…as new wrap rules sort the wheat from the chaff

The updated policy on master trusts and wraps will also have a positive impact on smaller operators, according to one of them.

The updated policy on master trusts and wraps will also have a positive impact on smaller operators, according to one of them.

General manager of dealer-owned master trust group Symetry, Don Clifton, says the new rules, which establish minimum capital requirements for start ups, aren’t going to work against these operators, despite claims to the contrary appearing in a recent Money Management cover story.

“Our first impression is that it won’t be any more difficult. The policy is nowhere near as bad as I had expected to be,” he says.

Clifton applauds the new capital adequacy requirements set out in the policy. Un-der these requirements, start up master trusts and wraps must have at least $50,000 in net tangible assets. If the operator carries out transactions on behalf of clients or maintains the records of client accounts for consolidated reporting purposes, it must have net tangible assets of 0.5 per cent of the total amount of assets, up to a cap of $5 million. If the operator acts as custodian of the assets, it must maintain at least $5 million in net tangible assets.

Clifton says this is fair enough and will sort the wheat from the chaff.

“Administering these types of services is difficult and complex. I don’t believe everyone can do it and do it well.”