COB regime: Non-MiFID deferred matters and telephone recording

June 2007

The FSA has published a Consultation Paper (CP) setting out its proposals for reforming the remaining elements of the Conduct of Business (COB) Sourcebook that are outside the scope of the Markets in Financial Instruments Directive (MiFID) and which were not included in CP 06/19 or CP 06/20. The CP (entitled “Conduct of Business regime: Non-MiFID deferred matters (including proposals for Telephone Recording), CP 07/09”), published on 3rd May 2007, also re-consults on some issues of client categorisation and financial promotions, where the FSA is revising some of the mainly non-MiFID proposals consulted on in CPs 06/19 and 06/20 respectively.

There are also proposals to introduce a telephone recording requirement that could apply to both MiFID and non-MiFID firms and small changes to the Client Assets sourcebook. The proposed rules on telephone recording will require firms to record telephone and electronic conversations across the equity, bond and financial and commodity derivatives markets where a firm receives client orders, where they involve the firm committing to deal as agent or principal, or where they relate to institutional sales.

The CP is linked to the overhaul of the Conduct of Business (COB) rules proposed in a sister consultation (CP 06/19 – see http://www.graingerconsult.com/topics/index.shtml.) It has been issued to cover non MiFID issues because the scope of MiFID is narrower than the scope of designated investment business for which the FSA has responsibility under the Financial Services and Markets Act 2000. As a result, there are a number of areas of business covered by the COB sourcebook which are outside the scope of MiFID.

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