FCA Handbook - COBS 16A.3 Occasional reporting: MiFID business

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COBS 16A.3 Occasional reporting: MiFID business

Execution of orders other than when undertaking portfolio management

(1) If a firm has carried out an order on behalf of a retail client or a professional client, it must:
1. (a) promptly provide the client, in a durable medium, with the essential information concerning the execution of that order;
2. (b)
  in the case of a retail client, send the client a notice in a durable medium confirming execution of the order:
  1. (i)
    as soon as possible and no later than the first business day following 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 the client, on request, with information about the status of their order.
(2) Paragraph (1) does not apply to a firm providing a portfolio management service.
(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 which is part of a series of orders that are executed periodically, it must:
1. (a)
  comply with (1)(b) in relation to that order; or
2. (b)
  provide the client, at least once every six months, with the information listed in (6) in respect of those transactions.
(6) The notice required by (1)(b) must include such of the following information as is applicable and, if relevant, in accordance with MiFID RTS 22:
1. (a) the reporting firm identification;
2. (b) the name or other designation of the client;
3. (c) the trading day;
4. (d) the trading time;
5. (e) the type of the order (for example, a limit order, market order or other specific type of order);
6. (f) the venue identification;
7. (g) the instrument identification;
8. (h) the buy/sell indicator;
9. (i) the nature of the order if other than buy/sell;
10. (j) the quantity;
11. (k) the unit price;
  (l) the total consideration;
12. (m) a total sum of the commissions and expenses charged and, where the client so requests, an itemised breakdown including, where relevant, the amount of any mark-up or mark-down imposed by the firm where the transaction was executed by the firm when dealing on own account, and the firm owes a duty of best execution to the client;
13. (n) the rate of exchange obtained where the transaction involves a conversion of currency;
14. (o) the client's responsibilities in relation to the settlement of the transaction, including the time limit for payment or delivery as well as the appropriate account details where these details and responsibilities have not previously been notified to the client; and
15. (p) if the client's counterparty was the firm itself or any person in the firm's group or another retail client of the firm, the fact that this was the case unless the order was executed through a trading system that facilitates anonymous trading.
(7) For the purposes of calculating the unit price in (6)(k), where the order is executed in tranches, the firm may supply the retail 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.
(8) The firm may provide the retail client with the information referred to in (6) using standard codes if it also provides an explanation of the codes used.

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; and
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 2.4.9R, a firm may dispatch confirmation to an agent, other than the firm or an associate of the firm, nominated by the client in writing.