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COBS 11.8 Recording telephone conversations and electronic communications

Application - Who?

COBS 11.8.1RRP

1This section applies to a firm:

  1. (1)

    which carries out any of the following activities:

    1. (a)

      receiving client orders;

    2. (b)

      executing client orders;

    3. (c)

      arranging for client orders to be executed;

    4. (d)

      carrying out transactions on behalf of the firm, or another person in the firm's group, and which are part of the firm's trading activities or the trading activities of another person in the firm's group;

    5. (e)

      executing orders that result from decisions by the firm to deal on behalf of its client;

    6. (f)

      placing orders with other entities for execution that result from decisions by the firm to deal on behalf of its client;

  2. (2)

    to the extent that the activities referred to in (1) relate to:

    1. (a)

      financial instruments4 admitted to trading on a prescribed market; or4

    2. (b)

      financial instruments4 in respect of which a request for admission to trading on such a market has been made; or4

    3. (c)

      instruments4 which are related investments in relation to such financial instruments4.

COBS 11.8.2RRP

This section does not apply to the carrying on of the following activities:

  1. (1)

    activities carried on between operators, or between operators and depositories, of the same fund3 (when acting in that capacity);

    3
  2. (2)

    corporate finance business;

  3. (3)

    corporate treasury functions.

COBS 11.8.3RRP

This section does not apply to the following firms or persons:

  1. (1)

    a service company;

  2. (2)

    a non-directive friendly society;

  3. (3)

    a non-directive insurer;

  4. (4)

    a UCITS qualifier.

Application - Where?

COBS 11.8.4RRP

This section applies only with respect to a firm's activities carried on from an establishment maintained by the firm in the United Kingdom.

Recording telephone conversations, etc

COBS 11.8.5RRP

A firm must take reasonable steps to record relevant telephone conversations, and keep a copy of relevant electronic communications, made with, sent from or received on equipment:

  1. (1)

    provided by the firm to an employee or contractor; or

  2. (2)

    the use of which by an employee or contractor has been sanctioned or permitted by the firm;

to enable that employee or contractor to carry out any of the activities referred to in COBS 11.8.1 R.

COBS 11.8.5ARRP

2A firm must take reasonable steps to prevent an employee or contractor from making, sending or receiving relevant telephone conversations and electronic communications on privately-owned equipment which the firm is unable to record or copy.

COBS 11.8.6RRP

The obligation in COBS 11.8.5 R and COBS 11.8.5A R2does not apply to:

  1. (1)

    [deleted]2

    2
  2. (2)

    a discretionary investment manager, in respect of telephone conversations or electronic communications made with, sent to or received from a firm which the discretionary investment manager reasonably believes is subject to the recording obligation in COBS 11.8.5 R in respect of that conversation or communication; or

  3. (3)

    a discretionary investment manager, in respect of telephone conversations or electronic communications made with, sent to or received from a person who is not subject to the recording obligation in COBS 11.8.5 R, provided that such telephone conversations or electronic communications are made with, sent to or received from such persons on an infrequent basis, and represent a small proportion of the total telephone conversations and electronic communications made, sent or received by the discretionary investment manager to which COBS 11.8.5 R apply.

COBS 11.8.7GRP

Electronic communications includes communications made by way of facsimile, email and instant messaging devices.

COBS 11.8.8RRP

For the purposes of COBS 11.8.5 R and COBS 11.8.5A R2 a relevant conversation or communication is any one of the following:

  1. (1)

    a conversation or communication between an employee or contractor of the firm with a client, or when acting on behalf of a client, with another person, which concludes an agreement by the firm to carry out the activities referred to in COBS 11.8.1 R as principal or as agent;

  2. (2)

    a conversation or communication between an employee or contractor of the firm with a professional client or an eligible counterparty, or when acting on behalf of a professional client or an eligible counterparty, with another person, which is carried on with a view to the conclusion of an agreement referred to in (1) above, and whether or not it is part of the same conversation or communication as in (1).

COBS 11.8.9GRP
  1. (1)

    COBS 11.8.8R (2) includes conversations and communications relating to specific transactions which are intended to lead to the conclusion of an agreement by the firm to deal with or on behalf of the client as principal or agent, even if those conversations or communications do not lead to the conclusion of such an agreement. It does not include conversations or communications which are not intended to lead to the conclusion of such an agreement, such as general conversations or communications about market conditions.

  2. (2)

    The FCA would not usually expect the obligation in COBS 11.8.5 R to include conversations or communications made by investment analysts, retail financial advisers, and persons carrying on back office functions, as such persons will not normally make relevant conversations or communications when acting in those capacities.

Retention of records

COBS 11.8.10RRP

A firm must take reasonable steps to retain all records made by it under COBS 11.8.5 R:

  1. (1)

    for a period of at least 6 months from the date the record was created;

  2. (2)

    in a medium that allows the storage of the information in a way accessible for future reference by the FCA, and so that the following conditions are met:

    1. (a)

      the FCA must be able to access the records readily;

    2. (b)

      it must be possible for any corrections or other amendments, and the contents of the records prior to such corrections and amendments, to be easily ascertained;

    3. (c)

      it must not be possible for the records to be otherwise manipulated or altered.