment.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.8 Investments not treated as custody investments — investments held temporarily for customers

      An INMA firm need not treat a relevant investment as a custody investment when it holds the investment temporarily on behalf of a customer, if the firm:

      (a) keeps the investment secure, records it as belonging to that customer, and forwards it to the customer or in accordance with the customer’s instructions, as soon as practicable after receiving it;
      (b) retains it for no longer than the period that the firm has determined (after taking reasonable steps) to be necessary to check for errors and to receive the final documents in connection with any series of transactions to which the documents relate; and
      (c) makes a record of all the investments handled in accordance with paragraphs (a) and (b), the details of the customer and any action that the firm has taken.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.9 Responsibility for nominees

      An INMA firm is responsible to its customers for the actions of any nominee controlled by the firm in relation to any requirement of this Chapter.

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

    • INMA 6.1.10 Systems and controls in relation to custody investments

      (1) An INMA firm that holds or controls custody investments must have systems and controls:
      (a) to ensure that those investments are properly safeguarded;
      (b) to ensure that those investments are identifiable and secure at all times; and
      (c) to demonstrate to its auditors and the Regulatory Authority that it complies with this Chapter.
      (2) An INMA firm that provides custody services must ensure that custody investments are recorded, registered and held appropriately to safeguard and control them.
      (3) Except as permitted in these rules or as required by law, an INMA firm that provides custody services must record, register and hold custody investments separately from its own assets.
      (4) To the extent practicable, an INMA firm must appropriately register or record legal title to a custody investment in the name of:
      (a) the customer concerned;
      (b) a nominee controlled by the firm, if the customer's beneficial entitlement to the investment is properly recorded in the nominee's records;
      (c) a nominee controlled by an eligible custodian;
      (d) an eligible custodian, if:
      (i) the investment is subject to the law or market practice of a jurisdiction outside the QFC, and the firm has taken reasonable steps to determine either that it is in the customer's best interests to register or record it in that way, or that (because of that law or market practice) it is not feasible to do otherwise; and
      (ii) the firm has notified the customer in writing;
      (e) the firm, if:
      (i) the firm has determined on reasonable grounds, having regard to the law and market practice to which the investment is subject, either that it is in the customer's best interests for the investment to be registered or recorded in the name of the firm or that it is not feasible to do otherwise; and
      (ii) the firm has notified the customer in accordance with rule 6.1.18(1)(i); or
      (f) any other person, in accordance with the customer's specific written instruction, if the firm has notified the customer in accordance with rule 6.1.18(1)(j).
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.11 Control of documents of title

      An INMA firm may hold a document of title to a custody investment either in the firm’s physical possession or with an eligible custodian, or in a nominee controlled by an eligible custodian, in an account designated for customers’ custody investments.

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

    • INMA 6.1.12 Use of eligible custodians

      (1) An INMA firm may hold a custody investment with an eligible custodian if (and only if):
      (a) under the laws applying to the investment, it will be recognised as segregated from, and will not form part of, the firm's assets in its insolvency; and
      (b) after making the assessment described in rule 6.1.13, the firm is satisfied that the custodian is a suitable person to hold the investment.
      (2) The INMA firm must have systems and controls to ensure that:
      (a) the requirements of subrule (1) (a) continue to be met; and
      (b) the assessment made for subrule (1) (b) remains correct.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.13 Assessing whether an eligible custodian is suitable

      (1) When assessing the suitability of an eligible custodian, an INMA firm must ensure that the custodian will provide protection equivalent to the protection conferred by this Chapter.
      (2) When assessing the suitability of an eligible custodian, an INMA firm must have regard to all the relevant circumstances including the following:
      (a) the custodian’s expertise and market reputation;
      (b) on a continuing basis, the quality of services that the custodian provides to the firm;
      (c) the custodian’s arrangements for holding and safeguarding custody investments and its use of agents and service providers;
      (d) the custodian’s credit rating, capital and financial resources;
      (e) the regulatory and insolvency regimes of the jurisdiction in which the custodian is located;
      (f) the custodian’s regulatory status and history.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.14 Acknowledgement by eligible custodian

      Before an INMA firm permits custody investments to be held by an eligible custodian or a nominee controlled by an eligible custodian, the firm must obtain a written acknowledgement from the custodian stating:

      (a) that the title of the account in which the investments will be held sufficiently distinguishes it from any other account containing assets that beneficially belong to the firm or its nominee, and is in the form requested by the firm;
      (b) that investments will be credited to, and withdrawn from, the account only in accordance with the firm’s instructions;
      (c) that the custodian will hold or record the investments separately from assets belonging to the custodian and will ensure that any sub-custodian that it uses does the same;
      (d) that the custodian will use due skill, care and diligence in the selection of any sub-custodian that it uses;
      (e) the arrangements for recording and registering the investments, claiming and receiving dividends and other entitlements and interest, and giving and receiving instructions;
      (f) that the custodian will give a statement to the firm at stated intervals setting out the description and amounts of investments in the account;
      (g) that the custodian is not entitled to combine the account with any other account, or to exercise any charge, mortgage, lien, right of set-off or counterclaim against investments in the account for any sum owed to it on any other account of the firm (except for any charges relating to the administration or safekeeping of the investments in the account); and
      (h) the extent of the custodian’s liability in the event of the loss of an investment caused by the fraud, wilful default or negligence of the custodian or its agent.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.15 INMA 6.1.15 Use of customers’ investments for firms’ own purposes

      (1) Subject to subrule (2), an INMA firm that provides custody services must not use a customer’s custody investment for its own purpose or that of another person.
      (2) An INMA firm may use a customer’s custody investment for its own purposes or those of another person, if it has systems and controls to ensure that:
      (a) it obtains the customer’s prior written permission;
      (b) adequate records are maintained to protect custody investments that are applied as collateral or used for stock lending;
      (c) equivalent assets can be returned to the customer; and
      (d) the customer is not disadvantaged by the use of the investment.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

      • INMA 6.1.15 Guidance

        The permission need not be specific but may be a general permission given as part of the customer's acceptance of an appropriate statement (about the use of the customer's custody investments) in the firm's terms of business.

        Note Under CIPR, Parts 4.4, 5.2 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.

        Amended by QFCRA RM/2019-4 (as from 1st January 2020).

    • INMA 6.1.16 Collateral for customers' investments used for stock lending

      (1) If a custody investment belonging to a customer is used for stock lending, the INMA firm concerned must ensure that:
      (a) the borrower provides collateral, in the form of readily realisable investments, in favour of the customer;
      (b) the firm monitors the current realisable values of the investment and the collateral daily; and
      (c) if the current realisable value of the collateral falls below that of the investment, the firm provides collateral (in the form of readily realisable investments) to make up the difference, unless the customer agrees otherwise in writing.
      (2) In this rule:

      debt instrument, securities receipt, share, and warrant have the respective meanings given by FSR, article 110 and Schedule 3, Part 3.

      Note Unit (in a collective investment scheme) is defined in the glossary.

      readily realisable investment means:

      (a) cash;
      (b) a demand deposit;
      (c) money deposited in a bank and available for immediate withdrawal;
      (d) a short-term, highly liquid investment that is readily convertible to a known amount of cash and is subject to an insignificant risk of change in value;
      (e) a debt instrument that is issued by or on behalf of a jurisdiction, or a public, regional or local authority of a jurisdiction, and is denominated in the jurisdiction's currency;
      (f) any other security admitted to official listing on, or regularly traded on or under the rules of, a regulated exchange; or
      (g) a newly issued security that can reasonably be expected to fall within paragraph (f) when trading in it starts.
      Note Regulated exchange is defined in the glossary.
      security means a debt instrument, a securities receipt, a share, a unit in a collective investment scheme or a warrant.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.17 Notifying customers if investments to be held outside QFC

      (1) This rule applies if:
      (a) an INMA firm is to arrange the provision of custody services for a customer; and
      (b) the customer’s investments will or may be held outside the QFC.
      (2) The firm must notify the customer in writing that:
      (a) the investments may be held outside the QFC; and
      (b) the market practices and the insolvency and legal regime may differ from the practices and regime in the QFC.
      (3) The notification may be in the firm’s terms of business.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.18 Notifying customers if investments to be held outside QFC

      (1) Before an INMA firm provides custody services to a customer, it must notify the customer in writing:
      (a) of the arrangements for recording and registering custody investments, claiming and receiving dividends and other entitlements and interest, and giving and receiving instructions relating to the investments concerned;
      (b) of the firm's obligations to the customer in relation to exercising the customer's rights in relation to the investments;
      (c) of the basis on which, and any terms governing the way in which, the investments will be held, including any rights that the firm may have to realise those investments if the customer defaults;
      (d) how, and how often, the firm will report to the customer in relation to the investments;
      (e) if the firm intends to mix the customer's investments with those of other customers:
      (i) a statement of that fact; and
      (ii) if the customer is a retail customer:
      (A) that customers' individual entitlements may not be identifiable by separate certificates or other physical documents, or an equivalent electronic record; and
      (B) that if a liquidator, receiver or administrator, or a trustee in bankruptcy, is appointed to the firm, and a deficiency is found in customers' custody investments, each customer may have to bear a share of the deficiency in proportion to that customer's original share of the investments in the account;
      (f) if the customer's investments may be held outside the QFC, a statement of that fact and a statement that the market practices, and the insolvency and legal regime, in that jurisdiction may differ from the practices and regime in the QFC;
      (g) if the firm holds or intends to hold custody investments in an account with an eligible custodian in the same corporate group as the firm, a statement of that fact;
      (h) the extent of the firm's liability in the event of default by a nominee controlled by the firm or an eligible custodian;
      (i) if legal title to the investments will be registered or recorded in the name of the firm, a statement of that fact; and
      (j) if the customer has instructed the firm about holding, registering or recording a custody investment under rule 6.1.10(4)(f) (Systems and controls in relation to custody investments) — that the consequences of doing so are at the customer's own risk, unless the firm has agreed otherwise.
      (2) In the case of a customer that is a retail customer, the firm must not register or record legal title to the customer's investments in the firm's name unless the firm has obtained the customer's written consent and has notified the customer that:
      (a) the investments will be or may be registered or recorded in the firm's name;
      (b) as a result, the investments may not be segregated from the firm's investments; and
      (c) in the event of the appointment of a liquidator, receiver or administrator, or trustee in bankruptcy, to the firm, the customer's assets may not be as well protected from claims made on behalf of the general creditors of the firm.
      (3) A notification for subrule (1) or (2) may be in the firm's terms of business.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.19 No exclusion of liability for nominee’s negligence or fraud

      An INMA firm must not exclude liability for the negligence, wilful default or fraud of a nominee controlled by the firm.

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

    • INMA 6.1.20 Periodic custody investment statements to customers

      (1) An INMA firm that provides custody services for a customer must prepare, and must send to the customer, periodic statements listing the customer’s custody investments.
      (2) Each statement must be prepared as at a date (the reporting date) that is not more than:
      (a) 6 months after the previous statement; or
      (b) if another interval between statements is agreed with the customer — the agreed interval after the previous statement.
      (3) Each statement must be sent to the customer within 1 month after the reporting date.
      (4) The firm must send each statement directly to the customer and not to another person, unless the customer has given written instructions requiring or allowing the firm to send the statement to the other person.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.21 When periodic custody statements need not be sent to customer

      (1) If a customer of an INMA firm is ordinarily resident outside the State of Qatar, the firm may, with the customer's prior written agreement, retain the statements required to be sent to the customer under rule 6.1.20.
      (2) Statements retained in accordance with subrule (1) must be held by an individual approved by the Regulatory Authority to carry out the compliance oversight function (within the meaning given by CTRL, rule 6.3.3) for the firm.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015)
      Amended by QFCRA RM/2021-1 (as from 1st July 2021).

    • INMA 6.1.22 Reconciliations to be carried out

      (1) An INMA firm that provides custody services:
      (a) at least once every month — must reconcile its records of customers’ custody investments held with eligible custodians with monthly statements received from those custodians;
      (b) at least every 6 months — must count every custody investment physically held by the firm or a nominee controlled by the firm, and reconcile the result of that count with the firm’s records; and
      (c) at least every 6 months — must reconcile the firm’s records of each customer’s holdings with the firm’s record of the location of custody investments.
      (2) An INMA firm must carry out a reconciliation required by subrule (1) within 10 business days after the date to which the reconciliation relates.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.23 Duties to be separated

      An INMA firm must maintain a clear separation of duties to ensure that employees responsible for the production or maintenance of the records to be reconciled do not carry out the reconciliations required by rule 6.1.22.

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

    • INMA 6.1.24 Review of reconciliations

      (1) A reconciliation carried out by an INMA firm in accordance with rule 6.1.22 must be reviewed by an adequately senior employee of the firm.
      (2) The employee must state in writing whether the reconciliation has been carried out in accordance with these rules.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.25 Correcting discrepancies in reconciliations

      An INMA firm must promptly correct any discrepancies that are discovered, and must make good, or provide the equivalent of, any discrepancy for which there are reasonable grounds to conclude that the firm is responsible.

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

    • INMA 6.1.26 Notice to be given of certain significant discrepancies

      (1) This rule applies if:
      (a) in carrying out a reconciliation under rule 6.1.22, an INMA firm discovers a significant discrepancy; and
      (b) the discrepancy is not rectified by the end of the next business day after the day on which it is discovered.
      (2) The firm must notify the Regulatory Authority of the discrepancy immediately, but by no later than the second business day after the day on which it is discovered.
      (3) In this rule:

      significant discrepancy includes discrepancies that have the cumulative effect of being significant.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 6.1.27 Record-keeping

      (1) An INMA firm must maintain records that enable it:
      (a) to demonstrate to its auditors and the Regulatory Authority that it complies with this Chapter; and
      (b) to demonstrate and explain all entries of custody investments held or controlled in accordance with this Chapter.
      (2) An INMA firm must maintain a master list of every account that it holds with an eligible custodian. The master list must set out:
      (a) the name of the account;
      (b) the account number;
      (c) the location of the account;
      (d) whether the account is currently open or closed; and
      (e) the date on which it was opened and if applicable, the date on which it was closed.
      (3) The details of an account must be documented and maintained in the master list for at least 6 years after the account is closed.
      (4) An INMA firm must maintain records of every agreement with an eligible custodian and any instruction given by the firm to a custodian under such an agreement.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).