Defining Issues | February 2023
The proposed amendments to the Custody Rule would expand the scope beyond client funds and securities to include all client assets of which an advisor has custody, as well as include discretionary authority for the advisor to trade client assets in the definition of ‘custody’. We summarize the proposed provisions and requirements.
Applicability
- Investment advisers registered (or required to be registered) with the SEC under the Investment Advisers Act of 1940
Relevant dates
Adviser size |
Compliance date |
Advisers with more than $1 billion in regulatory assets under management (‘RAUM’) |
One year following the effective date |
Advisers with up to $1 billion in RAUM |
18 months following the effective date |
Key impacts
Since the amendments in 2009, custodial and advisory practices have changed. The proposed amendments to the Custody Rule are intended to enhance investor protections related to safeguarding advisory clients assets to address these developments in three key areas:
- Modernize the scope of assets and activities that would trigger application of the rule;
- Enhance custodial protections that client assets receive under the rule;
- Update the related recordkeeping and reporting requirements for advisors.
Report contents
- Source and applicability
- Fast facts, impacts, actions
- Background
- Summary of updated and new guidance
- Transition period and compliance dates
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