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The JC’s Reg and Leg resource™
UK Edition
COBS Rules
11.6.3 Use of dealing commission to purchase goods or services
- (1) An investment manager must not accept goods or services in addition to the execution of its customer orders if it:
- (a) executes its customer orders through a broker or another person;
- (b) passes on the broker’s or other person's charges to its customers; and
- (c) is offered goods or services in return for the charges referred to in (b).
- (2) [deleted]
- (3) The prohibition under (1) does not apply where:
- (a) the investment manager has reasonable grounds to be satisfied that the good or service received in return for the charges in (1)(b) will reasonably assist the investment manager in the provision of its services to its customers, on whose behalf the relevant customer orders are being executed;
- (b) the investment manager’s receipt of that good or service in return for the charges in (1)(b) does not, and is not likely to, impair compliance with the duty of the investment manager to act in the best interests of its customers; and
- (c) that good or service either:
- (i) is directly related to the execution of trades on behalf of the investment manager's customers; or
- (ii) amounts to the provision of substantive research.
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This rule has been the subject FCA Policy Statement 14/7 which changed the ground rules re whether corporate access could be treated as research for the purposes of COBS 11.6.3. Expect MiFID 2 to wring yet more changes.
See also 11.6.8 which gives examples of goods or services that relate to the execution of trades or the provision of research that the FCA does not regard as meeting the requirements of either evidential provisions.
See also