COBS 22.1 Temporary restrictions on contingent convertible instruments

Certified high net worth investors

An individual who meets the requirements set out in COBS 4.12.6 R, or a person (or persons) legally empowered to make investment decisions on behalf of such individual.

The firm must consider the contingent convertible instrument is likely to be suitable for that individual, based on a preliminary assessment of that individual's profile and objectives. (See COBS 4.12.5 G (2).)

Exempt persons

An exempt person (other than a person exempted only by section 39 of the Act (Exemption of appointed representatives)) if the activity relates to a regulated activity in respect of which the person is exempt from the general prohibition.

Not applicable.

Certified sophisticated investors

An individual who meets the requirements set out in COBS 4.12.7 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client.

Not applicable.

Self-certified sophisticated investors

An individual who meets the requirements set out in COBS 4.12.8 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client.

The firm must consider the contingent convertible instrument is likely to be suitable for that individual, based on a preliminary assessment of that individual's profile and objectives. (See COBS 4.12.5 G (2).)

Solicited advice

Any retail client.

The prohibition does not apply provided all of the following requirements are met:

(a) there is no financial promotion other than a personal recommendation on the contingent convertible instrument;

(b) the personal recommendation is made following a specific request by that client for advice on the merits of investing in the contingent convertible instrument; and

(c) the client has not previously received a financial promotion or any other communication from the firm (or from a person connected to the firm) which is intended to influence the client in relation to investment in contingent convertible instruments. (See Note 1.)

MiFID or equivalent third country business other than financial promotions

Any retail client.

If the prohibited activities amount to MiFID or equivalent third country business, that rule only applies to the extent that the prohibited activity is the communication or approval of a financial promotion.

Prospectus

Any retail client.

The prohibition does not apply to the distribution of a prospectus required under the Prospectus Directive.

Issuers

Any retail client

To the extent that the firm is acting as issuer of a contingent convertible instrument, the prohibition only applies to the original issuance of the contingent convertible instrument and not to subsequent trading in the secondary market.

Clearing, custodial and processing services

Any retail client

The prohibition does not apply to the extent that the firm's activities relate to clearing, registration or settlement of transactions in contingent convertible instruments (or rights to or interests in such instruments), any back office processing or reporting of such transactions, or custody of contingent convertible instruments.

Indirect investment

Any retail client

The prohibition does not apply in relation to a beneficial interest in a contingent convertible instrument held from participation in a regulated collective investment scheme, investment in a non-mainstream pooled investment, or membership of an occupational pension scheme.

Note 1

A person is connected with a firm if it acts as an introducer or appointed representative for that firm or, if it is any other person, regardless of authorisation status, who has a relevant business relationship with the firm.

Note 2

See COBS 2.4 for rules and guidance on agent as client and reliance on others.