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COB 8.1 Confirmation of transactions

Application

COB 8.1.1R

This section applies to a firm when it executes a sale or purchase of a designated investment with or for a customer.

Purpose

COB 8.1.2G

Principle 7 (Communications with clients) requires a firm to pay due regard to the information needs of its customers. The provisions in COB 8.1 are designed to ensure that customers are promptly advised of the essential details of a transaction. Firms are obliged to despatch these details, except in certain circumstances when they are supplied by someone else, or at a later date, or if the customer waives the right to receive the information.

Requirement to confirm a transaction

COB 8.1.3R
  1. (1)

    A firm must, subject to COB 8.1.6 R, despatch to the customer a written confirmation recording the essential details of the transaction, and must do so promptly.

  2. (2)

    For the purposes of (1), a firm may despatch a confirmation to an agent, other than the firm or an associate of the firm, nominated by the customer in writing.

COB 8.1.4G
  1. (1)

    Regarding the electronic provision of a confirmation, see COB 1.8 (Application to electronic media).

  2. (2)

    A firm may comply with COB 8.1.3 R (1) by posting a confirmation on its website, provided that the confirmation is only accessible to the party that placed the order. If the firm does this for a private customer, it should regularly review the website to ensure that the customer has reviewed his confirmations. If the private customer has not accessed his confirmation within five days of it being posted on the website, the firm should send the confirmation to him either in hard copy or electronically.

Essential details and prompt despatch

COB 8.1.5E
  1. (1)

    A firm should provide the following essential details of a transaction, to the extent they are relevant:

    1. (a)

      the information specified in:

      1. (i)

        COB 8.1.15 E for all transactions;

      2. (ii)

        COB 8.1.16 E in particular circumstances;

      3. (iii)

        COB 8.1.17 E for transactions in units in a regulated collective investment scheme;

      4. (iv)

        COB 8.1.18 E for transactions in derivatives;

      5. (v)

        COB 8.1.19 E upon the exercise of an option; or

    2. (b)

      such information as the customer has agreed with the firm (in the case of a private customer, agreed in writing with his informed consent), or is in accordance with the custom of a non-UK market in which the transaction was arranged; or3

    3. (c)

      a copy of a confirmation received by the firm from a third party together with any other information provided by the firm which, when taken together, satisfies (1)(a).

  2. (2)

    To despatch a confirmation promptly, a firm should:

    1. (a)

      despatch it no later than the business day following the day the transaction was executed (as specified in COB 8.1.12 R) or within any period agreed with the customer (in the case of a private customer, agreed in writing with his informed consent); or3

    2. (b)

      despatch a copy of a confirmation received from a third party together with additional information, if any, to the customer as soon as practicable, but in any event no later than the business day following receipt; or3

    3. (c)

      when the firm has issued or redeemed units in a regulated collective investment scheme, despatch it at the latest on the business day following the day the issue or redemption price was determined, unless (b) applies; or 3

    4. (d)

      when a firm executes a transaction in:

      1. (i)

        an OTC derivative; or

      2. (ii)

        stock lending or borrowing; or

      3. (iii)

        a repo; or

      4. (iv)

        rights to or interests in OTC derivatives;

      despatch a confirmation as soon as practicable in accordance with proper standards of market practice for the investment concerned.3

  3. (3)

    Compliance with (1) and (2) may be relied upon as tending to establish compliance with COB 8.1.3 R.

  4. (4)

    Contravention of (1) or (2) may be relied upon as tending to establish contravention of COB 8.1.3 R.

Exceptions to the requirement to despatch a confirmation

COB 8.1.6R

A firm need not despatch a confirmation when:

  1. (1)

    the designated investment is a life policy or a personal pension contract; or

  2. (1A)

    the designated investment is held within a CTF and the annual statement provided under the CTF Regulations includes the information that would have been contained in a confirmation despatched in accordance with COB 8.1.3 relating to the transactions executed during the relevant period (but information which has since become irrelevant may be excluded); or6

  3. (2)

    an arrangement is in place for the customer to make a series of payments for the purchase of units in a regulated collective investment scheme or of shares in an investment trust (including one-off payments made in addition to those in the series); or

  4. (3)

    the firm has agreed with the customer (or, in the case of a private customer, agreed in writing with his informed consent) that confirmations need not be supplied, either generally or in specified circumstances (but see COB 8.1.7 R and COB 8.1.8 R); or3

  5. (4)

    the firm is acting as an investment manager, or as an ISA manager or plan manager, and:

    1. (a)

      the designated investment is not a contingent liability investment;

    2. (b)

      the firm has taken reasonable steps to determine that the customer does not wish to receive confirmations, either generally or in specified circumstances; and

    3. (c)

      the firm complies with COB 8.1.7 R or COB 8.1.8 R; or

  6. (5)

    it would duplicate a confirmation containing the essential details of the transaction (other than those that are firm-specific) which is to be promptly despatched by someone else.

COB 8.1.7R

A firm which is not an OPS firm referred to in COB 8.1.8 R may rely upon the exceptions in COB 8.1.6 R (3) or COB 8.1.6 R (4) only if any periodic statement which the firm provides to the customer in accordance with COB 8.2 ( Periodic Statement) (and subject to the exceptions in COB 8.2.6 R) contains the information that would have been contained in a confirmation despatched in accordance with COB 8.1.3 R (other than information which has since become irrelevant) relating to the transactions executed during the relevant period.3

COB 8.1.8R

An OPS firm conducting OPS activity for an OPS trustee which is an intermediate customer of the OPS firm, and is habitually resident in the United Kingdom, may rely upon the exceptions in COB 8.1.6 (3) or COB 8.1.6 R (4) only if it provides a periodic statement containing the information required by COB 8.2.10.

COB 8.1.9G

The request in COB 8.1.6 R (3) includes a general request as well as a request made on any specific occasion.

COB 8.1.10G

If the firm executes a series of transactions, or aggregates orders, it should modify the information to be provided as necessary, to ensure that the confirmation is clear, fair and not misleading, as required by COB 2.1.3 R.

When a confirmation may omit certain information

COB 8.1.11R

If:

  1. (1)

    anyone fails to supply information which the firm requires for inclusion in a confirmation; or

  2. (2)

    the transaction involves a conversion of one currency into another and that conversion has not been made by the firm;

the firm may omit this information from the confirmation, provided the fact of its omission is stated with an indication that it is to be supplied later (or that it cannot be supplied at all if that is the case). The relevant information must then be supplied to the customer promptly after receipt.

When a transaction is treated as executed

COB 8.1.12R
  1. (1)

    When a firm executes a transaction outside normal market hours, the transaction must be treated as executed on the following business day.

  2. (2)

    When a firm executes a series of transactions, all the transactions may be treated as executed at the time of the last transaction so long as a record of the time that each individual transaction was executed is made, for example, by means of a time stamp.

  3. (3)

    When a firm aggregates and then subsequently allocates a customer order with an own account order or with another customer order, the transaction must be treated as executed at the time of allocation under COB 7.7.5 R (Requirement for timely allocation).

COB 8.1.13G

Any right of the customer to cancel the designated investment does not affect the time when the transaction is treated as executed.

Record keeping requirements

COB 8.1.14R

A firm must make a copy of the confirmation information despatched to a customer under COB 8.1.3 R and retain it for three years from the date of despatch.

COB 8.1.15E

Content of a confirmation of transaction - general requirements

This table belongs to COB 8.1.5 E

Content of a confirmation of transaction - general requirements

1.

The firm's name and address.

2.

The firm's statutory status in accordance with GEN 4 Annex 1 (Statutory status disclosure).5

3.

If the firm (other than the operator of a regulated collective investment scheme) executed a transaction in a security as principal, that fact.4

4.

The customer's name or other designation and account number.

5.

A description of the designated investment, including the amount invested.

6.

Whether the transaction is a sale or purchase.

7.

The unit price at which the transaction was executed, and, if the unit price is averaged including any price set in accordance with COB 7.7.12 R (Price of allocation), a statement of that fact.4

8.

The date of the transaction.

9.

Either:

(a)

the time of the transaction; or

(b)

a statement that information about the time of the transaction will be supplied on request.

10.

The total consideration payable and the date on which it is due.

11.

Except if the firm is the operator of a collective investment scheme (subject to COB 8.1.17), the remuneration of the firm and that of any associate (unless that associate is not obliged to disclose it to the firm under this provision, as a result of the firm being its customer, or otherwise) in connection with the transaction, distinguishing:

(a)

the amount of any commission charged; and

(b)

the basis on which the commission has been determined, unless:

(i)

all commission charged to the customer has already been disclosed to him; or

(ii)

the basis has already been disclosed to him elsewhere; and4

(c)

if the firm or an associate acted as principal in executing the transaction, and the firm owes a duty of best execution to its customer, the amount of any mark-up or mark-down imposed by the firm or its associate.

12.

The amount of any fees, taxes or duties, unless included in remuneration mentioned in 11.

Note: If the transaction was for an intermediate customer, the firm need not identify separately the unit price and the remuneration of the firm and that of any associate in connection with the transaction, if the intermediate customer has requested a confirmation combining both of these items.

Where the firm or its associate has executed the customer order against its own book, the firm need not, when disclosing remuneration under COB 8.1.15, disclose in the confirmation any trading or dealing profit which is not a commission or mark-up or mark-down.2

COB 8.1.16E

Content of a confirmation of transaction - additional content in particular circumstances

This table belongs to COB 8.1.5 E

Content of a confirmation of transaction - additional content in particular circumstances

If the transaction involves:

The confirmation should state:

1.

a conversion of currency;

the rate of exchange obtained;

2.

a firm receiving any payment or reward from another person in connection with the transaction;

unless a prior written statement to this effect has been made to the customer, the amount or basis of any payment or reward or the fact that this will be made available on request;

3.

the firm being remunerated for acting as an agent for the market counterparty to the transaction as well as acting as agent for the customer;

that fact;

4.

a right to receive interest on an investment (for example, in relation to a government or public security);

the number of days or amount of interest which the purchaser is required to pay for (or the vendor is entitled to receive) as part of the total consideration.5

5.

charges shared with another person (except employees);

unless a prior written statement to this effect has been made to the customer, the amount or basis of any shared charges, or the fact that this will be made available on request;

6.

a security which is not a packaged product or a readily realisable security and

how the unit price of the transaction was arrived at or a statement that such information is available upon request

(a)

the firm acted as a principal in executing the transaction with the customer;

(b)

there is no calculable mark-up or mark-down; and

(c)

the firm owes duty of best execution;5

7.

units in an unregulated collective investment scheme of which the firm or one of its associates is the operator;

the amount or percentage of the operator's initial charges included in the price of those units;

8.

the firm's or an associate'sremuneration being passed on by the firm to a third party as a reward for introducing the business;

the identity of the third party and the amounts passed on or the fact that details of such arrangements will be made available on request;

9.

any dividend or capitalisation or other right which has been declared, but which has not been paid, allotted or otherwise become effective in respect of the investment, and under the terms of the transaction the benefit of which will not pass to the purchaser.

that fact.

COB 8.1.17E

Content of a confirmation of a transaction - additional content relating to transactions in units in a regulated collective investment scheme

This table belongs to COB 8.1.5 E

Content of a confirmation of transaction - additional content relating to transactions in units in a regulated collective investment scheme

1.

If the firm is not the operator and the transaction was executed with the customer by the firm as principal, that fact.

2.

The name of the scheme and the type and number of units involved.

3.

The amount of:

(a)

the operator's initial charges (in cash or percentage terms), if any; and1

(b)

any charges (other than the initial charges) made by the firm to the customer in respect of the transaction and, unless such charges to the customer are made on the same basis, the basis on which the amount of the charges was determined.

4.

A statement that the price at which the transaction has been executed is on an historic price or forward price basis, as the case may be.

COB 8.1.18E

Content of a confirmation of a transaction - additional content relating to transactions in derivatives

This table belongs to COB 8.1.5 E

Content of a confirmation of transaction - additional content relating to transactions in derivatives

1.

The maturity, delivery or expiry date of the derivative.

2.

In the case of an option, a reference to the last exercise date, whether it can be exercised before maturity and the strike price.

3.

If the transaction involved, or will involve, the purchase of one currency with another, the rate of exchange involved or a statement that the rate will be supplied when the currency has been purchased, including the maturity or expiry date of any currency hedge, unless the currency hedge is separately reportable under COB 8.1.3.

4.

If the transaction closes out an open futures position, all essential details required in respect of each contract comprised in the open position and each contract by which it was closed out and the profit or loss to the customer arising out of closing out that position (a difference account).

COB 8.1.19E

Content of a confirmation of transaction - additional content on exercise of an option

This table belongs to COB 8.1.5 E

Content of a confirmation of transaction - additional content on exercise of an option (exercise confirmations)

1.

The date of exercise, and either the time of exercise or that the customer will be notified of that time on request.

2.

Whether the exercise creates a sale or purchase in the underlying asset.

3.

The strike price of the option (for a currency option, the rate of exchange will be the same as the strike price) and, if applicable, the total consideration from or to the customer.