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MIFID - CLIENT MONEY RULES
This disclosure should be read in conjunction with the Terms of Business (all defined terms used herein shall have the meaning given in the Terms of Business unless indicated otherwise). It summarises key client money provisions applicable to J.P. Morgan Securities plc and J.P. Morgan Investment Firms (together but severally, referred to as J.P. Morgan in this section), applicable from 1st December 2014.
J.P. Morgan treats any money received from or held on clients’ behalf in the course of carrying on investment business as client money in accordance with the Client Money Rules which, for the avoidance of doubt, may include holding client money with a third party bank or banks. J.P. Morgan may also hold client money with a J.P. Morgan Credit Institution or other member of the J.P. Morgan group of companies which is a bank authorised in a third country (as defined under the Client Money Rules). J.P. Morgan may also allow another third party (for example an OTC counterparty, settlement agent, intermediate broker, Exchange or Clearing System) to hold or control client money in order to effect one or more transactions through or with that person or to satisfy a client’s obligation to provide collateral in respect of a transaction. Client money may be held outside the United Kingdom. If client money is held with a party outside the United Kingdom the applicable legal and regulatory regime may be different from that of the United Kingdom and other EEA states and if the bank, intermediate broker, OTC counterparty, Exchange, Clearing System or settlement agent fails, clients’ money may be treated differently from the position that would apply if client money were held in the United Kingdom or an EEA state. Clients should consider taking independent legal advice if they have any concerns.
Qualifying Money Fund
J.P. Morgan may place clients’ money into a qualifying money fund, as defined in the Client Money Rules. As a result, any money will not be held in accordance with the Client Money Rules and the units in any such fund will be held for clients as custody assets in accordance with the provisions on custody assets set out in the Custody Rules. If clients do not want J.P. Morgan to place client money held for clients into a qualifying money fund, clients should advise J.P. Morgan in writing.
Title Transfer Collateral Arrangements
The Client Money Rules will not apply in respect of any monies where full ownership has been transferred by the client to J.P. Morgan for the purpose of securing or otherwise covering present or future, actual or contingent or prospective obligations (a “Title Transfer Collateral Arrangement”). Where money has been provided to J.P. Morgan under a Title Transfer Collateral Arrangement such money may be used in the course of J.P. Morgan’s business and clients will therefore rank only as a general creditor of J.P. Morgan. Any notification that a client would like to terminate a Title Transfer Collateral Arrangement should be made in accordance with the Product Contract and in writing.
J.P. Morgan may pay away any unclaimed client money held on a client’s behalf to a registered charity of J.P. Morgan’s choice where J.P. Morgan has held such unclaimed money for at least 6 years following the last movement on the account (disregarding any payment or receipt of interest, charges or similar items) having taken reasonable steps to trace such client and return such money to it. In such case J.P. Morgan will (i) cease to treat such money as client money and (ii) undertake (or arrange for an Affiliate to undertake) to repay a sum equal to the balance paid way in the event a client seeks to claim such balance in the future.
Having obtained clients’ prior written consent where required under the Client Money Rules, J.P. Morgan may transfer client money balances to another person, as part of a business transfer to that person.
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