CASS reconciliation for FX brokers

Purpose

Client Assets Sourcebook (CASS) reconciliation is the daily operational requirement that sits at the center of client money compliance for Financial Conduct Authority (FCA)-regulated FX brokers. Without it, the firm has no auditable proof that client funds held in segregated accounts match what the internal books say clients are owed and no reliable way to detect shortfalls before they become reportable breaches.

This workflow gives compliance and operations teams a complete, auditable CASS reconciliation for every business day by:

• Pulling bank transaction data directly from the firm's segregated client money accounts
• Joining internal ledger records to calculate the firm's internal client money requirement
• Comparing custody records against internal asset positions to identify any shortfall or surplus
• Producing a daily reconciliation report and exception log in a format suitable for regulatory record-keeping

Data sources

1. Internal ledger records: The firm's internal record of what each client is owed, drawn from the trading platform or back-office system.
2. Bank transaction data: All transactions posted to the firm's client money bank accounts for the reconciliation date. Reiterate fetches these directly from the bank via API or web agent.
3. Asset custody records: Records of client assets held by the firm or a third-party custodian, including securities and other non-cash assets held on behalf of clients.

Key processing steps

1. Data normalization

All three data sources are standardized before any reconciliation check takes place. Normalization aligns field names, date formats, and currencies so that downstream comparisons are reliable.

2. Internal client money requirement calculation

• Normalized internal ledger records are aggregated across all clients to produce the firm's total internal client money requirement (ICMR), which is the amount the firm must hold in segregated accounts to cover all client liabilities.
• Clients with a negative cash balance (in debt to the firm) are excluded from the ICMR calculation per CASS 7 rules.

3. Bank balance reconciliation

• The total closing balance across all FCA-segregated client money accounts is compared against the ICMR calculated in Step 2.
• Cases where the bank balance exceeds or falls short of the ICMR, are flagged. Any bank account where the closing balance could not be retrieved or normalized is flagged as missing and excluded from the total.

4. Asset position reconciliation

Normalized custody records are compared against internal asset position records per client. Discrepancies and unmatched items are flagged for the exception log.

5. Reconciliation report and exception consolidation

• The bank reconciliation output and asset reconciliation output are combined into the daily CASS reconciliation report.
• All exceptions are consolidated into the exception log with the detail needed for the compliance team to investigate and resolve each item.

Outputs

1. CASS reconciliation report: Daily reconciliation showing total bank balance across all segregated accounts, total ICMR, variance, breach flag, and a per-client asset position reconciliation. Formatted for regulatory record-keeping and available for FCA inspection.
2. Exception log: Lists all flags, missing bank records, discrepancy positions, and unmatched asset positions from the run, with the detail needed for the compliance and operations teams to investigate and resolve each item.