COBS 3.6 Eligible counterparties
- (1)
An eligible counterparty is a client that is either a per se eligible counterparty or an elective eligible counterparty.
- (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
Per se eligible counterparties
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)
an investment firm;
- (2)
- (3)
an insurance company;
- (4)
a collective investment scheme authorised under the UK provisions which implemented the7 UCITS Directive or its management company;
- (5)
a pension fund or its management company;
- (6)
another financial institution authorised or regulated under the law of the United Kingdom7;
22 - (7)
[deleted]4
- (8)
a national government or its corresponding office, including a public body that deals with5 public debt at national level5;
- (9)
a central bank; and4
- (10)
a supranational organisation.
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
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)
the client is an undertaking and:
- (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- (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
- (ii)
meets the criteria in the rule on meeting two quantitative tests (COBS 3.5.2 R (3)(b)); and5
1
- (i)
- (b)
requests such categorisation; and6
- (a)
- (2)
the firm adheres to the procedure set out at COBS 3.6.4BUK7.
5
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)
is an undertaking;6
- (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)
requests such categorisation.6
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.
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:
(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;
(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.
[deleted]6
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.
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.