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COBS 3.6 Eligible counterparties

COBS 3.6.1RRP

  1. (1)

    An eligible counterparty is a client that is either a per se eligible counterparty or an elective eligible counterparty.

  2. (2)

    A1 client can only be an eligible counterparty in relation to eligible counterparty business (PRIN 1 Annex 1 R is an exception to this).1

[Note: article 30(1)5 of MiFID]

Per se eligible counterparties

COBS 3.6.2RRP

Each of the following is a per se eligible counterparty (including an entity that is not from the UK7 that is equivalent to any of the following) unless and to the extent it is given a different categorisation under this chapter:

3
  1. (1)

    an investment firm;

  2. (2)

    a credit institution;

  3. (3)

    an insurance company;

  4. (4)

    a collective investment scheme authorised under the UK provisions which implemented the7 UCITS Directive or its management company;

  5. (5)

    a pension fund or its management company;

  6. (6)

    another financial institution authorised or regulated under the law of the United Kingdom7;

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  7. (7)

    [deleted]4

  8. (8)

    a national government or its corresponding office, including a public body that deals with5 public debt at national level5;

  9. (9)

    a central bank; and4

  10. (10)

    a supranational organisation.

[Note: first paragraph of article 30(2)5 and first paragraph of article 30(4)5 of MiFID]

COBS 3.6.3GRP

For the purpose of COBS 3.6.2 R (6), a financial institution includes regulated institutions in the securities, banking and insurance sectors.

Elective eligible counterparties

COBS 3.6.4RRP

A firm may treat a client as an elective eligible counterparty in relation to business other than MiFID or equivalent third country business5 if:

  1. (1)

    the client is an undertaking and:

    1. (a)

      is a per se professional client (except for a client that is only a per se professional client because it is an institutional investor under COBS 3.5.2 R (5)) and5:

      1
      1. (i)

        is a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time); or1

      2. (ii)

        meets the criteria in the rule on meeting two quantitative tests (COBS 3.5.2 R (3)(b)); and5

        1
    2. (b)

      requests such categorisation; and6

  2. (2)

    the firm adheres to the procedure set out at COBS 3.6.4BUK7.

    5
COBS 3.6.4AR

Provided that it adheres to the procedure set out at COBS 3.6.4BUK7, a firm may treat a client as an elective eligible counterparty in relation to MiFID or equivalent third country business if the client:6

5
  1. (1)

    is an undertaking;6

  2. (2)

    is a per se professional client, except for a client that is only a per se professional client because it is an institutional investor under COBS 3.5.2R(5); and6

  3. (3)

    requests such categorisation.6

[Note: first paragraph of article 30(3) of MiFID]6

COBS 3.6.4BUK

7Article 71(5) of the MiFID Org Regulation sets out the procedure to be followed where a client requests to be treated as an eligible counterparty.

  1. 71(5) Where a client requests to be treated as an eligible counterparty, in accordance with [COBS 3.6.4AR], the following procedure shall be followed:

    1. (a) the investment firm shall provide the client with a clear written warning of the consequences for the client of such a request, including the protections they may lose;

    2. (b) the client shall confirm in writing the request to be treated as an eligible counterparty either generally or in respect of one or more investment services or a transaction or type of transaction or product and that they are aware of the consequences of the protection they may have lost as a result of the request.

COBS 3.6.4CR

[deleted]6

COBS 3.6.5GRP

The categories of elective eligible counterparties include an equivalent undertaking that is not from an the United Kingdom7 provided the above conditions and requirements are satisfied.

COBS 3.6.6RRP

A firm may obtain a prospective counterparty's confirmation that it agrees to be treated as an eligible counterparty either in the form of a general agreement or in respect of each individual transaction.

[Note: second paragraph of article 30(3)5 of MiFID]

Client and firm located in different jurisdictions

COBS 3.6.7RRP

[deleted]7