Question

What functions should be separated to segregate record keeping from asset custody?

Answer 1

Segregation refers to the separation of assets from a larger group or creating separate accounts for specific groups,assets, or individuals.Segregation is common in the brokerage industry and is designed to avoid the commingling of customer assets with the working capital of the brokerage firm.SEA Rule 17a-5(a) requires broker-dealers to file monthly reports regarding the proper segregation of customers accounts, as well as reserve account requirements.

Functions should be separated to segregate record keeping from asset custody are following:

*Helpful in analysis of seperate cost in there respective ratio

*To ascertain the value of assets

*Establish a comman link with the customers that helpful in maintain customer relationship.

*Easy handling of assets is possible according to client needsand goals.

*The brokerage firm must also monitor that the investments are suitable for each account

*Segregated account management ensures that decisions made are according to the client's risk tolerance, needs, and goals. When funds are pooled or commingled rather than segregated, as with a mutual fund investment decisions are made by the portfolio manager or investment company. On the other hand, the individual investor makes the decisions in their account held at a broker-dealer.