INMA 5.9.1 Duty to perform client money calculation

(1) An investment business firm must carry out a calculation (client money calculation) at least once a month to ensure that, as at the close of business on the day before the calculation is carried out (the cut-off date), the firm's client money resource (CM resource) is at least equal to its client money requirement (CM requirement).
(2) The client money calculation is carried out as follows:
Step 1

Calculate the firm's CM resource by adding the following amounts (as at the cut-off date):

•    the amount in the firm's client bank accounts;
•    the amount transferred to eligible third parties;
•    any amount immediately payable to the firm by customers and other persons.
Step 2

To calculate the firm's CM requirement, add the following amounts of client money (as at the cut-off date):

•   unearned fees or unearned commissions payable to the firm;
•   the amount transferred to eligible third parties;
•   any money held by approved representatives or non-QFC intermediaries of the firm;
•   any amounts immediately payable to customers and other persons by the firm.

Note Under rule 5.7.1(3), an amount paid by cheque must remain in the client bank account until the cheque is presented to the customer's bank and cleared by the paying agent.
Step 3

Compare the CM resource and the CM requirement to see whether they are equal.

(3) If the firm's CM resource is less than its CM requirement, the firm has a shortfall and must pay money into the client bank account to which the shortfall relates in accordance with rule 5.9.2(a).
(4) If the firm's CM resource is greater than its CM requirement, the firm has a surplus and must pay the surplus out of the client bank account to which the surplus relates in accordance with rule 5.9.2(b).
(5) Within a reasonable period after carrying out the client money calculation, the firm must also:
(a) match its CM resource to its CM requirement for each customer; and
(b) achieve a match for a majority of its customers and transactions.
Derived from QFCRA RM/2014-4 (as from 1st January 2015).