COB 1.6 Application to stock lending activity, corporate finance business, oil market activity and energy market activity
Stock lending activity
In respect of any stock lending activity undertaken with or for a customer by a firm, only those provisions of COB in COB 1.6.2 R apply.
10Stock lending activity8
This table belongs to COB 1.6.1 R
COB |
Subject |
Chapter 1 |
Application and general provisions |
2.1 |
Clear, fair and not misleading communication |
2.2 |
Inducements and soft commission |
2.3 |
Reliance on others |
2.4 |
Chinese walls |
2.5 |
Exclusion of liability |
2.69 |
General provisions related to distance marketing, but only in relation to distance contracts concluded with retail customers9 |
9
4.1 |
Client classification |
4.2 |
Terms of business and client agreements with customers |
5.3 |
Suitability |
5.4 |
Customers' understanding of risk |
5.5 |
Information about the firm |
5.7 |
Disclosure of charges, remuneration and commission |
6.78 |
Cancellation and withdrawal, but only in relation to distance contracts concluded with retail customers 8 |
8
7.1 |
Conflict of interest and material interest |
7.7 |
Aggregation and allocation |
7.8 |
Realisation of a private customer's assets |
7.9 |
Lending to private customers |
7.12 |
Customer order and execution records |
7.13 |
Personal account dealing |
7.1610 |
Investment research |
7.1710 |
Investment research recommendations: required disclosures |
8.1 |
Confirmation of transactions |
[deleted] |
[deleted] 6 |
Corporate finance business
In respect of any corporate finance business undertaken by a firm, only those provisions of COB in COB 1.6.4 R apply.
Provisions of COB applied to corporate finance business8
This table belongs to COB 1.6.3 R
COB |
Subject |
Chapter 1 |
Application and general provisions1 |
2.1 |
Clear, fair and not misleading communication |
2.2 |
Inducements and soft commission |
2.3 |
Reliance on others |
2.4 |
Chinese walls |
2.5 |
Exclusion of liability |
2.6 9 |
General provisions related to distance marketing, but only in relation to distance contracts concluded with retail customers9 |
9
Chapter 3 |
Financial promotion, except COB 3.8.6 G - COB 3.8.20A R12 and COB 3.9 |
4.1 |
Client classification |
5.3 |
Suitability |
5.4 |
Customers' understanding of risk |
5.5 |
Information about the firm, except COB 5.5.1 R - COB 5.5.8 G3 |
5.10 |
Corporate finance business issues5 |
6.4.259 |
Entering into a person to accept deposits, but (a) as if corporate finance business was accepting deposits and (b) only in relation to distance contracts concluded with retail customers9 |
9
6.7 8 |
Cancellation and withdrawal, but only in relation to distance contracts concluded with retail customers8 |
7.1 |
Conflict of interest and material interest |
7.12 |
Customer order and execution records |
7.13 |
Personal account dealing |
7.16 |
Investment research7 |
7.1710 |
Investment research recommendations: required disclosures |
[deleted] |
[deleted] 6 |
Firms should, when relevant, make reference to MAR 4 (Endorsement of the Takeover Code). The effect of this endorsement in MAR 4, is that, should a firm to whom the endorsement applies fail to comply with the City Code on Takeovers and Mergers ('Takeover Code'), the Rules Governing Substantial Acquisition of Shares ('SARs') or rulings or requirements made by the Takeover Panel, the Takeover Panel can request the FSA to take enforcement action against that firm.
8COB 6.7 (Cancellation and withdrawal) has limited application for corporate finance business. Distance contracts concluded with retail customers in the course of corporate finance business are exempt from COB 6.7 if the price of the financial service is dependent on fluctuations in the financial market outside the firm's control (COB 6.7.17, row 2, case 15(a)).
Oil market activity and energy market activity
2Only the provisions of COB listed in COB 1.6.7 R apply in respect of:
- (1)
oil market activity; and
- (2)
other energy market activity;undertaken by any firm (but see COB 1.6.8 R).
Provisions applied to oil market activity and energy market activity
This table belongs to COB 1.6.6 R
2COB |
Subject |
Chapter 1 |
Application and general provisions |
2.1 |
Clear, fair and not misleading |
2.3 |
Reliance on and responsibility for others |
2.4 |
Chinese walls |
2.5 |
Exclusion of liability |
Chapter 3 |
Financial promotion |
4.1 |
Client classification |
7.1 |
Conflict of interest and material interest |
7.3 |
Dealing ahead |
7.15 |
Non-market-price transactions |
7.1610 |
Investment research |
7.1710 |
Investment research recommendations: required disclosures |
8.1 |
Confirmation of transactions |
[deleted] |
[deleted] 6 |
2Despite COB 1.6.6 R, only the provisions of COB listed in COB 1.6.9 R apply to:
- (1)
- (2)
other energy market activity; undertaken by any firm where, if the firm were not authorised, the activity would not be a regulated activity because of:
- (3)
article 16 of the Regulated Activities Order (Dealing in contractually based investments); or
- (4)
article 22 of the Regulated Activities Order (Deals with or through authorised persons etc.).
Oil market activity and energy market activity: provisions applied to certain dealings with or through authorised persons etc.
This table belongs to COB 1.6.8 R.
2COB |
Subject |
Chapter 1 |
Application and general provisions |
2.3 |
Reliance on and responsibility for others |
2.4 |
Chinese walls |
2.5 |
Exclusion of liability |
3.11 |
Unregulated collective investment schemes |
7.15 |
Non-market-price transactions |
[deleted] |
[deleted] 6 |
2Article 16 of the Regulated Activities Order (Dealing in contractually based investments) sets out an exclusion for unauthorised persons who deal in investments as principal in contractually based investments. The exclusion relates to dealings:
- (1)
with or through an authorised person or, in certain cases, an exempt person; or
- (2)
in certain cases, through an office outside the United Kingdom maintained by a party to the transaction.
2Article 22 of the Regulated Activities Order (Deals with or through authorised persons) sets out an exclusion for unauthorised persons who deal in investments as agent. The exclusion relates to dealings with or through an authorised person if:
- (1)
the transaction is entered into on advice given to the client by an authorised person; or
- (2)
it is clear, in all the circumstances, that the client, in his capacity as an investor, is not seeking and has not sought advice from the agent as to the merits of the client's entering into the transaction (or the agent has declined to give such advice but has recommended the client seek such advice from an authorised person); and in either case, the agent does not receive from any person other than the client any pecuniary reward or advantage for which he does not account to the client.
4Despite COB 1.6.6 R to COB 1.6.11 G, if a firm that is undertaking oil market activity or other energy market activity operates an ATS, COB 4.2 (Terms of business) applies in relation to the operation of the ATS.4