COBS 11 Dealing and managing

This chapter applies to a firm.

1. (1)

   [deleted]

2. (2)

   [deleted]

The section on personal account dealing applies to the designated investment business of a firm in relation to activities carried on from an establishment in the United Kingdom.

The section on best execution (COBS 11.2A) does not apply to a firm when:

1. (1)

   executing orders: or

2. (2)

   placing orders with other entities for execution: or

3. (3)

   transmitting orders to other entities for execution;

in relation to a spread-bet which is not a financial instrument, where the firm has not made a personal recommendation in relation to that spread-bet.

The section on best execution (COBS 11.2 or COBS 11.2B, as applicable) does not apply to a firm when, acting in the capacity of operator of a regulated collective investment scheme, it purchases or sells units in that scheme.

A firm must take all reasonable steps to obtain, when executing orders, the best possible result for its clients taking into account the execution factors.

When executing a client order, a firm must take into account the following criteria for determining the relative importance of the execution factors:

1. (1)

   the characteristics of the client including the categorisation of the client as retail or professional;

2. (2)

   the characteristics of the client order;

3. (3)

   the characteristics of financial instruments that are the subject of that order; and

4. (4)

   the characteristics of the execution venues to which that order can be directed.

5. (5)

   [deleted] instrument constituting the fund.

Where a firm executes an order on behalf of a retail client, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

For the purposes of delivering best execution for a retail client where there is more than one competing venue to execute an order for a financial instrument, in order to assess and compare the results for the client that would be achieved by executing the order on each of the execution venues listed in the firm's order execution policy that is capable of executing that order, the firm's own commissions and costs for executing the order on each of the eligible execution venues must be taken into account in that assessment.

A firm must not structure or charge its commissions in such a way as to discriminate unfairly between execution venues.

A firm must establish and implement effective arrangements for complying with the obligation to take all reasonable steps to obtain the best possible result for its clients. In particular, the firm must establish and implement an order execution policy to allow it to obtain, for its client orders, the best possible result in accordance with that obligation.

The order execution policy must include, in respect of each class of financial instruments, information on the different execution venues where the firm executes its client orders and the factors affecting the choice of execution venue. It must at least include those execution venues that enable the firm to obtain on a consistent basis the best possible result for the execution of client orders.

1. (1)

   Whenever there is a specific instruction from the client, the firm must execute the order following the specific instruction.

1. (2)

   A firm satisfies its obligation under this section to take all reasonable steps to obtain the best possible result for a client to the extent that it executes an order, or a specific aspect of an order, following specific instructions from the client relating to the order or the specific aspect of the order.

A firm must provide appropriate information to its clients on its order execution policy.

1. (1)

   A firm must provide a retail client with the following details on its execution policy in good time prior to the provision of the service:

   1. (a)

      an account of the relative importance the firm assigns, in accordance with the execution criteria, to the execution factors, or the process by which the firm determines the relative importance of those factors;

   2. (b)

      a list of the execution venues on which the firm places significant reliance in meeting its obligation to take all reasonable steps to obtain on a consistent basis the best possible result for the execution of client orders;

   3. (c)

      a clear and prominent warning that any specific instructions from a client may prevent the firm from taking the steps that it has designed and implemented in its execution policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions.

2. (2)

   This information must be provided in a durable medium, or by means of a website (where that does not constitute a durable medium) provided that the website conditions are satisfied.

A full-scope UK AIFM must make available appropriate information on its execution policy required under article 27(3) of the AIFMD level 2 regulation (Execution of decisions to deal on behalf of the managed AIF) and on any material changes to that policy to the investors in of each AIF it manages.

Where the order execution policy provides for the possibility that client orders may be executed outside a regulated market or an MTF, the firm must, in particular, inform its clients about this possibility.

1. (1)

   A firm must obtain the prior consent of its clients to the execution policy.

2. (2)

   [deleted]

3. (3)

   [deleted]

A firm must obtain the prior express consent of its clients before proceeding to execute their orders outside a regulated market or an MTF. The firm may obtain this consent either in the form of a general agreement or in respect of individual transactions.

A firm must monitor the effectiveness of its order execution arrangements and execution policy in order to identify and, where appropriate, correct any deficiencies. In particular, it must assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for the client or whether it needs to make changes to its execution arrangements. The firm must notify clients of any material changes to their order execution arrangements or execution policy.

1. (1)

   A firm must review annually its execution policy, as well as its order execution arrangements.

2. (2)

   This review must also be carried out whenever a material change occurs that affects the firm's ability to continue to obtain the best possible result for the execution of its client orders on a consistent basis using the venues included in its execution policy.

1. (1)

   A firm must be able to demonstrate to its clients, at their request, that it has executed their orders in accordance with its execution policy.

2. (2)

   [deleted]

A firm must, when providing the service of portfolio management, comply with the obligation to act in accordance with the best interests of its clients when placing orders with other entities for execution that result from decisions by the firm to deal in financial instruments on behalf of its client.

A firm must, when providing the service of reception and transmission of orders, comply with the obligation to act in accordance with the best interests of its clients when transmitting client orders to other entities for execution.

In order to comply with the obligation to act in accordance with the best interests of its clients when it places an order with, or transmits an order to, another entity for execution, a firm must:

1. (1)

   take all reasonable steps to obtain the best possible result for its clients taking into account the execution factors. The relative importance of these factors must be determined by reference to the execution criteria and, for retail clients, to the requirement to determine the best possible result in terms of the total consideration (see COBS 11.2.7 R).

   A firm satisfies its obligation to act in accordance with the best interests of its clients, and is not required to take the steps mentioned above, to the extent that it follows specific instructions from its client when placing an order with, or transmitting an order to, another entity for execution;

1. (2)

   establish and implement a policy to enable it to comply with the obligation to take all reasonable steps to obtain the best possible result for its clients. The policy must identify, in respect of each class of instruments, the entities with which the orders are placed or to which the firm transmits orders for execution. The entities identified must have execution arrangements that enable the firm to comply with its obligations under this section when it places an order with, or transmits an order to, that entity for execution;

1. (3)

   provide appropriate information to its clients on the policy established in accordance with paragraph (2);

1. (4)

   monitor on a regular basis the effectiveness of the policy and, in particular, the execution quality of the entities identified in that policy and, where appropriate, correct any deficiencies; and

1. (5)

   review the policy annually. This review must also be carried out whenever a material change occurs that affects the firm's ability to continue to obtain the best possible result for its clients.

The provisions applying to a firm which places orders with, or transmits orders to, other entities for execution (see COBS 11.2.30 R to COBS 11.2.33 G) will not apply when the firm which provides the service of portfolio management or collective portfolio management and/or service of reception and transmission of orders also executes the orders received or the decisions to deal on behalf of its client's portfolio. In those cases the requirements of this section for firms who execute orders apply (see COBS 11.2.1 R to COBS 11.2.29 R).

1. (1)

    

   1. (a)

       [deleted]

   2. (b)

       [deleted]

2. (2)

    [deleted]

3. (3)

    This chapter does not apply (but COBS 11.2B applies) to UCITS management companies when carrying on scheme management activity.

4. (4)

    This chapter does not apply (but COBS 11.2 applies) to AIFMs when carrying on AIFM investment management functions and residual CIS operators.

5. (5)

    Where a firm that provides the service of portfolio management or reception and transmission of orders also executes the orders received or the decision to deal on behalf of its client's portfolio:

   1. (a)

        it must comply with COBS 11.2A.8R and COBS 11.2A.25R; and

   2. (b)

        COBS 11.2A.34R does not apply.

1. (1)

   A firm must take all sufficient steps to obtain, when executing orders, the best possible results for its clients taking into account the execution factors.

2. (2)

   The execution factors to be taken into account are price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of an order.

[Note: article 27(1) of MiFID]

Where a firm executes an order on behalf of a retail client, the best possible result must be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which must include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

[Note: article 27(1) of MiFID]

Whenever there is a specific instruction from the client, a firm must execute the order following the specific instruction.

[Note: article 27(1) of MiFID]

A firm’s own commissions and the costs for executing an order in each of the eligible execution venues must be taken into account when assessing and comparing the results that would be achieved for a client by executing the order on each of the execution venues listed in the firm’s execution policy that is capable of executing that order.

[Note: article 27(1) of MiFID]

A firm must not receive any remuneration, discount or non-monetary benefit for routing client orders to a particular trading venue or execution venue which would infringe the requirements on conflicts of interests (as set out in SYSC 10) or inducements as set out in COBS 2.3 (for firms carrying on business other than MiFID, equivalent third country or optional exemption business) and in COBS 2.3A, COBS 2.3B and COBS 2.3C (for firms carrying on MiFID, equivalent third country or optional exemption business).

[Note: article 27(2) of MiFID]

A firm must establish and implement effective arrangements for complying with the obligation to take all sufficient steps to obtain the best possible results for its clients. In particular, the firm must establish and implement an order execution policy to allow it to obtain, in accordance with COBS 11.2A.2R, the best possible result for the execution of client orders.

[Note: article 27(4) of MiFID]

The order execution policy must include, in respect of each class of financial instruments, information on the different execution venues where the firm executes its client orders and the factors affecting the choice of execution venue. It must at least include those execution venues that enable the firm to obtain on a consistent basis the best possible result for the execution of client orders.

[Note: article 27(5) of MiFID]

1. (1)

   A firm must provide appropriate information to its clients on its order execution policy.

2. (2)

   That information must explain clearly how orders will be executed by the firm for the clients.

3. (3)

   The information must include sufficient details and be provided in a way that can be easily understood by clients.

[Note: article 27(5) of MiFID]

1. (1)

   A firm must obtain the prior consent of its clients to the execution policy.

[Note: article 27(5) of MiFID]

1. (1)

   Where a firm’s order execution policy provides for the possibility that client orders may be executed outside a trading venue, a firm must, in particular, inform its clients about that possibility.

2. (2)

   A firm must obtain the express prior consent of its clients before proceeding to execute their orders outside a trading venue.

3. (3)

   A firm may obtain such consent either in the form of a general agreement or in respect of individual transactions.

[Note: article 27(5) of MiFID]

1. (1)

   A firm must monitor the effectiveness of its order execution arrangements and execution policy to identify and, where appropriate, correct any deficiencies. In particular it must assess, on a regular basis, whether the execution venues included in the order execution policy provide for the best possible result for the client or whether it needs to make changes to its execution arrangements taking into account relevant data or other internal analyses conducted by investment firms.

   [deleted]

2. (2)

   The firm must notify clients of any material changes to its order execution arrangements or execution policy.

[Note: article 27(7) of MiFID]

1. (1)

   A firm must be able to demonstrate to its clients, at their request, that it has executed their orders in accordance with its execution policy.

2. (2)

   A firm must be able to demonstrate to the FCA, at the request of that authority, its compliance with COBS 11.2A.2R and with the related provisions in this chapter which require firms to execute orders on terms most favourable to the client.

[Note: article 27(8) of MiFID]

1. (1) A firm that provides portfolio management services must comply with the client's best interests rule when placing orders with other persons for execution that result from decisions by the firm to deal in financial instruments on behalf of its client.

2. (2) A firm that provides the service of reception and transmission of orders, must comply with the client's best interests rule when transmitting client orders to other persons for execution.

    

3. (3) In order to comply with  the client's best interests rule in the way described paragraphs (1) or (2), a firm must comply with paragraphs (4) to (8).
4. (4) A firm must take all sufficient steps to obtain the best possible result for its client, taking into account the execution factors, the relative importance of which must be determined by reference:

   1. (a)

       to the execution criteria; and 

   2. (b)

       for retail clients, to COBS 11.2A.9R.

      >

   3. A firm satisfies its obligations under paragraph (1) or (2), and is not required to take the steps mentioned in this paragraph, to the extent that it follows specific instructions from its client when placing an order with, or transmitting an order to, another entity for execution.

       

5. (5) A firm must establish and implement a policy that enables it to comply with paragraph (4). The policy must identify, in respect of each class of instruments, the persons with which the orders are placed or to which the investment firm transmits orders for execution. The persons identified must have execution arrangements that enable the firm to comply with its obligations under this rule when it places or transmits orders to that person for execution.
6. (6) A firm must provide information to its clients on the policy in (5) and its execution policy established in accordance with COBS 11.2A.25R(2) to (9). The firm must provide clients with appropriate information about the firm and its services and the persons chosen for execution.
7. Upon reasonable request from a client, a firm must provide its clients or potential clients with information about entities where the orders are transmitted or placed for execution.
8. (7)  A firm must:

   1. (a)

       monitor on a regular basis the effectiveness of its policy established in accordance with paragraph (5) and, in particular, the execution quality of the entities identified and, where appropriate, correct any deficiencies;

   2. (b)

       review its order execution policy and order execution arrangements at least annually and whenever a material change occurs that affects the firm's ability to continue to obtain the best possible result for its clients;

   3. (c)

       assess whether a material change has occurred and must consider making changes to the execution venues or persons on which it places significant reliance in meeting MiFID best execution obligation.

9. (8) When executing clientorders or taking decisions to deal in OTCproducts, including bespoke products, the firmmust check the fairness of the price proposed to the clientby gathering market data used in the estimation of the price of such product and, where possible, by comparing with similar or comparable products.

Following the execution of a transaction on behalf of a client a firm must inform the client of where the order was executed.

[Note: article 27(3) of MiFID]

A management company must act in the best interests of each scheme it manages when executing decisions to deal on behalf of the scheme.

[Note: article 25(1) of the UCITS implementing Directive]

A management company must take all sufficient steps to obtain, when executing decisions to deal, the best possible result for each scheme it manages, taking into account:

1. (1)

   price;

2. (2)

   costs;

3. (3)

   speed;

4. (4)

   likelihood of execution;

5. (5)

   likelihood of settlement;

6. (6)

   order size and nature; and

7. (7)

   any other consideration relevant to the execution of the decision to deal,

(together the “execution factors”).

[Note: article 25(2) first sentence of the UCITS implementing Directive]

A management company must determine the relative importance of the execution factors, taking into account the following criteria:

1. (1)

   the objectives, investment policy and risks specific to the scheme, as indicated in its prospectus or instrument constituting the fund;

2. (2)

   the characteristics of the order, including where the order involves a securities financing transaction;

3. (3)

   the characteristics of the financial instruments that are the subject of that order; and

4. (4)

   the characteristics of the execution venues to which that order can be directed.

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

A management company must take into account its own commissions and costs for executing an order, when assessing and comparing the results that would be achieved for a scheme by executing the order on each of the execution venues listed in the management company’s execution policy that is capable of executing that order.

A management company must not receive any remuneration, discount or non-monetary benefit for routing orders to a particular trading venue or execution venue which would infringe the requirements on conflicts of interest (in SYSC 10) or inducements (in COBS 2.3 and COBS 18 Annex 1).

A management company must not structure or charge its commission in a way that discriminates unfairly between execution venues.

When executing orders or taking decisions to deal in OTC products including bespoke products, the management company must check the fairness of the price proposed to the scheme, by gathering market data used to estimate the price of such products and, where possible, by comparing with similar or comparable products.

A management company must act in the best interests of each scheme it manages when placing orders to deal on behalf of that scheme with other entities for execution.

[Note: article 26(1) of the UCITS implementing Directive]

1. (1)

   A management company must take all sufficient steps to obtain the best possible result for each scheme it manages when placing orders to deal on behalf of that scheme with other entities, taking into account the execution factors.

2. (2)

   A management company must determine the relative importance of the execution factors in accordance with COBS 11.2B.7R.

[Note: article 26(2) first and second sentences of the first paragraph of the UCITS implementing Directive]

1. (1)

   A management company must establish and implement effective arrangements for complying with the obligation to take all sufficient steps to obtain the best possible result for each scheme it manages.

2. (2)

   In particular, the management company must establish and implement an order execution policy to allow it to obtain the best possible result for each scheme it manages when:

   1. (a)

      executing orders on behalf of the scheme (in accordance with COBS 11.2B.5R); and

   2. (b)

      placing orders with other entities for execution (in accordance with COBS 11.2B.15R(1)).

[Note: articles 25(3) first paragraph and 26(2) third sentence of the first paragraph of the UCITS implementing Directive]

1. (1)

   The order execution policy must include, for each type of financial instrument, information on the different execution venues where the management company executes its scheme orders and the factors affecting the choice of execution venue.

2. (2)

   It must at least include execution venues that enable the management company to obtain the best possible result for the execution of scheme orders on a consistent basis.

1. (1)

   The order execution policy must identify, for each type of financial instrument, the entities with which orders are placed or to which the management company transmits orders for execution.

2. (2)

   The entities identified must have execution arrangements that enable the management company to comply with its obligations under this section when it places or transmits orders to that entity for execution.

[Note: article 26(2) fourth sentence of the first paragraph and first sentence of the second paragraph]

A management company must be able to demonstrate that it has executed or placed orders on behalf of each scheme it manages in accordance with its execution policy.

[Note: articles 25(5) and 26(4) of the UCITS implementing Directive]

1. (1)

   A management company of an ICVC that is a UCITS scheme that is structured as an investment company, must obtain the prior consent of the ICVC or investment company to the execution policy.

2. (2)

   In the case of a management company that is the ACD of an ICVC that is a UCITS scheme, (1) does not apply where the ACD is the sole director of the ICVC.

[Note: article 25(3) first sentence of the second paragraph of the UCITS implementing Directive]

1. (1)

   A management company must monitor the effectiveness of its order execution arrangements and policy on a regular basis to identify and, where appropriate, correct any deficiencies.

2. (2)

   A management company that places orders with other entities for execution must in particular monitor the execution quality of those entities on a regular basis to identify and, where appropriate, correct any deficiencies.

3. (3)

   A management company must assess, on a regular basis:

   1. (a)

      whether the execution venues included in the order execution policy provide for the best possible result for the schemes it manages; and

   2. (b)

      whether it needs to make changes to its execution arrangements taking into account relevant data or other internal analyses conducted by the management company.

[Note: article 25(4) first sentence, and article 26(3) first paragraph of the UCITS implementing Directive]

A management company must:

1. (1)
   1. (a)

      assess whether a material change has occurred in its order execution arrangements; and

   2. (b)

      if so, consider making changes to the execution venues or entities on which it places significant reliance in meeting the overarching best execution requirement; and

2. (2)

   review its execution policy, as well as its order execution arrangements:

   1. (a)

      at least annually; and

   2. (b)

      whenever a material change occurs that affects the management company’s ability to continue to obtain the best possible result for the scheme.

[Note: article 25(4) second sentence, and article 26(3) second paragraph of the UCITS implementing Directive]

A management company must make available to the unitholders of each scheme it manages appropriate information on its execution policy and on any material changes to that policy.

[Note: articles 25(3) second sentence of the second paragraph and 26(2) second sentence of the second paragraph of the UCITS implementing Directive]

The information on the execution policy must:

1. (1)

   be customised depending on the type of financial instrument and type of service provided; and

2. (2)

   include the information in COBS 11.2B.33R and COBS 11.2B.35R(1) to COBS 11.2B.35R(4).

A management company must make available the following details on its execution policy:

1. (1)

   an account of the relative importance the management company assigns to the execution factors, or the process by which the management company determines the relative importance of the execution factors;

2. (2)

   a list of the execution venues on which the management company places significant reliance in meeting its obligation to take all reasonable steps to obtain the best possible result for the execution of scheme orders on a consistent basis, specifying which execution venues are used for each type of financial instrument and SFT;

3. (3)

   appropriate information about the management company and the entities chosen for execution;

4. (4)

   a list of the factors used to select an execution venue which:

   1. (a)

      includes:

      1. (i)

         qualitative factors such as clearing schemes, circuit breakers, scheduled actions, or any other relevant consideration; and

      2. (ii)

         the relative importance of each factor; and

   2. (b)

      is consistent with the controls used by the management company to demonstrate that best execution has been achieved on a consistent basis, when reviewing the adequacy of its policy and arrangements;

5. (5)

   how the execution factors of price, costs, speed, likelihood of execution and any other relevant factors are considered as part of all sufficient steps to obtain the best possible result for the scheme;

6. (6)

   where applicable:

   1. (a)

      confirmation that the management company executes orders outside a trading venue;

   2. (b)

      the consequences of this, for example counterparty risk arising from execution outside a trading venue; and

   3. (c)

      a statement that additional information about the consequences of this means of execution is available on request; and

7. (7)

   a summary of:

   1. (a)

      the selection process for execution venues;

   2. (b)

      the execution strategies employed;

   3. (c)

      the procedures and process used to analyse the quality of execution obtained; and

   4. (d)

      how the management company monitors and verifies that the best possible results were obtained for the schemes it manages.

A management company must make the information in COBS 11.2B.31R available to unitholders or potential unitholders:

1. (1)

   in a durable medium; or

2. (2)

   by means of a website (where that does not constitute a durable medium) provided that the website conditions are satisfied; or

3. (3)

   in the prospectus of the scheme.

1. (1)

   A management company must make information available about the inducements that the management company may receive from execution venues in accordance with COBS 2.3 and COBS 18 Annex 1.

2. (2)

   The information in (1) must at least:

   1. (a)

      specify the fees charged by the management company to all counterparties involved in the transaction; and

   2. (b)

      where the fees vary depending on the scheme, indicate the maximum fees or range of the fees that may be payable.

3. (3)

   Where a management company applies different fees depending on the execution venue, a management company must explain these differences in sufficient detail to allow unitholders to understand the advantages and the disadvantages of the choice of a particular execution venue.

4. (4)

   Where a management company charges more than one participant in a transaction, the firm must make information available about the value of any monetary or non-monetary benefits received by the firm, in compliance with COBS 2.3.1R.

5. (5)

   Where a unitholder makes a reasonable and proportionate request to a management company for information about its policies or arrangements and how they are reviewed, that management company must answer clearly and within a reasonable time.

Upon reasonable request from a unitholder or potential unitholder, a management company must provide information about entities where orders are transmitted or placed for execution.

1. (1)

   A firm (other than a UCITS management company providing collective portfolio management services) which is authorised to execute orders on behalf of clients must implement procedures and arrangements which provide for the prompt, fair and expeditious execution of client orders, relative to other orders or the trading interests of the firm.

[Note: paragraph 1 of article 28(1) of MiFID]

1. (2)

   These procedures or arrangements must allow for the execution of otherwise comparable orders in accordance with the time of their reception by the firm.

[Note: paragraph 2 of article 28(1) of MiFID]

1. (3)

   A UCITS management company providing collective portfolio management services, must establish and implement procedures and arrangements in respect of all client orders it carries out which provide for the prompt, fair and expeditious execution of portfolio transactions on behalf of the UCITS scheme it manages.

[Note: article 27(1) first paragraph of the UCITS implementing Directive]

1. (1)

    [deleted]

2. (2)

    [deleted]

3. (3)

   COBS 11.3.4AR does not apply to a UCITS management company.

Where a management company executes the order itself in the course of providing collective portfolio management services, it must take all reasonable steps to ensure that any client financial instruments or client funds received in settlement of that executed order are promptly and correctly delivered to the account of the appropriate UCITS scheme.

A management company must ensure that the order allocation policy referred to COBS 11.3.7AR(3) is in sufficiently precise terms.

[Note: article 28(1) of the UCITS implementing Directive]

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 or traded on a trading venue 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.

The obligation in COBS 11.4.1R to make public a limit order is disapplied in respect of transactions that are large in scale compared with normal market as determined under article 4 of MiFIR.

1. (1)

    [deleted]

2. (2)

    This section does not apply to corporate finance business carried on by a firm which is not a MiFID investment firm.

This section does not apply to a firm in relation to MiFID, equivalent third country or optional exemption business (but see COBS 11.7A (Personal account dealing relating to MiFID, equivalent third country or optional exemption business)).

A firm that conducts designated investment business must establish, implement and maintain adequate arrangements aimed at preventing the following activities in the case of any relevant person who is involved in activities that may give rise to a conflict of interest, or who has access to inside information as defined in the Market Abuse Regulation or to other confidential information relating to clients or transactions with or for clients by virtue of an activity carried out by him or her on behalf of the firm:

1. (1)

   entering into a personal transaction which meets at least one of the following criteria:

   1. (a)

      that person is prohibited from entering into it under the Market Abuse Regulation;

   2. (b)

      it involves the misuse or improper disclosure of that confidential information;

   3. (c)

      it conflicts or is likely to conflict with an obligation of the firm to a customer under the regulatory system or any other obligation of the firm under MiFID or the UCITS Directive;

2. (2)

   advising or procuring, other than in the proper course of his employment or contract for services, any other person to enter into a transaction in designated investments which, if a personal transaction of the relevant person, would be covered by (1) or a relevant provision;

3. (3)

   disclosing, other than in the normal course of his or her employment or contract for services, any information or opinion to any other person if the relevant person knows, or reasonably ought to know, that as a result of that disclosure that other person will or would be likely to take either of the following steps:

   1. (a)

      to enter into a transaction in designated investments which, if a personal transaction of the relevant person, would be covered by (1) or a relevant provision;

   2. (b)

      to advise or procure another person to enter into such a transaction.

For the purposes of this section, the relevant provisions are:

1. (1)

   COBS 12.2.21R(1)(a) and (b); and

2. (2)

   COBS 11.3.5AR.

The arrangements required under this section must in particular be designed to ensure that:

1. (1)

   each relevant person covered by this section is aware of the restrictions on personal transactions, and of the measures established by the firm in connection with personal transactions and disclosure, in accordance with this section;

2. (2)

   the firm:

   1. (a)

      is informed promptly of any personal transaction entered into by a relevant person, either by notification of that transaction or by other procedures enabling the firm to identify such transactions; or

   2. (b)

      in the case of outsourcing arrangements, ensures that the service provider to which the activity is outsourced maintains a record of personal transactions entered into by any relevant person and provides that information to the firm promptly on request;

3. (3)

   a record is kept of the personal transaction notified to the firm or identified by it, including any authorisation or prohibition in connection with such a transaction.

This section does not apply to the following kinds of personal transaction:

1. (1)

   personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed;

2. (2)

   personal transactions in units or shares in collective undertakings that comply with the conditions necessary to enjoy the rights conferred by the UCITS Directive or are subject to supervision under the law of an EEA State which requires an equivalent level of risk spreading in their assets, where the relevant person and any other person for whose account the transactions are effected, are not involved in the management of that undertaking;

3. (3)

   personal transactions in life policies.

For the purposes of this section, a person who is not:

1. (1)

   a director, partner or equivalent, manager or appointed representative (or, where applicable, a tied agent) of the firm; or

2. (2)

   a director, partner or equivalent, or manager of any appointed representative (or where applicable, a tied agent) of the firm;

will only be a relevant person to the extent that they are involved in the provision of designated investment business or collective portfolio management services.

Where successive personal transactions are carried out on behalf of a person in accordance with prior instructions given by that person, the obligations under this section do not apply:

1. (1)

   separately to each successive transaction if those instructions remain in force and unchanged; or

2. (2)

   to the termination or withdrawal of such instructions, provided that any financial instruments which had previously been acquired pursuant to the instructions are not disposed of at the same time as the instructions terminate or are withdrawn.

Obligations under this section do apply in relation to a personal transaction, or the commencement of successive personal transactions, that are carried out on behalf of the same person if those instructions are changed or if new instructions are issued.

This chapter applies to a firm in relation to its MiFID, equivalent third country or optional exemption business.

1. (1)

    [deleted]

2. (2)

    [deleted]

3. (3)

    The requirements in COBS 11.7A.5R do not apply in respect of the following personal transactions:

   1. (a)

       personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed;

   2. (b)

       personal transactions in units or shares, in UCITS or AIFs that are subject to supervision under the law of the UK which requires an equivalent level of risk spreading in their assets, where the relevant person and any other person for whose account the transactions are effected are not involved in the management of that undertaking.

A firm that conducts designated investment business must establish appropriate rules governing personal transactions undertaking by managers, employees and tied agents.

[Note: article 16(2) of MiFID]

1. (1)

    Where successive personal transactions are carried out on behalf of a person in accordance with prior instructions given by that person, the obligations under this section do not apply:

   1. (a)

       separately to each successive transaction if those instructions remain in force and unchanged; or

   2. (b)

       to the termination or withdrawal of such instructions, provided that any financial instruments which had previously been acquired pursuant to the instructions are nor disposed of at the same time as the instructions terminate or are withdrawn.

2. (2)

    Obligations under this section do apply in relation to a personal transaction, or the commencement of successive personal transactions, that are carried out on behalf of the same person if those instructions are changed or if new instructions are issued.