COBS 16.3 Periodic reporting
Provision by the firm and contents
- (1)
If a firm is managing investments on behalf of a client, it must provide the client with a periodic statement in a durable medium unless such a statement is provided by another person.
- (2)
If the client is a retail client, the periodic statement must include such of the periodic information (COBS 16 Annex 2R) 1as is applicable.
[Note: article 41(1) and (2) of the MiFID implementing Directive]
- (1)
In the case of a retail client, the periodic statement must be provided once every six months, except in the following cases:
- (a)
if the retail client so requests, the periodic statement must be provided every three months;
- (b)
if the retail client elects to receive information about executed transactions on a transaction-by-transaction basis (COBS 16.3.3 R) and there are no transactions in derivatives or other securities giving the right to acquire or sell a transferable security or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields, commodities or other indices or measures, the periodic statement must be provided at least once every twelve months;
- (c)
if the agreement between a firm and a retail client for the managing of investments authorises a leveraged portfolio, the periodic statement must be provided at least once a month.
- (a)
- (2)
A firm must inform a retail client that he has the right to request the provision of a periodic statement every three months.
[Note: article 41(3) of the MiFID implementing Directive]
- (1)
If the client elects to receive information about executed transactions on a transaction-by-transaction basis, a firm managing investments must provide promptly to the client, on the execution of a transaction, the essential information concerning that transaction in a durable medium.
- (2)
If the client is a retail client, the firm must send him a notice confirming the transaction and containing such of the information identified in column (1) of the table in COBS 16 Annex 1R as is applicable:
- (a)
no later than the first business day following that execution; or
- (b)
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;
- (a)
unless the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the retail client by another person.
[Note: article 41(4) of the MiFID implementing Directive]
For the purposes of calculating the unit price in the trade confirmation information or periodic 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.
[Note: article 40(4) of the MiFID implementing Directive]
- (1)
If a firm:
- (a)
manages investments for a retail client; or
- (b)
operates a retail client account that includes an uncovered open position in a contingent liability transaction,
it must report to the retail client any losses exceeding any predetermined threshold, agreed between it and the retail client.
- (a)
- (2)
The firm must report:
- (a)
no later than the end of the business day in which the threshold is exceeded; or
- (b)
if the threshold is exceeded on a non-business day, the close of the next business day.
- (a)
[Note: article 42 of the MiFID implementing Directive]
For the purposes of this section, a contingent liability transaction is one that involves any actual or potential liability for the client that exceeds the cost of acquiring the instrument.
[Note: recital 63 of the MiFID implementing Directive]
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Guidance on contingent liability transaction
When providing a periodic statement to a retail client, a firm should consider whether to include:
- (1)
the collateral value in respect of any contingent liability transaction in the client's portfolio during the relevant period; and
- (2)
option account valuations in respect of each open option written by the client in the client's portfolio at the end of the relevant period; stating:
- (a)
the share, future, index or other investment involved;
- (b)
the trade price and date for the opening transaction, unless the valuation statement follows the statement for the period in which the option was opened;
- (c)
the market price of the contract; and
- (d)
the exercise price of the contract.
- (a)
- (3)
Option account valuations may show an average trade price and market price in respect of an option series if the retail client buys a number of contracts within the same series.
Periodic reporting: special situations
In relation to business that is not MiFID or equivalent third country business, a firm need not provide a periodic statement:
- (1)
to a client habitually resident outside the United Kingdom if the client concerned has so requested or the firm has taken reasonable steps to establish that he does not wish to receive it;
- (2)
in respect of a CTF, if the statement provided under the CTF Regulations contains the periodic information.
2
Record keeping: periodic reporting
A firm must make, and retain, a copy of any periodic statement:
- (1)
for MiFID or equivalent third country business, for a period of at least five years; or
- (2)
for business that is not MiFID or, for a period of at least three years;
from the date of despatch.
[Note: see article 51(3) of the MiFID implementing Directive]