COBS 12—investment research requirements
COBS 12—investment research requirements

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • COBS 12—investment research requirements
  • Background to investment research rules
  • To whom do the FCA's investment research rules apply?
  • To what do the investment research rules apply?
  • Meaning of investment research and non-independent research
  • Conflicts of interest—investment research
  • Exemption—investment research
  • Objectivity and independence of analysts
  • Publication of investment research
  • Remuneration of financial analysts
  • more

Background to investment research rules

This Practice Note explains the Financial Conduct Authority's (FCA) rules on investment research, which are contained in Chapter 12 of the Conduct of Business sourcebook (COBS 12). The COBS 12 requirements concern conflicts of interest and set out specific requirements relating to the production and dissemination of investment research and non-independent research. Prior to 3 January 2018, COBS 12 implemented Articles 24 and 25 of Commission Directive 2006/73/EC (MiFID Implementing Directive) which itself implemented the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID). MiFID has been replaced by the recast Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II Directive) and the Markets in Financial Instruments Regulation (Regulation (EU) 600/2014) (MiFIR) (together the MiFID II framework). Both the MiFID II Directive and MiFIR entered into force on 2 July 2014. As amended, the majority of the MiFID II framework has applied since 3 January 2018, and EU Member States had until 3 July 2017 to transpose the provisions of MiFID II into national law. Consequently, the FCA amended COBS 12 to reflect the requirements of Articles 36 and 37 of Commission Delegated Regulation (EU) 2017/565 (MiFID II Org. Regulation) (made under Articles 16(3) and 24(3) of the MiFID II Directive, which replaced Articles 24 and 25 of the MiFID Implementing Directive.

In implementing MiFID II provisions on the production and dissemination of investment research, the FCA elected to copy out the MiFID II provisions into a revised COBS 12.2, rather than retaining the previous structure of COBS 12.2 and 12.3, since MiFID II does not split investment research and non-independent research in the way the FCA