What is the legal difference between UK FCA CASS 7 statutory trusts and US SEC Rule 15c3-3 customer reserve accounts?+
UK FCA CASS 7 operates under English equity and statutory trust law (FSMA 2000 s.137B), impressing a constructive trust over client cash at the exact moment of receipt so beneficial ownership never enters the firm's corporate estate. By contrast, US SEC Rule 15c3-3 operates as a functional balance-sheet lock: uninvested customer cash remains a debt liability on the broker-dealer's books, but the broker must calculate the Exhibit A Reserve Formula (17 CFR § 240.15c3-3a) and lock net customer credits in a Special Reserve Bank Account for the Exclusive Benefit of Customers, which SIPA sweeps into a preferred 'Customer Property' pool upon liquidation.
Why can Special Administrator fees reduce client recoveries under the UK Special Administration Regime (SAR) but not in a US SIPA liquidation?+
Under FCA CASS 7.17.2R(2) and Regulation 20 of the UK Investment Bank Special Administration Regulations 2011 (IBSAR), the costs of pursuing Objective 1 (reconciling and returning client money and custody assets) rank as a direct charge against the Client Money Pool whenever the firm's general estate is insolvent. For retail clients eligible for the UK Financial Services Compensation Scheme (FSCS), the FSCS covers administrator fee deductions up to the £85,000 cap, but institutional clients or balances above £85,000 bear the fee deduction directly. Conversely, under US SIPA (15 U.S.C. § 78eee(b)(5)(E)), SIPC is statutorily obligated to advance funds to cover all SIPA Trustee and administrative expenses without deducting a cent from Customer Property.
How does MiFID II Article 16(10) protect European retail investors from Title Transfer Collateral Arrangements (TTCAs)?+
Prior to MiFID II, certain European brokers used Title Transfer Collateral Arrangements (TTCAs) in standard terms of business to transfer legal ownership of client margin cash to the broker's house balance sheet. MiFID II Article 16(10) and Article 6 of Commission Delegated Directive (EU) 2017/593 enacted an absolute ban on TTCAs with retail clients across the European Union. Even for Professional Clients, firms must document a strict proportionality assessment justifying why a title transfer is appropriate relative to the client's actual margin liability.
Are US futures and retail forex accounts covered by SIPC insurance or SEC Rule 15c3-3?+
No. SIPC protection ($500,000 total, $250,000 cash limit) and SEC Rule 15c3-3 apply exclusively to securities and security options held in a securities account at an SEC-registered broker-dealer. Cleared futures and options on futures at a CFTC-registered Futures Commission Merchant (FCM) are protected by statutory segregation under Section 4d(a)(2) of the Commodity Exchange Act and CFTC Regulation 1.20—and liquidated under 17 CFR Part 190—but carry $0 in SIPC or FDIC insurance. Off-exchange retail forex accounts at a US RFED carry neither SIPC insurance nor CEA Section 4d statutory trust priority.
