When a firm performs internal reconciliations of the financial instruments held for each client, what must it do if the reconciliation shows a discrepancy?
A.
Inform the regulator within 30 days
B.
Close the client's account by close of business on the same day
C.
Rectify the situation within 7 days from the date that the reconciliation is performed
D.
Make good any shortfall for which it is responsible
The CISI UAE Financial Rules and Regulations requires firms holding client financial instruments to carry out reconciliations between their internal records of each client's entitlement and the financial instruments actually held by the firm or by third parties. Where such a reconciliation identifies a discrepancy, the firm must make good, or provide the equivalent of, any shortfall for which it is responsible . If another person is responsible for the discrepancy, the firm must instead take reasonable steps to resolve the position with that person. Firms must also notify the regulator without delay if they fail to comply with the applicable reconciliation requirements. This rule is distinct from the separate requirements governing internal reconciliations of client money , where a discrepancy must be investigated and a cash shortfall paid into the client bank account, or an excess removed, by close of business on the day the reconciliation is performed. Therefore, neither a 30-day notification period nor a seven-day correction period applies here. Option D precisely reflects the CISI requirement.
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