Section 1

Question 1

Who do the conduct of business rules apply to? (COBS)

Answer 1

The Conduct of Business Rules (COBS) apply directly to firms conducting designated investment business or conducting insurance business from an establishment maintained by them (or their appointed representatives) in the
UK
• The COBS therefore apply indirectly to appointed representatives

Question 2

The Impact of Location on COBS

Answer 2

The general application is modified depending on the firm’s location and
activities. For example:
• The rules in COBS that derive from MiFID apply to UK MiFID firms carrying on MiFID business from a UK establishment.
• Due to Brexit, the COBS handbook no longer applies to MiFID business of a UK MiFID firm carried on from an establishment in another EEA state.
• The rules in COBS that derive from MiFID apply to a non-UK MiFID investment firm (i.e., a third country firm) operating a branch in the UK carrying out MiFID business within the UK.
• EEA firms are now considered third country firms in the UK

Question 3

Website conditions enabling a firm to communicate via website

Answer 3

• A firm is permitted to communicate via a website if the following conditions are met:
  • There must be evidence that it is an appropriate method of communication
  • The client has specifically consented to this method
  • The client is notified of the website address electronically
  • The information is kept up to date
  • The information must be continuously accessible for as long as the client requires it

Question 4

Recording voice or electronic communications requirements

Answer 4

Good quality recording should be made and kept for five years when relating to:
• Receiving client orders
• Executing client orders
• Arranging for a client order to be executed
- …in qualifying investments admitted to trading on a prescribed market (e.g. securities)
- Includes communications via fax, email, instant messaging, and mobile phones
- Applies to communications with any client or eligible counterparty

Question 5

Define durable medium

Answer 5

A medium that allows the unchanged reproduction and storage of the
information, for example:
• Paper
• Floppy disc, CD Rom, DVD
• Hard drive of recipient’s computer