• INMA Chapter 7 INMA Chapter 7 Use of customers' investments as collateral

    • INMA 7.1.1 Application of Chapter 7

      (1) This Chapter applies to an INMA firm that receives or holds relevant investments of a customer to secure the customer's obligations to the firm in the course of, or in connection with, the firm's conducting investment and advisory business, if:
      (a) either:
      (i) the customer's entire legal and beneficial interest in those investments has been transferred to the firm; or
      (ii) the firm has a right to use those investments as if the customer's entire legal and beneficial interest in them had been transferred to the firm; and
      (b) the firm is obliged to return equivalent investments to the customer when the customer's obligations to the firm are satisfied.
      (2) If an INMA firm receives or holds a relevant investment under an arrangement described in subrule (1)(a)(ii) but has not yet exercised its right to use the investment, this Chapter does not apply in relation to the investment until after the firm has exercised its right to use it.
      (3) This Chapter does not apply in relation to an investment in which an INMA firm's interest is a bare security interest. An interest is a bare security interest if it gives the firm the right to realise the investment only on the customer's default but no right to use it in other circumstances.
      (4) If under subrule (2) or (3) this Chapter does not apply in relation to an investment, the INMA firm concerned:
      (a) must treat the investment as a custody investment; and
      (b) must comply with Chapter 6 in relation to it.
      Note For the meaning of custody investment — see rule 6.1.4.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 7.1.2 Adequate records to be kept

      (1) If an INMA firm receives or holds relevant investments of a customer under an arrangement described in rule 7.1.1, the firm must keep adequate records to enable it to meet any future obligations to the customer in relation to the investments, including the obligation to return equivalent relevant investments to the customer.
      (2) However, if the investments are received under an arrangement described in rule 7.1.1(1)(a)(ii), subrule (1) applies only if the firm has exercised its right to use them as if the customer's entire legal and beneficial interest in them had been transferred to the firm.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 7.1.3 Periodic statements to customer

      (1) An INMA firm that holds relevant investments of a customer under an arrangement described in rule 7.1.1 must prepare, and send to the customer, periodic statements listing the investments and their market values.
      (2) Each statement must be prepared as at a date (the reporting date) that is not more than:
      (a) 6 months after the last statement; or
      (b) if another interval between statements is agreed with the customer — the agreed interval after the last 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 it has written instructions from the customer requiring or allowing it to send the statement to the other person.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).