18 - Trustees

Summary

Trustees of collective investment schemes

See 17.2.

Custodians

Regulatory status

Custody of assets (2.4.4(11)) is subject to a separate category of licensable activity (3.2.2.6). The custodian will, inevitably, hold the assets, comprising physical custody or, more likely, rights against sub-custodians, depositories and clearing houses, subject to an express or implied trust.

Infrastructure rules

All of the infrastructure rules apply (5.2–5.5, 6.3.1–6.3.4, 6.3.6, 6.3.7).

Conduct rules

The custodian will need to comply with the detailed rules on holding client assets and client money (7.1, 7.2).

Other trustees

Regulatory status

Trustees, whether of private settlements or commercial trusts, such as trustees of securities issues and collateral arrangements (3.2.5.3), will be carrying on any combination of:

1. • buying and selling investments as principal (3.2.2.1); and/or

2. • management (3.2.2.4); and/or

3. • advice (3.2.2.3).

However, they may or may not be able to rely on the exemption for trustees from licensing (3.2.5.3).

Infrastructure rules

If licensed (authorised) the trustee must comply with all of the infrastructure rules (5.2–5.5, 6.3.1–6.3.4, 6.3.6, 6.3.7).

Pre-MiFD conduct rules

Trustees are highly regulated under general law and statute which covers most, if not all, of the areas that FSA seeks to regulate, ‘for example: duties to safeguard trust assets … duties to invest trust property … duties to keep accurate records … duties on professional paid trustees to exhibit a high degree of care in the management of trust property … duties … of never self-dealing, and or being liable to account for profits … where there is a conflict between their fiduciary duties and their personal self-interest’.