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SEC proposal amends the Custody Rule

Defining Issues | February 2023

Proposed amendments are intended to enhance investor protections relating to safeguarding client assets.

The proposed amendments to the Custody Rule would expand the scope beyond client funds and securities to include all client assets of which an advisor has custody, as well as include discretionary authority for the advisor to trade client assets in the definition of ‘custody’. We summarize the proposed provisions and requirements.

KPMG comment letter


  • Investment advisers registered (or required to be registered) with the SEC under the Investment Advisers Act of 1940

Relevant dates

Adviser size

Compliance date

Advisers with more than $1 billion in regulatory assets under management (‘RAUM’)One year following the effective date
Advisers with up to $1 billion in RAUM    18 months following the effective date 

Key impacts

Since the amendments in 2009, custodial and advisory practices have changed. The proposed amendments to the Custody Rule are intended to enhance investor protections related to safeguarding advisory clients assets to address these developments in three key areas:

  • Modernize the scope of assets and activities that would trigger application of the rule;
  • Enhance custodial protections that client assets receive under the rule;
  • Update the related recordkeeping and reporting requirements for advisors.

Report contents

  • Source and applicability
  • Fast facts, impacts, actions
  • Background
  • Summary of updated and new guidance
  • Transition period and compliance dates

Download the document:

SEC proposal

Focus on investment management

Download PDF

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Meet our team

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Michael Hall
Partner, Dept. of Professional Practice, KPMG US
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Tyler McKamy
Managing Director, Dept. of Professional Practice, KPMG US

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