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

COB TP2 Client classification transitional provisions at N2

COB TP 2.1 1COB TR 3: Client Classification Provisions

(1)

(2)

(3)

(4)

(5)

(6)

Material to which the transitional provision applies: All rules in the Handbook

TRANSITIONAL PROVISION

Transitional provision: dates in force

Handbook provision: coming into force

1.0

Timeless (saving) provisions for the Handbook (including COB)

1.1

Rules in the Handbookunless the contrary intention appears

R

Client Classification

(1) This paragraph applies only to a pre-N2firm and in relation to any person who became a client of the firmbefore commencement (in this rule referred to as an "existing client").

(2) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, as a market counterparty in accordance with the rules of its previous regulator, it will not contravene a rulein the Handbook by treating the client as a market counterparty, unless (3) applies.

(3) If the client in (2) has been classified as a market counterparty only in relation to a particular transaction or type of transaction, the firm must from commencement classify that client in accordance with COB 4.1.

(4) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, or a client withinCOB TR 1 1.6, as a non-private customer in accordance with the rules of its previous regulator, it will not contravene a rule in the Handbook by treating that client as an intermediate customer.

(5) The firm may, notwithstanding (4), classify the client in (4) as a market counterparty provided the firm complies with COB 4.1.12 R (2) (Large intermediate customer classified as a market counterparty).

(6) If a firm beforecommencement classified an existing client, other than another firm or overseas financial services institution, as a private customer in accordance with the rules of its previous regulator, it will not contravene a rule in the Handbook by treating that client as a private customer.

(7) Thefirm may, notwithstanding (6), classify the client in (6) as an intermediate customer provided the firm complies with COB 4.1.9 R (Expert private customer classified as an intermediate customer).

(8) If a firm before commencement classified an existing client, other than another firm or overseas financial services institution, as an ordinary business investor in accordance with the rules of its previous regulator , it will not contravene a rule in the Handbook by treating that client as an intermediate customer.

indefinitely

varies depending on the rule concerned

1.2

Rules in the Handbook unless the contrary intention appears

G

Firms should note that COB TP 2.1 does not require them to take positive steps to re-classify clients falling within the scope of the rule at N2 for the purposes of compliance with COB 4.1.4 R (Requirement to classify). COB TP 2.1 has the effect of automatically re-classifying these clients except as otherwise stated.

indefinitely

varies depending on the rule concerned

1.3

Rules in the Handbook unless the contrary indication appears

G

There are no transitional rule regarding classification by a firm ("F") of a client who is a firm or overseas financial services institution ("C1"). In such cases the effect of COB 4.1.7 R is that C1 will be a market counterparty of F, unless COB 4.1.7 R (2) apply. If C1 wishes to be classified as an intermediate customer for inter-professional business from commencement, the requirement for agreement under COB 4.1.7 R (2)(c) could, for example, be satisfied if:(a) C1 notifies F in writing that it wishes to be classified as an intermediate customer for that purpose and that F's agreement will be implied if F continues to do business with C1 after commencement; and(b) F has not notified C1 in writing that it does not agree to that classification.

indefinitely

varies depending on the rule concerned

1.4

Rules in the Handbook unless the contrary intention appears.

G

For the assistance of firms , the FSA has prepared a client classification mapping table, which explains the link between pre-N2 client categories and the client classification in COB . This is to be found in Annex E of the Policy Statement on Transitional Arrangements for the Conduct of Business Sourcebook issued in July 2001.

1.5

Rules in the Handbook unless the contrary intention appears.

F

If a firm treats a client as a private customer , or as an intermediate customer , or as a market counterparty in accordance with COB TP 1.1 or COB TP 1.1, it will not contravene a rule in the Handbook by doing so.