Cais Agreement

The CAIS Agreement: What It Means for Financial Advisors

If you`re a financial advisor, you`ve likely heard of the CAIS Agreement. But what exactly is it, and how does it impact your business?

The CAIS Agreement stands for the Custody, Access, and Indemnification Standard Agreement. It`s a legal document that outlines the terms and conditions for custodianship of alternative investments. The agreement was created in 2014 by alternative investment platform CAIS, in partnership with major custodians such as Pershing, Fidelity, and Charles Schwab.

Essentially, the CAIS Agreement provides a standardized framework for custodian banks to hold and manage alternative investments on behalf of financial advisors and their clients. This includes hedge funds, private equity, and other non-traditional assets that may not be held by traditional custodians.

One of the key benefits of the CAIS Agreement is the increased access it provides to alternative investments. Previously, many custodians were hesitant to hold these types of assets due to regulatory concerns and the complexity of managing them. With the CAIS Agreement in place, custodians can now feel more confident in their ability to provide these services, and financial advisors can offer their clients a wider range of investment options.

Another important aspect of the CAIS Agreement is its indemnification provisions. The agreement specifies that custodians will be held harmless from any liability related to the assets being held, as long as they`re following the terms of the agreement. This helps alleviate some of the risk associated with holding alternative investments, and provides an added layer of protection for custodians and their clients.

Overall, the CAIS Agreement is a positive development for the alternative investment industry. By providing a standardized framework for custodian banks to manage these assets, it has opened up new opportunities for financial advisors and their clients. If you`re considering offering alternative investments to your clients, it`s important to work with a custodian that has signed the CAIS Agreement, and to understand the terms and conditions outlined in the agreement.

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