ON THE MONITOR
Prime Brokers, Protect Those Client Assets
April 19, 2010
The Financial Services Authority is finally cracking down on how prime brokers protect client assets.
Eighteen months after Lehman Brothers went bankrupt on both sides of the Atlantic, the United Kingdom securities watchdog published a consultation paper setting out issues involving in protecting a fund’s assets when the holder of those assets disappears. Comments on “Enhancing the Client Assets Sourcebook” are due by June 30th.
The consultation paper follows stern letters the FSA sent out in March 2009 to compliance officers in the City of London urging them to follow basic client protection rules. Some of the recommendations in the document issued last month also elaborate on the U.K. Treasury’s guidelines for what large, systemically-important financial firms should include in their “living wills” in the event of their insolvency.
Client assets are assets that belong to a fund manager but are held by a brokerage firm. They should ideally be held in a trust which would segregate them from the proprietary assets of the prime brokerage. In the event of the firm’s bankruptcy, they then can be immediately returned to their rightful owners – the fund managers.
THE WEEK AHEAD:
MONDAY, APRIL 19
EVENT: 2010 High Performance Computing Linux Financial Markets
8 a.m., Flagg Management, Roosevelt Hotel, New York
TUESDAY, APRIL 20
Goldman Sachs Conference Call to Announce First Quarter 2010 Results, 11 a.m., First Quarter 2010, Earnings Estimate: $4.02
WEBCAST: Public Policy Issues Raised by the Report of the Lehman Bankruptcy Examiner
11 a.m., House Financial Services Committee, 2128 Rayburn House Office Building
WEDNESDAY, APRIL 21
WEBCAST: Corporate Governance and Shareholder Empowerment
10 a.m., House Subcommittee on Capital Markets, 2128 Rayburn House Office Building
11 a.m., First Quarter 2010, Earnings Estimate: 58 cents
FRIDAY, APRIL 23
SPEECH: S.E.C. Commissioner Elisse B. Walter
7:55 a.m., University of California San Diego Economics Roundtable, Faculty Club, La Jolla, California
THE WEEK THAT WAS:
SEC Charges Goldman Sachs with Fraud
Wireless Technology at Millisecond Speeds Coming
Pan-European Settlement Platform Delayed
State Street Takes Minority Stake in Pension Risk Analytics Firm
SEC Proposes Reporting System For Monitoring Largest Traders
Study: OTC Derivatives Need Better Valuations and Collateral Management
S.E.C. Accuses Goldman of Fraud in Housing Deal
Finra plan to increase power draws ire
Brokerage hit with $375,000 fine over 2007 data breach
