(1) Investment firms may deposit financial instruments held by them on behalf of their clients into an account or accounts opened with a third party provided that the firms -
(a) exercise all due skill, care and diligence in the selection, appointment and periodic review of the third party and of the arrangements for the holding and safekeeping of those financial instruments, and
(b) take into account the expertise and market reputation of the third party as well as any legal requirements or market practices related to the holding of those financial instruments that could adversely affect clients' rights.
(2) If the safekeeping of financial instruments for the account of another person is subject to specific regulation and supervision in a jurisdiction where an investment firm proposes to deposit client financial instruments with a third party, the firm shall not deposit those financial instruments in that jurisdiction with a third party which is not subject to such regulation and