• COBS 3.6 COBS 3.6 Soft Dollar Agreements

    • COBS 3.6.1

      An Authorised Person may accept goods and services under a Soft Dollar Agreement only if the goods and services are reasonably expected to:

      (a) assist in the provision of Investment Business services to the Authorised Person's Clients by means of:
      (i) specific advice on dealing in, or on the value of, any Investment;
      (ii) research or analysis about Investments generally; or
      (iii) use of computer or other information facilities to the extent that they are associated with specialist computer software or research services, or dedicated telephone lines;
      (b) provide custody services relating to Investments belonging to, or managed for, Clients;
      (c) provide services relating to portfolio valuation or performance measurement services; or
      (d) provide market price services.

    • COBS 3.6.2

      An Authorised Person must undertake a thorough assessment of the nature of the goods and services and the terms upon which they are to be provided under a Soft Dollar Agreement to ensure that the receipt of such goods and services provide commensurate value notifying in particular if any costs of such goods and services are to be passed through to Clients. Where the Client bears the cost of the goods and services, the disclosure obligation relating to costs and charges under Rule 3.3.2 will apply to such costs.

    • COBS 3.6.3

      An Authorised Person must not Deal in Investments as agent for a Client, either directly or indirectly, through any broker under a Soft Dollar Agreement, unless:

      (a) the agreement is a written agreement for the supply of goods or services described in Rule 3.6.1, which do not take the form of, or include, cash or any other direct financial benefit;
      (b) Transaction execution by the broker is consistent with any best execution obligations owed to the Client;
      (c) the Authorised Person has taken reasonable steps to ensure that the services provided by the broker are competitive, with no comparative price disadvantage, and take into account the interests of the Client;
      (d) for Transactions in which the broker acts as principal, the Authorised Person has taken reasonable steps to ensure that Commission paid under the agreement will be sufficient to cover the value of the goods or services to be received and the costs of execution; and
      (e) the Authorised Person makes adequate disclosure in accordance with Rules 3.6.4 and 3.6.5.

    • COBS 3.6.4

      Before an Authorised Person enters into a Transaction for or on behalf of a Retail Client, Professional Client or Market Counterparty, either directly or indirectly, with or through the agency of another Person, in relation to which there is a Soft Dollar Agreement which the Authorised Person has, or knows that another member of its Group has, with that other Person, it must disclose to its Client:

      (a) the existence of a Soft Dollar Agreement; and
      (b) the Authorised Person's or its Group's policy relating to Soft Dollar Agreements.

    • COBS 3.6.5

      If an Authorised Person or member of its Group has a Soft Dollar Agreement under which either the Authorised Person or member of its Group deals for a Client, the Authorised Person must provide that Client with the following information:

      (a) the percentage paid under Soft Dollar Agreements of the total Commission paid by or at the direction of:
      (i) the Authorised Person; and
      (ii) any other member of the Authorised Person's Group which is a party to those agreements;
      (b) the value, on a cost price basis, of the goods and services received by the Authorised Person under Soft Dollar Agreements, expressed as a percentage of the total Commission paid by or at the direction of:
      (i) the Authorised Person; or
      (ii) other members of the Authorised Person's Group;
      (c) a summary of the nature of the goods and services received by the Authorised Person under the Soft Dollar Agreements; and
      (d) the total Commission paid from the portfolio of that Client.

    • COBS 3.6.6

      The information in Rule 3.6.5 must be provided to that Client at least once a year, covering the period since the Authorised Person last reported to that Client.