In short
CASS 6 and CASS 7 software automates custody record checks and reconciliations for safe custody assets, and the internal and external client money reconciliations, requirement calculation and same-day correction obligations that CASS 7.15 imposes on investment firms holding client money. For the regime itself, see the explainer on what CASS is; this article specifies what the software has to do.
Two regimes, held by the same firm, with different failure modes
CASS 6 governs safe custody assets, the securities and instruments a firm holds or arranges to be held for clients. CASS 7 governs client money, the cash a firm holds for clients in the course of investment business. Most investment firms are subject to both, and the temptation is to treat them as one control environment. They are not, and building one reconciliation engine that quietly assumes they behave the same way is a common source of undetected weakness.
Custody failures are usually positional: the firm believes it holds a quantity of a security for a client and the custodian's record disagrees, typically because of unprocessed corporate actions, settlement timing or stock lending. The consequence is a shortfall in a specific asset, which cannot be remedied with cash and must be bought in.
Client money failures are usually valuational and temporal: the client money resource, the cash actually held in client bank accounts, does not equal the client money requirement, the sum the firm should be holding for clients under its applicable calculation method. The consequence is a same-day funding obligation. Software that reconciles cash competently while treating custody as a secondary check of quantities will pass a client money test and fail a custody one.
CASS 6: internal custody record checks and external reconciliation
The internal custody record check compares the firm's own record of safe custody assets held for each client against its own record of the total held with each custodian. It tests internal coherence. The external custody reconciliation compares those records against statements obtained from each third party actually holding the assets, and its quality is limited entirely by the timeliness and granularity of those statements.
Custody chains are usually longer than firms assume. A single holding can pass through a nominee, a global custodian, a sub-custodian in the market of issue and a central securities depository, each maintaining its own record. Reconciling against a global custodian's statement proves agreement with that custodian, not that the position exists at the depository, so an external reconciliation that stops at the first link in the chain is incomplete.
Both checks must be performed as regularly as necessary, which for most firms means considerably more frequently than monthly for internal checks and at least monthly for external reconciliation where statement frequency permits. Discrepancies must be investigated and resolved promptly, and a confirmed shortfall in a safe custody asset requires the firm to appropriate a sufficient quantity of its own assets or otherwise make good the position. The practical difficulty is granularity: a reconciliation that agrees at portfolio value while disagreeing at individual security level is not a reconciliation, so any engine used for CASS 6 has to match position by position, account by account, custodian by custodian, modelling corporate actions, stock lending and pending settlement as legitimate differences rather than treating each as an error to chase.
CASS 7: the internal reconciliation under CASS 7.15, external reconciliation, and the requirement calculation
CASS 7.15 requires firms using the normal approach to perform the internal client money reconciliation as often as necessary and at least daily, comparing the client money resource against the client money requirement. Where the resource is less than the requirement, the firm must pay in the difference; where it exceeds the requirement, the excess must be withdrawn. Both movements have to be evidenced as attributable events, not treated as bookkeeping adjustments absorbed into the next day's figures.
The external client money reconciliation compares the firm's internal records of client bank balances against statements from each institution holding client money, subject to the same timeliness constraint as custody: it is only as current as the statement feed allows.
The requirement calculation is where firms are most often caught out, because it is not simply the sum of client ledger balances. It has to reflect unresolved items, margined transactions where relevant, amounts due to and from clients, and any firm money properly held in client accounts as a buffer. A methodology error produces a requirement that is consistently wrong, and a consistently wrong requirement reconciles cleanly against a resource measured on the same flawed basis, because a two-way comparison between requirement and resource cannot detect an error common to both. Reconciling the requirement, the resource, and the underlying transaction population as three independent references is what catches a methodology error that a two-way match will never reveal.
Where firm-level control breaks at platform scale
Firms running large books, including retail investment platforms with model portfolios and multiple tax wrappers, face a structural version of the same problem. The same security can be held by thousands of clients across several wrappers, pooled in a nominee, and settled through more than one custodian depending on market, while client money moves continuously between the firm's own client accounts, product providers and the settlement cycle.
Aggregate reconciliation across that structure can balance while individual wrappers, models or omnibus sub-accounts are wrong in offsetting directions, which is the failure mode most likely to survive undetected until a client complaint or a transfer out. The correct unit of reconciliation is the level at which entitlement is actually held, with roll-up to the aggregate, rather than a match performed only at the top and assumed to hold underneath.
Where an omnibus account pools multiple clients' assets or money at a custodian or bank, the sub-ledger becomes the entitlement record and its integrity is what actually matters; reconciling the pooled account against the sub-ledger, and the sub-ledger against the underlying client records, is a three-way relationship, not a two-way one. Break volume at this scale also makes manual investigation arithmetically difficult even at low exception rates, so the operations team's capacity, rather than the exception rate itself, becomes the binding constraint on growth unless investigation is automated rather than merely queued.
The CASS audit and the reproducibility standard
The client assets audit is performed against a defined assurance standard and produces an opinion, with breaches reported to the FCA. Auditors sample dates and trace the full control cycle for each: the reconciliation, the calculation inputs, the discrepancies raised, the resolution and the review.
The recurring finding across the sector is not that reconciliations were not performed, it is that the firm cannot reproduce them. Inputs have been overwritten, a supporting extract has been regenerated, and the version tested during the audit is not the version relied on at the time. Sealing each run at the point of execution, so the inputs, calculation, outcome and reviewer are fixed by a hash committed then, removes that argument entirely.
How Safeheld handles CASS 6 and CASS 7
Safeheld reconciles custody at position level across every custodian, and client money at requirement-versus-resource level under the firm's applicable calculation method, running both on the schedule the firm sets, normally daily. For custody it tests the common causes of apparent breaks, being corporate action timing, unsettled trades and lending positions, before escalating. For client money it reconciles the requirement, the resource and the transaction population as independent references so a methodology error becomes visible rather than hidden inside an internally consistent pair of numbers.
Every run is sealed with a SHA-256 Merkle root and is independently verifiable, so a CASS audit sample is answered from a fixed record rather than one regenerated for the auditor's visit.
Frequently asked questions
What is the difference between CASS 6 and CASS 7?
CASS 6 governs safe custody assets, meaning client securities and instruments held by or for the firm. CASS 7 governs client money, meaning cash held for clients. Firms holding both must operate both control frameworks separately, because custody failures are typically positional and client money failures are typically valuational.
How often must the internal client money reconciliation run under CASS 7.15?
As often as necessary and, for firms using the normal approach, at least daily, comparing the client money resource against the client money requirement, with any deficit funded and any excess withdrawn as an attributable event.
Why can a CASS 7 reconciliation balance while the firm is still non-compliant?
A methodology error in the requirement calculation produces a figure that is consistently wrong, and the resource is measured against that same wrong figure, so a two-way comparison reconciles cleanly. Only a third independent reference, the underlying transaction population, reveals the divergence.
How does reconciliation change on a large investment platform with omnibus accounts?
The correct unit of reconciliation becomes the level at which entitlement is held, typically wrapper or sub-ledger, with roll-up to the aggregate. An aggregate match can balance while individual accounts within a pooled structure are wrong in offsetting directions, which is why the sub-ledger has to be reconciled against both the pooled account above it and the client records below it.