FCA Handbook - COBS 16.2 Occasional reporting

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COBS 16.2 Occasional reporting

Execution of orders other than when managing investments

(1)
If a firm has carried out an order in the course of its designated investment business on behalf of a client, it must:
1. (a)
  promptly provide the client, in a durable medium, with the essential information concerning the execution of the order;
2. (b)
  in the case of a retail client, send the client a notice in a durable medium confirming the execution of the order and such of the trade confirmation information (COBS 16 Annex 1R) as is applicable:
  1. (i)
    as soon as possible and no later than the first business day following that execution; or
  2. (ii)
    if the confirmation is received by the firm from a third party, no later than the first business day following receipt of the confirmation from the third party; and
3. (c)
  supply a client, on request, with information about the status of his order.
(2)
Paragraph (1) does not apply to a firm managing investments.
(3)
Paragraph (1)(b) does not apply if the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the client by another person.
(4)
Paragraphs (1)(a) and (b) do not apply to an order executed on behalf of a client that relates to a bond funding a mortgage loan agreement with the client. The report on the transaction must be made at the same time as the terms of the mortgage loan are communicated, but no later than one month after the execution of the order.
(5)
If a firm carries out an order for a retail client relating to units or shares in a collective investment undertaking that is part of a series of orders that are executed periodically, it must:
1. (a)
  comply with paragraph (1)(b) in relation to that order; or
2. (b)
  provide the client at least once every six months with such of the trade confirmation information (COBS 16 Annex 1R) as is applicable in relation to each transaction in that series carried out in the relevant reporting period.
(6)
In relation to subscription and redemption orders for units in a UCITS scheme executed by an authorised fund manager, paragraphs (1), (3) and (5) of this rule apply as if references to:
1. (a)
  a client and to a retail client were references to a Unitholder in the scheme; and
2. (b)
  trade confirmation information in paragraphs (1)(b) and (5)(b) were to the information in paragraph (7).
(7)
The notice referred to in paragraph (1)(b) must, where applicable, for subscription and redemption orders for units in a UCITS scheme executed by an authorised fund manager, include the following information:
1. (a)
  the identification of the management company;
2. (b)
  the name or other designation of the Unitholder;
3. (c)
  the date and time of receipt of the order and method of payment;
4. (d)
  the date of execution;
5. (e)
  the identification of the UCITS scheme or;
6. (f)
  the nature of the order (subscription or redemption);
7. (g)
  the number of units involved;
8. (h)
  the unit price at which the units were subscribed or redeemed;
9. (i)
  the reference valuation date;
10. (j)
  the gross value of the order including charges for subscription or net amount after charges for redemptions; and
11. (k)
  the total sum of the commissions and expenses charged and where the investor so requests, an itemised breakdown.

[Note: article 24 of the UCITS implementing Directive]

The requirement concerning orders relating to bonds funding a mortgage loan agreement is unlikely to be relevant to products in the United Kingdom market.

For the purposes of calculating the unit price in the trade confirmation information, where the order is executed in tranches, the firm may supply the client with information about the price of each tranche or the average price. If the average price is provided, the firm must supply the retail client with information about the price of each tranche upon request.

In determining what is essential information, a firm should consider including:

(1)
for transactions in a derivative:
1. (a)
  the maturity, delivery or expiry date of the derivative;
2. (b)
  in the case of an option, a reference to the last exercise date, whether it can be exercised before maturity and the strike price;
3. (c)
  if the transaction closes out an open futures position, all essential details required in respect of each contract comprised in the open position and each contract by which it was closed out and the profit or loss to the client arising out of closing out that position (a difference account);
(2)
for the exercise of an option:
1. (a)
  the date of exercise, and either the time of exercise or that the client will be notified of that time on request;
2. (b)
  whether the exercise creates a sale or purchase in the underlying asset; and
3. (c)
  the strike price of the option (for a currency option, the rate of exchange will be the same as the strike price) and, if applicable, the total consideration from or to the client; and
(3)
the fact that the transaction involves any dividend or capitalisation or other right which has been declared, but which has not been paid, allotted or otherwise become effective in respect of the investment, and under the terms of the transaction the benefit of which will not pass to the purchaser.

Guidance on the requirements

Where a firm executes an order in tranches, the firm may, where appropriate, indicate the trading time and the execution venue in a way that is consistent with this, such as, "multiple". In accordance with the client's best interests rule, a firm should provide additional information at the client's request.

In accordance with COBS 2.4.9 R, a firm may dispatch a confirmation to an agent, other than the firm or an associate of the firm, nominated by the client in writing.

Special cases

A firm need not despatch a confirmation if:

(1)
the firm has agreed with the client (in the case of a retail client, in writing and with the client's informed consent) that confirmations need not be supplied, either generally or in specified circumstances; or
(2)
the designated investment is a life policy, stakeholder pension scheme or a personal pension scheme (other than a SIPP); or
(3)
the designated investment is held within a CTF and the statement provided under the CTF Regulations includes the information that would have been contained in a confirmation under this section (other than information that has since become irrelevant).

Record keeping: occasional reporting

A firm must retain a copy of any confirmation despatched to a client under this section for a period of at least three years from the date of despatch.