Eligible counterparty - FCA Rulebook Term

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Section 3.6.2, COBS Rules

COBS Rules
COBS 3.6.2 - Per se eligible counterparties

Each of the following is a per se eligible counterparty (including an entity that is not from an EEA state that is equivalent to any of the following) unless and to the extent it is given a different categorisation under this chapter:

(1) an investment firm;

(2) a credit institution;

(3) an insurance company;

(4) a collective investment scheme authorised under the UCITS Directive or its management company;

(5) a pension fund or its management company;

(6) another financial institution authorised or regulated under EU legislation or the national law of an EEA State;

(7) an undertaking exempted from the application of MiFID under either Article 2(1)(k) (certain own account dealers in commodities or commodity derivatives) or Article 2(1)(l) (locals) of that directive;

(8) a national government or its corresponding office, including a public body that deals with the public debt;

(9) a central bank;

(10) a supranational organisation.

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Either a per se eligible counterparty, or an elective eligible counterparty.

Per se ECP

To be compared and contrasted with elective eligible counterparty. These matter greatly when categorising clients for MiFID purposes, particularly in the context of best execution.

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Elective ECP

The famous “elective ECP” categorisation:

• Many per se professional clients are also per se eligible counterparties — but not all.
• Those per se professional clients that are not per se eligible counterparties — i.e., that are elective ECPs — can only be treated as ECPs if they have requested this categorisation. Now one might, of course, gently put that idea in such a client’s head: nothing wrong with that. Politely suggesting an elective ECP might wish to think about requesting an upgrade is one thing — but one cannot unilaterally categorise an elective ECP as an ECP without them first requesting it.
• an “elective professional client” (ie one is able to be upgraded from retail to professional) cannot further request to be treated as an ECP.

Conduct of Business

This is an article about the FCA’s conduct of business rules, known by its chapter in the FCA Sourcebook, COBS, which implement, among other things, MiFID (directive 2004/39/EC (EUR Lex) and implementing directive 2006/73/EC (EUR Lex)).