S.L. 370.5 Art. 9Deposit of client money.

(1) A subject person shall, on receiving any customer money, promptly place such money with any of the following:

(a) a central bank;

(b) a credit institution authorised in accordance with the provisions of Directive 2013/36/EU;

(c) a bank authorised in a third country; or

(d) a qualifying money market fund:

Provided that this sub-regulation shall not apply to a credit institution authorised under Directive 2013/36/EU in relation to deposits within the meaning of the aforementioned Directive and held by that institution.

(2) Where the subject person does not deposit customer money with a central bank, it shall exercise all due skill, care and diligence in the selection, appointment and periodic review of the credit institution, bank or money market fund where the money are placed and the arrangements for the holding of such money. The subject person shall furthermore, consider the need for diversification as part of its due diligence.

(3) Where the subject person deposits customer money in accordance with sub-regulation (2), it shall, in particular, take into account the expertise and market reputation such institutions or money market funds with a view to ensuring the protection of the rights of its customers as well as any legal or regulatory requirements or market practices related to the holding of customers’ money that could adversely affect such rights.

(4) The subject person shall ensure that customers give their explicit consent to the placement of their money in a qualifying money market fund. Furthermore, for the purposes of ensuring that this right to consent is effective, the subject person shall inform customers that money placed with a qualifying money market fund will not be held in accordance with the requirements for safeguarding customer money prescribed in the Commission Delegated Directive and these regulations.

(5) Where the subject person deposits customer money with a credit institution, bank or money market fund of the same group as the subject person, it shall limit the money deposited with any such group, entity or combination of any such group entities so that money does not exceed 20% of all such monies.

(6) The requirement prescribed in sub-regulation (5) can be waived by the Authority where the subject person is able to demonstrate that, in view of the nature, scale and complexity of its business, and also the safety offered by the third parties considered in sub-regulation (5) and including in any case the small balance of customer money the subject person holds, the requirement prescribed in sub-regulation (5) is not proportionate.

(7) The subject person shall periodically review the assessment made in accordance with sub-regulation (6) and shall notify the initial and reviewed assessments to the competent authority.