Related provisions for COBS 2.3.13
1 - 3 of 3 items.
(1) Subject to (3), an3investment manager must not accept any good or service3in addition to the execution of its customer orders if it:33(a) executes its customer orders through a broker or another person;(b) passes on the broker's or other person'scharges to its customers; and(c) is offered that good or service3 in return for the charges referred to in (b).3(2) [deleted]3(3) 3The prohibition under (1) does not apply where:(a) the investment manager has reasonable grounds to
(1) Under COBS 11.6.3R (3)(c)(i), for a good or service to be directly related to the execution of trades on behalf of the investment manager'scustomers it must be:33(a) linked to the arranging and conclusion of a specific investment transaction (or series of related transactions); and (b) provided between the point at which the investment manager makes an investment or trading decision and the point at which the investment transaction (or series of related transactions) is concluded.
(1) Under COBS 11.6.3R (3)(c)(ii), for a good or service to amount to the provision of substantive research the relevant research must:33(a) be3 capable of adding value to the investment or trading decisions by providing new insights that inform the investment manager when making such decisions about its customers' portfolios;3(b) whatever form its output takes, represent3 original thought, in the critical and careful consideration and assessment of new and existing facts, and
An example of a good or service 3relating to the execution of trades that the FCA does not regard as meeting the requirements of the rule on use of dealing commission (COBS 11.6.3 R) is post-trade analytics. These would not meet the evidential criteria for a good or service to be directly related to the execution of trades under COBS 11.6.4E (1).33
Examples of goods or services that relate to the provision of research that the FCA does not regard as meeting the requirements of the rule on use of dealing commission (COBS 11.6.3 R) include price feeds or historical price data that have not been analysed or manipulated in order to present the investment manager with meaningful conclusions. These would not meet the evidential criteria for a good or service to amount to the provision of substantive research under COBS 11.6.5E
Examples of goods or services that relate to the execution of trades or the provision of research that the FCA does not regard as meeting the requirements of either evidential provisions COBS 11.6.4E (1) or COBS 11.6.5E (1)3 include:3(1) services relating to the valuation or performance measurement of portfolios;(2) computer hardware; (3) connectivity services such as electronic networks and dedicated telephone lines; (4) seminar fees;(4A) 3corporate access services;3(5) subscriptions
An investment manager that enters into arrangements under this section must make adequate prior disclosure to customers concerning the receipt of goods or services that directly relate to the execution of trades or amount to the provision of substantive research3. This prior disclosure should form part of the summary form disclosure under the rule on inducements (COBS 2.3.1 R).3
The rule on inducements is applicable to a firm and those acting on behalf of a firm in relation to the provision of an investment service or ancillary service to a client. Small gifts and minor hospitality received by an individual in their personal capacity below a level specified in the firm's conflict's of interest policy, will not be relevant for the purpose of the rule on inducements.
A firm must
have in place arrangements designed to ensure that the following conditions
are satisfied:(1) if a financial
analyst or other relevant person has
knowledge of the likely timing or content of investment
research which is not publicly available or available to clients and cannot readily be inferred from
information that is so available, that financial
analyst or other relevant person must
not undertake personal transactions
or trade on behalf of any other person,
including
Small gifts or minor hospitality
below a level specified in the firm'sconflicts of interest policy and mentioned
in the description of that policy that is made available to clients in
accordance with COBS 6.1.4 R (8) should not be considered as inducements for the
purposes of COBS 12.2.5 R (3). [Note: recital 32 of the MiFID
implementing Directive]