The issue of client money handling under the FSA regime is a thorny one for brokers; first risk transfer, then co-mingling. Many brokers would have been happy to simply keep the status quo - the IBA account would provide sufficient client protection, surely.

But the FSA has marched on with its client money rules, and despite the regulator's decision to re-consult on co-mingling - much to the joy of the industry - brokers still need to look carefully at the detail.

The existence of a broker chain throws up some important issues. As Louise Gill explains this week, the first broker in the chain has various responsibilities as client money passes up the chain. Yet it can also find itself losing control of that same money if it does not make the appropriate arrangements with the other brokers.

Michael Faulkner

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