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ARTICLE · 08 MARCH 2023

FCMs Are Custodians: The SEC's Proposed Safekeeping Rule Will Present Challenges For Them

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Much has been, and remains to be, written on the SEC's recent proposal to replace the custody rule for registered investment advisers with a new "safekeeping" rule. The implications...

United StatesFinance and Banking
Stephen R. Morris
Stephen R. Morris
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Much has been, and remains to be, written on the SEC's recent proposal to replace the custody rule for registered investment advisers with a new "safekeeping" rule. The implications are indeed far-reaching for registered advisers and their clients, alike.

Less apparent on the face of coverage of the SEC release are the no less far-reaching implications for qualified custodians – banks, broker-dealers, futures commission merchants and foreign financial institutions. If adopted as proposed the new safekeeping rule will require these entities to implement new processes and procedures around the onboarding of registered advisers and their clients, and, more broadly, to rethink the risks involved in providing custody services to them.

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