Dealing in investments
Dealing in investments

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

  • Dealing in investments
  • Dealing as principal or as agent
  • Dealing in investments as principal
  • Holding out as dealing in investments as principal
  • Security- and contractually-based investments
  • Buying and selling
  • Subscribing for and underwriting
  • Exclusions
  • Dealing in investments as agent
  • Securities and relevant investments
  • More...

Dealing as principal or as agent

Authorised persons can obtain permission to deal in investments as principal, or as agent for another. Dealing in investments as principal or agent are specified activities.

Dealing in investments as principal

Dealing in investments as principal is a regulated activity under article 14 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 (RAO).

The activity consists of:

  1. buying

  2. selling

  3. subscribing for, or

  4. underwriting

securities or contractually-based investments as principal (ie for and on behalf of oneself).

The operation of a multilateral trading facility or an organised trading facility is not covered by RAO, SI 2001/544, art 14.

Holding out as dealing in investments as principal

In order to be covered by RAO, SI 2001/544, art 14, the principal must hold himself out as willing, as principal, to:

  1. buy, sell, or subscribe for investments at prices determined by him generally and continuously rather than in respect of each particular transaction

  2. engage in the business of buying investments with a view to selling them

  3. engage in the business of underwriting investments; or

  4. regularly solicit members of the public with the purpose of inducing them, as principals or agents, to enter into a transaction.

‘Members of the public’ is further defined in RAO, SI 2001/544, art 15(2).

The holding out provisions are drafted as an exclusion in RAO, SI 2001/544—the absence of these provisions means that RAO, SI

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