COBS Anatomy

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MiFID Categorisation

COBS 1 Application
COBS 2 Conduct of business obligations

COBS 2.1 Acting honestly, fairly and professionally
COBS 2.2 Information disclosure before providing services
COBS 2.3 Inducements
COBS 2.4 Agent as client and reliance on others
COBS 2.4.3 Agent as client
COBS 2.4.4 Reliance on other investment firms: MiFID and equivalent business

3 Client categorisation

3.1 Application
3.2 Clients
3.3 General notifications
3.4 Retail clients
3.5 Professional clients
3.6 Eligible counterparties
3.7 Providing clients with a higher level of protection
3.8 Policies, procedures and records

COBS 4 Communicating with clients, including financial promotions
COBS 5 Distance communications
COBS 6 Information about the firm, its services and remuneration
COBS 7 Insurance mediation
COBS 8 Client agreements: designated investment business

8.1.2 [Written basic agreement for retail clients]
8.1.3 [Information to be provided to a retail client]

COBS 9 Suitability (including basic advice)
COBS 10 Appropriateness (for non-advised services)
COBS 11 Dealing and managing including best execution

Template:TOC COBS 11.1
COBS 11.2 Best Execution
Note that, courtesy of 1 Annex 1 best execution obligations are not owed to an eligible counterparty, but only to a professional client or a retail client.
COBS 11.2.1 Obligation to execute orders on terms most favourable to the client
COBS 11.2.2 Application of best execution obligation
COBS 11.2.3
COBS 11.2.4
COBS 11.2.5
COBS 11.2.6 Best execution criteria
COBS 11.2.7 Role of price
COBS 11.2.19 Following specific instructions from a client
COBS 11.2.25: Consent to best execution policy generally
COBS 11.2.26: Client consent to execution policy and execution of orders outside a regulated market or MTF

Best execution criteria

COBS 11.2.6R28/02/2014

When executing a client order, a firm must take into account the following criteria for determining the relative importance of the execution factors: (1) the characteristics of the client including the categorisation of the client as retail or professional;

(2) the characteristics of the client order;

(3) the characteristics of financial instruments that are the subject of that order;

(4) the characteristics of the execution venues to which that order can be directed; and

(5) for a management company, the objectives, investment policy and risks specific to the UCITS scheme or EEA UCITS scheme, as indicated in its prospectus or instrument constituting the fund.

[Note: article 44(1) of the MiFID implementing Directive and article 25(2) second sentence of the UCITS implementing Directive]

Template:TOC COBS 11.3 Use of dealing commission to purchase goods or services
11.4.1 Obligation to make unexecuted client limit orders public
11.4.3 How client limit orders may be made public
11.4.5 Orders that are large in scale

Unless a client expressly instructs otherwise, a firm must, in the case of a client limit order in respect of shares admitted to trading on a regulated market which is not immediately executed under prevailing market conditions, take measures to facilitate the earliest possible execution of that order by making public immediately that client limit order in a manner which is easily accessible to other market participants.

Template:TOC COBS 11.5
These COBS rules may have changed as a result of MiFID II
COBS 11.6 Use of dealing commissions
COBS 11.6.1
COBS 11.6.2
COBS 11.6.3 Use of dealing commission to purchase goods or services
COBS 11.6.4
COBS 11.6.5
COBS 11.6.6
COBS 11.6.7
COBS 11.6.8G - examples of goods and services that are not exempt and cannot be paid for from dealing commissions

COBS 12 Investment research
COBS 13 Preparing product information
COBS 14 Providing product information to clients
COBS 15 Cancellation
COBS 16 Reporting information to clients
COBS 17 Claims handling for long-term care insurance
COBS 18 Specialist Regimes
COBS 19 Pensions supplementary provisions
COBS 20 With-profits
COBS 21 Permitted Links
COBS transchedule Transitional Provisions and Schedules

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)).