SEC Division of Investment Management staff letter: UBS Financial Services, Inc.

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Arthur W.Hahn arthur.hahn@kattenlaw.com
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Via Overnight Mail
Associate Director
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street N.E.
Mail Stop 0506
Washington, DC 20549
Re: Cash ManagementRnvestment Advisers Act Rule 202(a)(11)-1 Dear Mr. Plaze:
On behalf of our client, UBS Financial Services Inc. ("UBSFS"),' we request that the staff of the Securities and Exchange Commission confirm that the investment discretion granted by a customer to UBSFS for the cash management program described below constitutes "temporary or limited" discretion within the meaning of rule 202(a)(11)-l(d) of the Investment Advisers Act of 1940 (the "Advisers Act"), and that the customer accounts in the program may continue to be treated by UBSFS as brokerage accounts and not advisory accounts. A. UBSFS's Cash Mana~ement Business UBSFS has developed a significant cash management business, conducted by registered representatives who open accounts on behalf of institutional investors. UBSFS custonlers typically seek to have their corporate cash invested in a manner that is designed to maximize returns, subject to the primary objective of preserving capital and maintaining liquidity sufficient to allow the customer to readily access necessary operating funds. Generally, the cash management accounts with UBSFS are opened and monitored by senior managers of the customer's business who have important and time-consuming responsibilities with respect to the customer's finance or treasury functions. Some such customers, rather than subjecting themselves to frequent ongoing telephone calls and discussions concerning moment-to-moment details about the investment of their cash balances, choose to grant to UBSFS limited discretionary authority over the accounts. In particular, the discretion granted to UBSFS is limited by written guidelines from the customer's board of directors or authorized senior management setting forth restrictions and requirements concerning the trading and handling of the account, and by the customer's subsequent directions and instructions (if any) concerning the account. UBSFS currently exercises this limited discretion over approxinlately 250 cash management accounts and has provided such cash management services to its customers for over ten years, during which time UBSFS has presented and marketed the business as a "cash management" business.

• UBSFS is a registered securities broker-dealer and a member of various securities exchanges and self-regulatory
  organizations.
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