Client consent to execution policy and execution of orders outside a regulated market or MTF - COBS Provision: Difference between revisions

{{a|cobs|}}The vexed question of how clients consent to a {{tag|best execution}} policy in general, and provide permission for their orders to be handled away from regulated exchanges in particular, is covered in COBS {{cobsprov|11.2.25}} and {{cobsprov|11.2.26}}. As we shall see.

{{prior consent and prior express consent}}

While at first blush it reads as though {{cobsprov|11.2.26}} should apply to all orders, even those which cannot be traded on a [[regulated market]] in any circumstances (otc swaps for example), the confines of common sense and logic have not entirely escaped the {{tag|European Commission}}. In its “[http://ec.europa.eu/yqol/index.cfm?fuseaction=legislation.showIssue&issueId=69&browse=true&questionId=173 Questions on Single Market Legislation]” resource, it notes:

   

{{quote|However, on a purposive reading of the express consent requirement, an investment firm does not have to obtain express consent from its clients where the relevant instruments are not admitted to trading on a [[regulated market]] or [[MTF]].}}

====Products which trade {{tag|OTC}} - can the transaction a consent to execute off {{tag|regulated market}}?====

There is an unspoken distrinction in the {{tag|COBS}} rules between:

*“'''agency'''” or “'''quasi-agency'''” orders: orders whereby a  broker receives instructions from client and then turns around and interacts with third party venues (including {{fcaprov|regulated market}}s, {{fcaprov|MTF}}s but also unregulated venues like systematic internalisers), without involvement of the client, to fill that order); and