COB 7.12 Customer order and execution records
Application
This section applies to a firm that:
- (1)
receives (or, in the exercise of its discretion, decides upon) a customer order;
- (2)
- (3)
passes a customer order to another person for execution; or
- (4)
in addition to (1), (2) or (3), also executes own account transactions;
in any designated investment other than a life policy.
Purpose
Principle 3 (Management and control) requires a firm to take reasonable care to organise and control its affairs responsibly and effectively. This section aims to ensure that a firm makes and retains records of customer orders and other transactions in the course of adhering to the customer order execution requirements in COB 7.4 (Customer order priority), COB 7.5 (Best execution) and COB 7.6 (Timely execution).
Record keeping requirement
A firm must ensure by the establishment and maintenance of appropriate procedures that it promptly records adequate information in relation to the events in COB 7.12.1 R, including any own account transactions.
- (1)
When an event in the left-hand column of COB 7.12.6 E occurs, a firm should make a record of the matters set out in the right-hand column that relate to that event.
- (2)
Compliance with (1) may be relied on as tending to establish compliance with COB 7.12.3 R.
- (3)
Contravention of (1) may be relied on as tending to establish contravention of COB 7.12.3 R.
In addition to the information referred to in COB 7.12.4 E, other information that the firm considers prudent should be recorded.
Minimum contents of customer order and execution records
This table belongs to COB 7.12.3 R
When: |
The firm should record: |
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(1) |
a customer order arises |
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(b) |
the date and time of: |
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(i) |
receipt by the firm of the customer order; or |
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(ii) |
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(c) |
the identity of the employee who received the customer order or made the decision in (b)(i) and (ii); |
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(d) |
(i) |
the designated investment concerned; and |
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(ii) |
the number of, or total value of, the designated investment (including any price limit); |
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(e) |
whether the customer order is for a purchase or sale; and |
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(f) |
any other instruction received by the firm from the customer with regard to the execution of the customer order.1 |
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(2) |
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(a) |
the name or other designation and account number of the client (if any) for whom the transaction was executed (unless the transaction was an own account transaction); |
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(b) |
the name of the counterparty, if known to the firm; |
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(c) |
the date and if available, the time of the transaction; |
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(d) |
the identity of the employee executing the transaction; |
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(e) |
(i) |
the designated investment concerned; and |
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(ii) |
the number of, or total value of, the designated investment; |
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(f) |
the price and other significant terms (including exchange rate details if relevant); and |
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(g) |
whether the transaction was a purchase or a sale. |
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(h) |
[deleted]2 |
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(3) |
the firm passes a customer order to another person for execution |
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(a) |
the name of the person instructed; |
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(b) |
the terms of the instruction; and |
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(c) |
the date and time that the instruction was given. |
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When a firm aggregates and subsequently allocates a customer order with an own account transaction or with another customer order, the time and price required to be recorded by COB 7.12.6 E and (f) will be determined in accordance with the provisions in COB 7.7.5 R (Requirement for timely allocation) and COB 7.7.12 R (Price of allocation) respectively.
For the purposes of COB 7.12.3 R, if information is recorded as soon as practicable following receipt or execution, then the FSA will regard it as having been recorded promptly. When information required to be recorded is supplied to the firm by someone else, it should be recorded upon receipt.
Orders received over the Internet
When a firm gives a customer access to market information, that is updated continuously in line with the relevant market, in conjunction with the ability to place a customer order by relying on such market information, and the customer order is executed automatically upon receipt, the firm should record the price, even if only indicative, which the customer relied on when placing the customer order, as part of the information required to be recorded in accordance with COB 7.12.3 R.
When a firm provides market information as described in COB 7.12.9 G, and the customerorder is submitted over the Internet but is not executed automatically upon receipt, the firm should record the price displayed on the screen at the time the customerorder is placed, as part of the information required to be recorded in accordance with COB 7.12.3 R.
Period of retention
A firm must retain the records referred to in COB 7.12.3 R for a period of at least three years after the date of the event in the left-hand column of COB 7.12.6 E.