Inclusions and Exclusions Flashcards
Which firms are subject to COBS - General Application Rule?
- Firms and their ARs in the UK
- Overseas firms in the UK
Which firms are subject to the COBS - EEA Territorial Scope Rule?
- UK firms conducting MiFID business in the UK for UK clients.
- EEA branches of UK firms doing MiFID business outside that state’s territory
- EEA firms with a UK branch
What are the exceptions to the EEA Territorial Scope Rule?
- Investment Research
- Personal Account Dealing
- Appointed Representatives - Firms is principal and responsible.
Rules apply on home state basis only. UK firms are subject to COBS but EEA firms are not.
Which activities are captured by COBS rules?
- Designated investment business
- Life insurance
- Financial Promotions - Accepting Deposits
Under COBS which clients are captured as professional clients?
- Credit institution (bank)
- Investment Firm
- Commodities Dealing
- Local
- Pension Fund
- Institutional Investor
- CIS
- Insurance Company
- Large MiFID undertaking
- Large non-MiFID undertaking
- Governments and public bodies
Under COBS which clients are captured as ECP clients?
All firms that professional clients
CIS under UCITS Directive
Which activities can be classified under an ECP client?
- Executing client orders
- Receiving and transmitting client orders
- Ancillary services
- Arranging
- Dealing on own account
Which firms are required by COBS to produce a client agreement?
- Designated investment business - retail clients
- MiFID business
- Ancillary or third country business - retail and professional
Which firm(s) are exempt from COBS requirements to produce a client agreement?
Life insurance company
Which types of firms need to provide information about the nature and risks of an investment?
- MiFID or equivalent third country business - retail and professional
- Non-MiFID business - retail clients - derivatives, warrants or stock lending activity.
Which firms need to provide information about the firm?
- Retail, professional and ECP clients
To which types of clients must a firm provide information about managing investments?
- Retail clients
To which types of clients must a firm provide information about the safe custody of assets and money?
- Retail, professional and ECP clients
To which types of clients must a firm provide information about the costs?
- Retail, professional and ECP clients
Which types of firms need to provide information about the compensation schemes available?
- MiFID firms
To which type of sales does the Retail Distribution Review brings rules about advisor charging?
- Advised sales - retail products
Which types of sales are exempt from RDR rules on advisor charging?
- Non advised business - execution only and discretionary management of investments
Which type of business does COBS make provisions for relying on other firms for information?
- MiFID business receiving instruction to provide investment or ancillary services through another MiFID firm.
What does the FCA state should be the approach for non-MiFID firms when relying on information from others in relation to investments?
- Reasonable for firms to rely on information provided by an unconnected authorised person or firm unless it is aware of anything that would question the accuracy of the information.
To which type of firm do the rules on Financial Promotions apply to?
- MiFID businesses communicating financial promotions.
Which types of firms are exempt from the rules on financial promotions?
- Firms with a Financial Promotion Order for HM Treasury.
- Overseas firms communicating with non-UK clients.
- EEA firms communicating with UK clients.
- ECPs
- Promotions subject to the Takeover Code
- One-off promotions (not cold calls)
- Personal quotes or illustration forms
- Unregulated CIS (Promotion of CIS (Exemptions Order) 2001)
- Credit, a home purchase plan or a home reversion plan.
- Promotion for a non-investment insurance contract
Which firms are subject to the prospectus rules?
- Firms which offer admission to the trading of transferable securities where a prospectus is required under Section 85 FSMA.
- Where an election to produce a prospectus has been made under Section 87 FMSA.
Which types of promotions are subject to the rules on direct offer promotions?
- Direct offer promotions in newspapers, trade magazines, TV, direct mail - retail clients
Which types of firms can rely on promotions approved by another party?
- Non-MiFID business - not in breach of rules if communicating a promotion produced by a third party.
Which types of activities are subject to the Suitability Rules?
- Personal recommendations
- Managing investments of a retail client
- Manage the assets of a personal or stakeholder or occupational pension scheme.
Which types of firms need to produce suitability report?
- MiFID - retail and professional clients
For which types of activities/instruments must a suitability report be produced?
Personal recommendation to trade in the following:
- Equities
- Derivatives
- Structured Products
- Unregulated CIS
- Regulated CIS (pre-MiFID product)
- Investment (if shares in trust savings scheme)
- Stocks and Shares ISA - (pre-MiFID product)
- Personal Pension or Stakeholder Pension
- Income withdrawals or contributions to an annuity.
- Entering into pension transfers or opt-outs
- Life insurance policy (non-MiFID)
Which firms/investments are exempt from producing a suitability report?
- Regulated CIS if acting on a discretionary management basis (retail client)
- Habitually outside the UK
- A friendly society in connection with a small life policy with premiums less than £1 a week of £50 for a year.
- Personal recommendation to increase premium contributions to an existing life insurance contract.
- To add single contributions to an existing packaged product.
Which types of activities would the appropriateness rules apply to?
- Non advised sales
- MiFID firms providing investment advice
- Arranging deals or dealing in warrants and derivatives for retail clients where the firm is aware that the client’s application is in response to a direct offer promotion.
- Assessing the appropriateness on behalf of other MiFID firms.
Which types of activities are exempt from the appropriateness rules?
- Service is execution only
- Receipt or transmission of orders
- Shares on a regulated market
- Money market instruments, bonds and other forms of securitised debt
- UCITS funds
- Non-complex investments
Which types of firms need to produce a Key Investor Information Document (KIID)?
- Authorised Fund Manager
- UCITS
When would a firm not have to produce a KIID?
- Another firm has agreed to produce a KIID.
- Information in a KIID is featured in another document
- Reinsurance and pure protection insurance contracts.
Which types of products require a Key Features Document (KFD)?
- Child Trust Funds
- Cash Deposit ISAs
- Packaged Products
Which types of firms are subject to COBS rules on PRIIPS?
- Retail clients (MiFID) and customers referred to in the Insurance Mediation Directive.
- Retail investment companies
- Life companies
- Discretionary investment management companies
- Insurance based investments
- Fund managers
- Stockbrokers - retail clients
- Financial advisers
- Firms operating retail distribution platforms
Who are subject to SYSC rules on conflict of interest?
- Producers of investment research
When would a firm not be subject to SYSC rules on conflict of interest?
- Persons not in the same group as the firm
- The firm does not substantially change the investment research.
- The firm does not hold itself out as produced the investment research.
- The firm verifies that the producer of the investment research has a conflict of interest policy.
Which types of firms and clients are subject to the COBS rules on inducements?
- MiFID and non-MiFID firms
- Retail and Professional clients
Who would need to set up a Research Payments Account?
Producers of research
What would not count as research?
- Post trade analytics
- Data on historic prices that have not be analysed
- Seminar fees
- Order and execution services
- Administration of an RPA
To who do the rules on best execution apply to?
- Authorised Fund Managers (AFMs) (COBS)
- Residual CIS (COBS)
- MiFID investment services (MiFID)
- UCITS management companies (MiFID)
Which types of clients/firms are subject to COBS 6 - Safe custody rules?
- Firms safeguarding client assets for retail, professional and ECP clients.
- Firms holding financial instruments for MiFID business
- Firms safeguarding and administering investments for non-MiFID business.
Which types of clients/firms are subject to COBS 7 - Client money rules
- Retail, professional and ECP clients
- Holding client money - MiFID business
- Firms opting to client money rules under MiFID despite being non-MiFID.
Which firms are exempt from COBS rules on safe custody of assets and client money rules?
- ICVs
- Incoming EEA firms
- Credit institutions (e.g. bank) under the Banking Consolidation Directive (BCD)
- Coins held for their metal value
- Money held in connection with a DvP transaction
- Money payable to the firm
- Business carried out by the firm on behalf of the client in order to achieve best executions
- Client transfers of money and assets to the firm
