The FOA is pleased that some of the suggestions it made in relation to the changes required by EMIR have been reflected in the Consultation and draft Handbook text. In particular, it is obliged to the FSA for its explicit acknowledgement of the continued use of net omnibus accounts and title transfer collateral structures.
More generally, the FOA agrees with the principles behind the proposed amendments to CASS, but it is difficult for the members to implement them at this stage and therefore to respond to the FSA’s questions as fully as they would like be cause of the numerous moving parts, which are not yet fully inter-locking. The members’ own client clearing offerings are dependent on the CCPs’ new account structures and operating models and, in some cases, those of their clearing members. This is coupled with a lack of clarity on timings on both when firms will (or will have to) start clearing through EMIR compliant arrangements and the introduction of the various sets of CASS amendments. While the FOA understands the need to split Part I of the Consultation from the proposed introduction of sub-pools, this creates a further moving part that needs to be factored into complicated operational and system changes that members need to undertake to comply with the shorter term new requirements.
In particular, the FOA questions whether it is necessary to introduce the amendments in Part I of the Consultation in January 2013 given that the CCPs will not have been re-authorised by then. A few extra weeks or months to think through these issues and their implementation in parallel to that process would be beneficial to firms and their clients alike. That said, the FOA members have taken time to discuss the proposed changes to the extent allowed by the FSA’s deadlines and have put together this response with the assistance of Norton Rose LLP. The FOA intends to respond to Parts II and III of the Consultation at a later date and again welcomes the FSA’s willingness to undertake such an open-minded review of the client assets regime over the course of the next year.
