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Controls guideInformationalPublished reference
Client-Money Segregation and Reconciliation Technology Requirements
Evidence-led controls guide: Client-Money Segregation and Reconciliation Technology Requirements. Review decision criteria, limitations and next steps.
Trust and methodology
How this research was prepared
We want you to be able to identify who owns the page, inspect the evidence, understand how tools were used, and challenge anything that looks wrong or out of date.
Evidence you can inspect
3 primary references are listed on this page with context about what each one supports. The source set was checked on . The page also includes an original working artifact: Client-money resource reconciliation trace.
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Direct answer
What the evidence supports
Client-money segregation is the legal and operational separation of client funds from the firm’s own money under the rules that apply to the firm, product, account, and jurisdiction. Technology supports this obligation by classifying accounts and transactions, maintaining complete ledgers, reconciling internal records to banks or custodians, controlling transfers, recording acknowledgements and approvals, detecting shortfalls or excesses, escalating exceptions, and preserving an audit trail. Software does not create regulatory permission or replace the responsible firm’s judgment.
A reliable design begins with the applicable rulebook and legal account structure, not with a generic “segregated” checkbox. Map every deposit, withdrawal, fee, trade cash flow, margin movement, interest item, chargeback, reversal, transfer, currency conversion, correction, and insolvency-relevant record. Define internal and external reconciliation methods, frequency, cut-off, source systems, responsibility, tolerance, shortfall funding, approval, notification, retention, and business-continuity procedure.
Original control example
Client-money resource reconciliation trace
The applicable legal calculation must come from qualified advisers and the relevant rules. This simplified trace only illustrates exception handling.
Internal requirement
Complete client-level records total $2,400,000 at the documented cut-off after valid postings, currencies, fees, and adjustments are normalized.
External resource
Designated external accounts total $2,380,000. A validated $15,000 timing item is separately evidenced and due within the approved process.
Unexplained difference
$2,380,000 + $15,000 − $2,400,000 = −$5,000. Escalate, fund, investigate, correct, approve, and retain the evidence required by the applicable regime rather than hiding the shortfall inside tolerance.
Client-money, safeguarding, custody, margin, and payment-services regimes differ. Do not use this arithmetic as a legal calculation or substitute it for current rules, permissions, account acknowledgements, and counsel-reviewed procedures.
Technology requirements for client-money controls
The exact requirement differs by regulatory regime, but the control design should make classification, movement, reconciliation, and exception handling explicit.
Client and account classification
Store legal entity, jurisdiction, client category, product, account status, protection treatment, currency, bank or custodian, trust or statutory designation, contractual terms, and effective dates. Changes need approval and history.
Complete books and records
Maintain client-level entitlements and transaction history with balanced entries, value and booking dates, source references, currency, fees, corrections, and links to bank, custodian, payment, trading, and general-ledger records.
Controlled money movement
Enforce permitted source and destination accounts, verified beneficiary changes, dual control where required, limits, sanctions or fraud holds, release approval, payment status, rejection, recall, reversal, and immutable audit history.
Internal and external reconciliation
Implement the regulator-approved or counsel-reviewed calculation using complete source records and defined cut-offs. Distinguish timing differences from breaks and retain the inputs, output, reviewer, and corrective action.
Shortfall, excess, and incident handling
Set materiality and escalation without using tolerance to hide errors. Define funding authority, withdrawal of excess where permitted, investigation, senior notification, regulator or client communication, remediation, and recurrence prevention.
Design from rule to daily evidence
- 01
Translate the legal model
Qualified counsel and compliance owners identify applicable rules, permissions, exclusions, bank or custodian account structure, acknowledgements, calculation method, frequency, records, notifications, and responsible officers.
- 02
Map every source and posting
Trace payment providers, bank statements, wallets where permitted, trading accounts, margin, fees, commissions, adjustments, chargebacks, CRM, back office, subledgers, and general ledger. Assign authoritative source and owner.
- 03
Build controlled reconciliations
Validate source completeness, normalize identifiers and currencies, calculate required resources and records, match balances and transactions, classify exceptions, and prevent silent overwrite or unsupported netting.
- 04
Review, fund, and certify
Independent reviewers investigate breaks, approve corrections, arrange shortfall funding under documented authority, record any permitted excess transfer, certify completion, and escalate aged or material issues.
- 05
Rehearse disruption and insolvency access
Test missing statements, provider outage, incorrect file, cyber incident, staff absence, bank failure, platform recovery, record export, contact lists, and the ability to produce current client entitlements.
Control evidence to retain
Retention periods and exact records follow the applicable rules, but the evidence must support independent reconstruction and supervisory review.
Account and acknowledgement records
Keep bank or custodian account details, designation, trust or statutory acknowledgements where applicable, signatories, permissions, opening and closure, and periodic verification.
Daily source and calculation pack
Preserve source completeness checks, statements, ledgers, exchange rates, cut-off, calculation version, balances, matching output, exceptions, reviewer, certification, and timestamps.
Exception and correction trail
Record cause, client impact, amount, currency, age, owner, escalation, funding, accounting correction, approval, communication, closure, and prevention action.
Access and segregation-of-duties review
Evidence who can change bank details, classify clients, post journals, release payments, approve adjustments, run reconciliation, fund shortfalls, and certify completion.
Continuity and retrieval tests
Retain test dates, scenarios, source restoration, manual fallback, staff roles, recovery time, record integrity, export success, issues, and remediation.
Boundaries and limitations
- Client-money, safeguarding, custody, margin, payment-services, and trust-account regimes are not interchangeable.
- Applicability depends on the legal entity, permissions, product, client type, contract, flow of funds, and jurisdiction.
- A label such as “segregated account” is not sufficient evidence; review the legal arrangement, bank acknowledgement, records, controls, and reconciliations.
- RTX5 can support technology workflows only within an approved operating model; it does not provide legal authorization or regulator approval.
Primary references
Sources were checked on 21 September 2026 and support the stated context; they do not certify RTX5, replace product testing, or provide individual legal or financial advice.
FCA Client Assets SourcebookOfficial UK client-assets rules and guidance; firms must determine the provisions that apply to their permissions and business.ASIC Client Money Reporting Rules 2017Official Australian information about client-money reporting rules for relevant AFS licensees.ASIC AFS licensingOfficial licensing starting point showing that financial-services authorization is a separate legal workstream.
Questions readers ask
Does a segregated bank account prove compliance?
No. The firm also needs the correct legal designation, complete books and records, controlled movements, required calculations and reconciliations, shortfall procedures, governance, and evidence.
Can the trading platform balance be the client-money ledger?
Only if the approved design and applicable rules support it and it contains all required transactions and controls. Many firms need separate accounting or subledger records and external reconciliation.
Who is responsible when a vendor hosts the system?
Outsourcing can allocate operational tasks, but the regulated firm generally retains obligations and oversight. The contract and responsibility matrix should define data, access, incidents, evidence, continuity, and exit.
Continue through the evidence map
Review the planning cluster, follow another published reference, or discuss the exact product and deployment evidence your team needs. A contact request is not a promise of regulatory approval, market access, or universal availability.