Ireland: Client Asset Requirements For Investment Firms


On 2 August 2013, the Central Bank of Ireland ("Central Bank") published Consultation Paper CP 71 ("CP 71") on proposed Client Asset Regulations and Guidance for investment firms and fund service providers ("FSPs"). Having considered the responses received to CP 71, the Central Bank took the decision to introduce two separate sets of regulations, one for investment firms and another for FSPs. This briefing deals with the regulations which apply to investment firms only and is relevant to investment business firms which hold client assets.

On 30 March 2015, the Central Bank published a set of regulations; the Client Asset Regulations 2015 for Investment Firms1, (the "Client Asset Regulations" or the "Regulations") which aim to strengthen the safeguards around client assets held by investment firms.

The Central Bank has also published guidance ("Guidance on Client Asset Regulations for Investment Firms") to assist investment firms to comply with the Client Asset Regulations. The Client Asset Regulations will come into operation on 1 October 2015 and will replace the existing Client Asset Requirements (issued 1 November 2007) from that date.

On the publication of the Regulations, Director of Markets Supervision, Gareth Murphy, said "The publication of these Regulations marks a significant development with regard to the safeguarding of client assets and investor money in Ireland. The development of these Regulations is the outcome of a lengthy period of industry consultation with investment firms and funds service providers. The Central Bank will closely monitor the implementation of these Regulations so as to ensure that our aim of enhancing investor protection and safeguarding client assets is achieved."

Who do the Regulations apply to?

The Client Asset Regulations apply to investment firms when holding client assets2 and as such may apply to investment firms authorised under MiFID Regulations3, investment business firms authorised under the Investment Intermediaries Act 1995 (as amended) (the "IIA")4, UCITS management companies authorised to provide individual portfolio management activities and Alternative Investment Fund Managers authorised to provide individual portfolio management activities.

The Client Asset Regulations would also apply to an Irish authorised firm which passports its activities into another Member State, however, the Client Asset Regulations will not apply to an incoming investment firm which passports into Ireland (either on a freedom of service or branch basis).

Client Asset Regulations

The Client Asset Regulations are set out under seven headings which the Central Bank regards as the seven core client asset principles of the client asset regime:

  1. Segregation

An investment firm should physically hold, or arrange for the holding of, client assets separate from the firm's own assets and maintain accounting segregation between the firm's own assets and client assets.

The Client Asset Regulations provide that money received by an investment firm for investment in an activity that is not a regulated financial service should not be deposited in a client asset account. If an investment firm chooses to operate a client asset type regime for its non-regulated business, the investment firm must explain to its clients that such assets;

  1. Are held separately from client assets;
  2. Will not be protected as client assets; and
  3. Will not be covered under the Investor Compensation Scheme.
  1. Designation and Registration

An investment firm should ensure that client assets are clearly identified in its internal records and in the records of third parties. Those assets must be identifiable from the investment firm's own assets.

Under the Client Asset Regulations a firm should obtain a "Fund Facilities and Financial Instrument Facilities Letter in advance of opening a client asset account with a third party in respect of client funds. This letter is meant to govern the relationship between the firm and the third party.

  1. Reconciliation

An investment firm should keep accurate books and records to enable it at any time and without delay to provide an accurate record of the client assets held by the investment firm for each client and the total held in the client asset account. In addition, an investment firm should perform a reconciliation between its internal records and those external records of any third party with whom client assets are held as provided for in the Client Asset Regulations. The Guidance on Client Asset Regulations for Investment Firms explicitly states that fixed term deposits should be reconciled on a monthly basis.

Under Regulation 5(10) of the Client Asset Regulations, an investment firm shall commence an investigation into the cause of any difference in the reconciliation within one working day, shall identify the cause of the reconciliation difference within 5 working days and shall resolve any reconciliation difference identified as soon as practicable.

  1. Daily Calculation

Each working day, an investment firm should ensure that the aggregate balance on its client asset bank account as at the close of business on the previous working day is equal to the amount it should be holding on behalf of its clients. The Client Asset Requirements therefore eliminate the requirement upon firms to retain a buffer; (i.e. a firm's Client Money Resource should only contain what it is required to hold for its clients on a given day).

  1. Client Disclosure and Client Consent

An investment firm should provide information to its clients in a way that informs the client on how and where their client assets are held and the resulting risks thereof. Under the Client Asset Regulations a firm will be required to provide a Client Assets Key Information Document ("CKID") to retail clients. In addition, a firm should be able to demonstrate, when requested to do so, evidence that it provided the CKID to its retail clients. The Client Asset Regulations also specify thecircumstances when an investment firm should obtain consent in writing from its clients - such circumstances include; (i) where client assets are passed to a third party outside the State or the EEA; (ii) when client assets are to be held in a pooled account; and (iii) where any lien, security interest and/or right of set-off is granted over the client's assets.

  1. Risk Management

An investment firm should ensure that it applies systems and controls that are appropriate to identify risks in relation to client assets and should put in place mitigants to counteract these risks.

Under the Client Asset Regulations an investment firm will be required to appoint an individual to the role of Head of Client Asset Oversight Role ("HCAO"), who will be responsible for ensuring that the firm complies with its obligations under the Client Asset Regulations. This person will be a pre-approved controlled function ("PCF") under Part 3 of the Central Bank Reform Act 2010. The responsibilities of the HCAO should be tailored to the business model of the firm.

Firms that hold/intend to hold client assets will be required to adopt a Client Asset Management Plan ("CAMP"). The CAMP will be required to be reviewed and updated at least annually or more frequently if there is a change to a firm's business which effects the way in which client assets are held by the firm. The Client Asset Regulations contain detailed rules as to what should be included in the CAMP.

  1. Client Asset Examination ("CAE")

An investment firm should engage an external auditor to report at least on an annual basis on the investment firm's safeguarding of client assets. Under the new regime the auditor must provide an assurance report with regards to certain matters which are specified in the Client Asset Regulations.


The Client Asset Regulations will ensure that investment firms will have stronger systems and controls in place to protect the ownership rights of clients. In addition investment firms will have a process in place which, in the event of insolvency, will facilitate the expeditious return of client assets. It is hoped that the revised regime will prevent a repeat of cases such as MF Global, Lehman Brothers and Custom House Capital in Ireland where individual investors lost significant amounts of money.


1 S.I. No. 104 of 2015

2 The term client assets is defined in S.I. No. 104 of 2014 as meaning client funds and client financial instruments

3 S.I. No. 60 of 2007

4 The definition of "investment firm" which is contained in the Client Asset Regulations specifically excludes a person authorised under the IIA to solely carry out; (i) the administration of collective investment schemes or fund accounting services or acting as a transfer agent or registration agent for such schemes or (ii) custodial operations involving the safekeeping and administration of investment instruments; i.e. the definition specifically excludes fund administrators and depositaries authorised under the IIA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions