COBS 6.5 COBS 6.5 Best Execution
COBS 6.5.1 Application(a) The Rules in this section do not apply to an Authorised Person with respect to any Transaction which:(i) it undertakes with a Market Counterparty;(ii) it carries out for the purposes of managing a Fund of which it is the Fund Manager; or(iii) is an Execution-Only Transaction.(b) Where an Authorised Person undertakes an Execution-Only Transaction with or for a Client, the Authorised Person is not relieved from providing best execution in respect of any aspect of that Transaction which lies outside the Client's specific instructions.
COBS 6.5.2 Providing Best Execution(a) When an Authorised Person agrees, or decides in the exercise of its discretion, to Execute any Transaction with or for a Client in an Investment, it must provide best execution.(b) An Authorised Person provides best execution if it takes reasonable care to determine the best execution available for that Investment under the prevailing market conditions and deals at a price and other conditions which are no less advantageous to that Client.
COBS 6.5.3 Requirements
In determining whether an Authorised Person has taken reasonable care to provide the best overall price for a Client in accordance with Rule 6.5.2 the Regulator will have regard to whether an Authorised Person has:(a) discounted any fees and charges previously disclosed to the Client;(b) not taken a Mark-up or Mark-down from the price at which it Executed the Transaction, unless this is disclosed to the Client; and(c) had regard to price competition or the availability of a range of price sources for the execution of its Clients' Transactions. In the case where the Authorised Person has access to prices of different Recognised Investment Exchanges or MTFs or OTFs or its own available proprietary prices, it must Execute the Transaction at the best overall price available having considered other relevant factors.
If another Person is responsible for the execution of a Transaction, an Authorised Person may rely on that Person to provide best execution where that Person has undertaken to provide best execution in accordance with this section.
When determining best execution, an Authorised Person must consider the direct costs and indirect costs and the relevant order type and size, clearing and settlement arrangements and costs, margin costs, third-party fees and timing of a Client's order and its settlement that could affect decisions on when, where and how to trade.