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Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

Status: In this content, we have included all amendments made by EU exit-related instruments up to end September 2020. There will be more amendments to be made later this year, further to the September QCP.

COBS 2.3C Research and execution services

Application

COBS 2.3C.1R

1This section applies to an investment firm providing execution services to:

  1. (1)

    a firm carrying on MiFID, equivalent third country or optional exemption business; or

  2. (2)

    an investment firm authorised under MiFID that is not within (1); or

  3. (3)

    a UCITS management company; or

  4. (4)

    a full-scope UK AIFM; or

  5. (5)

    a small authorised UK AIFM; or

  6. (6)

    a residual CIS operator; or

  7. (7)

    an incoming EEA AIFM branch2; or

  8. (8)

    2an OPS firm.

Requirement on a firm that executes orders and provides research to price and supply services separately

COBS 2.3C.2R

A firm providing execution services must:

  1. (1)

    identify separate charges for its execution services that only reflect the cost of executing the transaction;

  2. (2)

    subject each other benefit or service (other than an acceptable minor non-monetary benefit in COBS 2.3A.19R) which it provides to persons listed in COBS 2.3C.1R(1) to (6) to a separately identifiable charge; and

  3. (3)

    ensure that the supply of, and charges for, other benefits or services under (2) is not influenced or conditioned by levels of payment for execution services.

[Note: article 13(9) of the MiFID Delegated Directive]

COBS 2.3C.3R

A firm providing both execution and research services must price and supply them separately.

COBS 2.3C.4G

Compliance with COBS 2.3C.2R is intended to enable a firm subject to COBS 2.3A.15R and COBS 2.3A.16R to comply with its obligation not to accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of the service to clients.

[Note: recital 26 to the MiFID Delegated Directive]