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COBS 22.4 Prohibition on the retail marketing, distribution and sale of derivative contracts of a binary or other fixed outcomes nature

Application

COBS 22.4.1 R

1This section applies to:

  1. (1)

    MiFID investment firms, with the exception of collective portfolio management investment firms; and

  2. (2)

    branches of third country investment firms,

in relation to the marketing, distribution or sale of investments specified in articles 85(4A) and 85(4B) of the Regulated Activities Order in or from the United Kingdom to a retail client.

COBS 22.4.2 G

1 Firms are reminded that the Glossary definition of MiFID investment firm includes CRD credit institutions when those institutions are providing an investment service or activity.

COBS 22.4.2A G

2 Persons (including unauthorised persons) who benefit from a temporary exemption or exclusion from the general prohibition under:

  1. (1)

    Part 7 of the EU Exit Passport Regulations; or

  2. (2)

    Part 4 of the Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/1361)

are required to comply with the rules in this section as a consequence of:

  1. (3)

    regulation 59 of the EU Exit Passport Regulations; or

  2. (4)

    regulation 19 of the Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019.

COBS 22.4.3 G

1For the avoidance of doubt, in COBS 22.4.1R, “marketing” includes communicating and/or approving financial promotions, and “distribution or sale” includes dealing in relation to investments specified in articles 85(4A) and 85(4B) of the Regulated Activities Order.

Prohibitions

COBS 22.4.4 R
  1. (1)

    1A firm must not:

    1. (a)

      sell an investment specified in articles 85(4A) and 85(4B) of the Regulated Activities Order to a retail client; or

    2. (b)

      distribute an investment specified in articles 85(4A) and 85(4B) of the Regulated Activities Order to a retail client; or

    3. (c)

      market an investment specified in articles 85(4A) and 85(4B) of the Regulated Activities Order if the marketing is addressed to or disseminated in such a way that it is likely to be received by a retail client.

  2. (2)

    “Marketing” includes, but is not limited to, communicating and/or approving financial promotions.