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COBS 18 Annex 2 Record keeping: client orders and transactions

1

Application

1.1

R

This section applies to:

(1)

a firm in respect of non-MiFID business related to commodity derivative instruments;

(2)

a small authorised UK AIFM and a residual CIS operator;

(3)

an OPS firm when it carries on business which is not MiFID or equivalent third country business; and

(4)

an authorised professional firm with respect to activities other than non-mainstream regulated activities.

1.2

G

In accordance with COBS 18.5.3R(1), references to client in relation to a small authorised UK AIFM or a residual CIS operator are to be construed as references to any fund in respect of which the firm is acting or intends to act.

2

Record keeping of client orders and decisions to deal

2.1

R

(1)

A firm must immediately make a record of the details in (2), to the extent they are applicable to the order or decision to deal in question, in relation to:

(a)

every order received from a client;

(b)

every decision to deal taken in providing the service of portfolio management; and

(c)

for a small authorised UK AIFM and residual CIS operator, every decision to deal taken in managing financial instruments held for or within a fund.

(2)

The details referred to in (1) are:

(a)

the name or other designation of the client;

(b)

the name or other designation of any relevant person acting on behalf of the client;

(c)

the details specified in points (3), (4), and in points (5) to (8), of the table in 4.1;

(d)

the nature of the order if other than buy or sell;

(e)

the type of the order;

(f)

any other details, conditions and particular instructions from the client that specify how the order must be carried out; and

(g)

the date and exact time of the receipt of the order, or of the decision to deal by the firm.

3

Record-keeping of transactions

3.1

R

Immediately after executing a client order, or, in the case of firms that transmit orders to another person for execution, immediately after receiving confirmation that an order has been executed, firms must record the following details of the transaction in question:

(1)

the name or other designation of the client;

(2)

the details specified in points (1) to (10) of the table in 4.1R;

(3)

the total price, being the product of the unit price and the quantity;

(4)

the nature of the transaction if other than buy or sell; and

(5)

the natural person who executed the transaction or who is responsible for the execution.

3.2

R

If a firm transmits an order to another person for execution, the firm must immediately record the following details after making the transmission:

(1)

the name or other designation of the client whose order has been transmitted;

(2)

the name or other designation of the person to whom the order was transmitted;

(3)

the terms of the order transmitted; and

(4)

the date and exact time of transmission.

4

Details to be recorded

4.1

R

(1)

Trading day

The trading day on which the transaction was executed.

(2)

Trading time

The time at which the transaction was executed, reported in the local time of the competent authority to which the transaction will be reported, and the basis in which the transaction is reported expressed as Co-ordinated Universal Time (UTC) +/- hours.

(3)

Buy/sell indicator

Identifies whether the transaction was a buy or sell from the perspective of the reporting firm or, in the case of a report to a client, of the client.

(4)

Instrument identification

This must consist of:

a unique code to be decided by the competent authority (if any) to which the report is made identifying the financial instrument which is the subject of the transaction; and

if the financial instrument in question does not have a unique identification code, the name of the instrument or, in the case of a derivative contract, the characteristics of the contract.

(5)

Unit price

The price per security or derivative contract excluding commission and (where relevant) accrued interest. In the case of a debt instrument, the price may be expressed either in terms of currency or as a percentage.

(6)

Price notation

The currency in which the price is expressed. If, in the case of a bond or other form of securitised debt the price is expressed as a percentage, that percentage must be included.

(7)

Quantity

The number of units of the financial instruments, the nominal value of bonds, or the number of derivative contracts included in the transaction.

(8)

Quantity notation

An indication as to whether the quantity is the number of units of financial instruments, the nominal value of bonds or the number of derivative contracts.

(9)

Counterparty

Identification of the counterparty to the transaction.

(a)

Where the counterparty is an investment firm, that identification must consist of a unique code for that firm, to be determined by the competent authority (if any) to which the report is made; where the counterparty is a regulated market, an MTF or an entity acting as its central counterparty, the unique harmonised identification code for that market, MTF or entity acting as central counterparty, as specified in the list published by the competent authority of the home Member State of that entity.

(b)

Where the counterparty is not an investment firm, a regulated market, an MTF or an entity acting as central counterparty, it should be identified as ‘customer/client’ of the investment firm which executed the transaction.

(10)

Venue identification

Identification of the venue where the transaction was executed.

That identification must consist of: where the venue is a trading venue, its unique harmonised identification code; otherwise, the code ‘OTC’.