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Status: You are viewing the version of the handbook as on 2005-06-30.

COB 7.15 Non-market-price transactions

Application

COB 7.15.1R

This section applies to a firm when it conducts designated investment business with or for a customer.

Purpose

COB 7.15.2G

Principle 1 (Integrity) requires a firm to conduct its business with integrity, whilst Principle 5 (Market conduct) requires a firm to observe proper standards of market conduct. In general, firms should undertake transactions at the prevailing market price. Failure to do this may result in a firm participating, whether deliberately or unknowingly, in the concealment of a profit or loss, or in the perpetration of a fraud. A firm should therefore not enter into a non-market-price transaction unless it has taken reasonable steps to ensure that the transaction is not illegal or otherwise for an improper purpose.

Non-market-price transactions

COB 7.15.3R

Subject to COB 7.15.4 R, a firm must not, as agent or principal, enter into a non-market-price transaction under which it deals in a designated investment with or for a customer, unless it has taken reasonable steps to ensure that the transaction is not being entered into by the customer for an improper purpose.

COB 7.15.4R

COB 7.15.3 R does not apply to a non-market-price transaction if it is subject to the rules of a recognised investment exchange.

COB 7.15.5G

For further guidance, firms are referred to the corresponding provisions on non-market-price transactions set out in MAR 3 (Inter-professional conduct), in particular MAR 3.5.7 E (Non-market-price transactions). Although these provisions apply to a firm's bilateral dealings with a market counterparty, they are also relevant to business conducted with or for customers.