(e) details of how bonuses are calculated and distributed, including the following information:

(і) how profits that are allocated for the payment of bonuses are distributed;

(ii) whether increased benefits resulting from bonuses are payable (subject to any adjustments) even if the contract is terminated early by either party to the contract;

(iii) if bonuses increase benefits—whether increases are likely to be made each year or only when the policy amounts become payable to the policyholder;

(iv) the basis on which bonuses are distributed to policyholders;

(v) whether policies share equitably in the allocation of all the profits of the long-term fund, or only certain elements of the profits;

(f) an illustration prepared in accordance with COB ‎5.6.6 (Life policies or Family Takaful Contracts —illustrations), except if the benefits of the Life Policy or Family Takaful Contract do not depend on future investment returns;

(g) information about charges and expenses that, subject to subrule (2), includes:

(і) a description of the nature of the charges and expenses the Retail Client will, or may be expected to, pay; and

(ii) 2 tables (one for the lower projection, and the other for the higher projection, calculated on the basis of a rate of return mentioned in COB ‎5.6.6 (2)), each prepared in accordance with COB ‎5.6.7 (Life policies—effect of charges and expenses table) illustrating the effect of charges and expenses on the policy;

(h) information on premiums or Takaful Contributions for each benefit, including, if appropriate, both main benefits and supplementary benefits;

(і) if the Retail Client has been charged for rider benefits or increased underwriting benefits—the amount of premiums charged for those benefits;

(j) if the policy is a unit-linked policy—a definition of the units to which benefits are linked and the nature of the underlying assets.

(2) If the Authorised Firm is exempt from including an illustration mentioned in rule (1) (f) because the benefits of the Life Policy or Family Takaful Contract do not depend on future investment returns, the Product Disclosure Document prepared by it for the Life Policy or Family Takaful Contract must include:

(a) an indication of guaranteed benefits, surrender benefits, paid-up values and any other benefits (whichever are applicable) under the policy; and

(b) the likely amount, and a general description, of the charges and expenses the Retail Client will, or may be expected to, pay under the policy.

5.6.6. Life policies or Family Takaful Contract —illustrations

(1) For COB ‎5.6.5 (1) (f), the illustration must indicate how the main terms of the Life Policy or Family Takaful Contract, as the case may be, apply to the Retail Client and contain projections of the final surrender value of the policy calculated in accordance with COB ‎5.6.8 (Life policies or Family Takaful Contract —projection calculation rules).

(2) The illustration must contain at least 2 projections, with:

(a) a lower projection calculated on the basis of a rate of return to be set at no more than 5%; and

(b) a higher projection calculated on the basis of a rate of return that the Authorised Firm reasonably expects the Life Policy or Family Takaful Contract to achieve, but that, in any event, must be no more than 9%.

5.6.7. Life policies or Family Takaful Contracts —effect of charges and expenses tables

(1) For COB ‎5.6.5(1) (g), each table illustrating the effect of charges and expenses on the policy must include the contents of the following table (The Effects of Charges and Expenses Table).

The Effects of Charges and Expenses Table

(2) An Authorised Firm may change the Effects of Charges and Expenses Table so far as necessary to reflect the nature and effect of the charges and expenses inherent in the particular product.

(3) In completing the Effects of Charges and Expenses Table, the Authorised Firm must:

(a) include figures for the first 5 years of the Life Policy or the Family Takaful Contract; and

(b) if the policy is a whole-Life Policy or Family Takaful Contract or the illustration covers more than 25 years—include figures for the 10th and every subsequent 10th year of the policy’s term; and

(c) if the policy is neither a whole-Life Policy nor a Family Takaful Contract and the illustration covers 25 years or less—include figures for the 10th and every subsequent 5th year of the policy’s term; and

(d) include:

(і) the final year of the policy; or

(ii) for a whole-Life Policy or a single premium Life Policy without a fixed term—an appropriate end date for the policy; and

(e) if there is discontinuity in the trend of surrender values—include the appropriate intervening years; and

(f) in the ‘Total paid in to date’ column, show cumulative totals of contributions paid to the end of each relevant year; and

(g) in the ‘Effect of charges and expenses to date’ column, show the figure calculated by taking the accumulated value of the fund without taking charges and expenses into account and then subtracting from that figure the figure in the ‘What you might get back’ column for the same year; and

(h) in the ‘What you might get back’ column, show the projection of the surrender value for the policy calculated in accordance with COB ‎5.6.8 (Life policies—projection calculation rules) and accumulated at the rate of return selected by the firm for the lower or higher projection mentioned in COB ‎5.6.6 (2) (Life policies—illustrations), as the case requires; and

(і) if the Retail Client is entitled to exercise, and has chosen or expressed the intention to exercise, the right to make partial surrenders—include a column headed ‘Withdrawals’ showing the cumulative total of the withdrawals.

(4) The Authorised Firm must include a statement at the bottom of the table expressing the effect of charges and expenses on the Life Policy or Family Takaful Contract in terms of a reduction in the rate of return.

Guidance

The reduction in the rate of return (A) may be calculated as follows:

A = B – C

where:

B is the rate of return selected by the firm for the lower or higher projection mentioned in COB ‎5.6.6(2), as the case requires.

C is the annual rate of return worked out by:

(a) carrying out a projection using B; and

(b) then calculating the annual rate of return (rounded to the nearest tenth of 1%) required to achieve the same projection value if charges and expenses were not taken into account.

5.6.8. Life policies or Family Takaful Contract —projection calculation rules

(1) For COB ‎5.6.6 (Life policies—illustrations) and COB ‎5.6.7 (Life policies—effect of charges and expenses table), any projection of the surrender value of a Life Policy or Family Takaful Contract used in an illustration or an Effects of Charges and Expenses Table must be calculated in accordance with a methodology and set of assumptions prepared and approved by the Approved Actuary of the AIFC Insurer preparing the Product Disclosure Document.

(2) In preparing the methodology and assumptions mentioned in subrule (1), the Approved Actuary must have regard to relevant professional standards and any requirements of this division.

(3) A projection must be specific to the Retail Client and be calculated on the basis of the Client’s age and sex, the amount assured, the premium and other factors material to the Life Policy or the Family Takaful Contract.

(4) However, if a projection is calculated for the purposes of a financial promotion or in relation to a single premium Life Policy, it must be calculated on the basis of factors that represent the average member of the group to whom it is directed or by whom it is likely to be received.

(5) In calculating the projection, contributions must be net of any rider benefits and extra premiums charged for increased underwriting benefits.

5.6.9. Life policies or Family Takaful Contracts —provision of policy document

If an Authorised Firm finalises a Life Policy or a Family Takaful Contract with or for a Client, the firm must, immediately after finalising the policy, give the Client, in a durable medium, a policy document containing all the terms of the policy.

5.6.10. Life policies or Family Takaful Contracts —recordkeeping

(1) An Authorised Firm must ensure that a copy of a Product Disclosure Document given by it to a Retail Client in relation to a Life Policy or a Family Takaful Contract is made and kept for at least 6 years, unless the Client does not take out the policy.

(2) An Authorised Firm must ensure that a copy of any other disclosure documentation given by it to a Retail Client in relation to a Life Policy or a Family Takaful Contract is made and kept for at least 6 years, unless the Client does not take out the policy.

(3) An Authorised Firm must ensure that a record of the methodology and set of assumptions prepared and approved by the Approved Actuary for COB ‎5.6.8 (1) for the firm is made and kept for at least 6 years after the day the methodology or set of assumptions is replaced by a new methodology or set of assumptions.

(4) An Authorised Firm must ensure that a copy of each policy document given to a Client for a Life Policy or a Family Takaful Contract under COB ‎5.6.9 is kept for at least 6 years after the day the policy ends.

5.6.11. Takaful Contracts – Specific Disclosure requirements

(1) A Takaful Operator or an Insurance Intermediary or an Insurance Manager making a comparison between a Takaful Contract and conventional Contract of Insurance, in the course of offering a policy to their Client, must highlight the principal differences between these products as part of their marketing communications or promotional materials. These differences may relate to the following aspects, but are not limited to:

(a) presence of contractual right to claims or benefits or whether these are discretionary on the part of the firm;

(b) the basis on which benefits and surpluses are allocated to, and between policyholders or participants, as the case may be; and

(c) whether there is any future liability for policyholders or participants, either individually or collectively, to meet deficits in the policyholders’ or participants' funds.

(2) Takaful Operators must ensure that, the participants in the Takaful funds operated by them are provided with clear information about the performance of the funds. The disclosures to meet this requirement must comply with relevant AAOIFI standards, in particular Standard 13 (Disclosure of Bases for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies) and 12 (General Presentation and Disclosure in the Financial Statements of Islamic Insurance Companies).

(3) Takaful Operators must disclose to the participants in the Takaful Funds operated by them, the amount of Wakala fee and Mudaraba share of profits paid by the Takaful fund to the Takaful Operator, as well as the methodology for determining such amounts. In the case of Takaful Operators adopting Takaful models employing contracts other than Wakala or Mudaraba, the compensation paid by the Takaful Funds to the Takaful Operator and the relevant methodologies must be disclosed.

6. ORDER EXECUTION AND ORDER HANDLING

6.1. Best execution

6.1.1. Application

COB 6 applies to an Authorised Firm that executes orders for or on behalf of a Client.

The Rules in COB 6 do not apply to an Authorised Firm with respect to any transaction which:

(a) it undertakes with a Market Counterparty, except for COB 6.2.9;

(b) it carries out for the purposes of managing a Fund of which it is the Fund Manager; or

(c) is an Execution-Only Transaction.

Where an Authorised Firm executes an Execution-Only Transaction with or for a Client, the Authorised Firm is not relieved from providing best execution in respect of any aspect of that transaction which lies outside the Client’s specific instructions.

6.1.2. Best execution obligation

Subject to COB 6.1.3, when an Authorised Firm executes any transaction with or for a Client in an Investment, it must take all sufficient steps to obtain the best possible result for the Client taking into account the information available, including the following factors:

(a) price;

(b) costs;

(c) speed;

(d) likelihood of execution and settlement;

(e) size;

(f) nature; and

(g) any other consideration relevant to execution.

6.1.3. Best execution with or for Retail Clients

When an Authorised Firm executes a transaction in an Investment for a Retail Client, the best possible result will be determined by reference to the price and other costs, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

6.1.4. Specific instructions

When an Authorised Firm executes a transaction in accordance with specific instructions from the Client, it should be treated as having met its best execution obligation in relation to that part of the order covered by those instructions.

6.2. Client order handling

6.2.1. Application

The Rules in COB 6.2 do not apply to an Authorised Firm with respect to any transaction which:

(a) it undertakes with a Market Counterparty; or

(b) it carries out for the purposes of managing a Fund of which it is the Fund Manager.

6.2.2. General requirement

An Authorised Firm that executes orders on behalf of Clients must ensure that it has in place procedures that provide for the prompt, fair and expeditious execution of orders for a Client, relative to orders for itself or for other Clients.

6.2.3. General obligation in relation to orders for a Client

An Authorised Firm must satisfy the following conditions when executing orders for a Client:

(a) orders executed for Clients must be promptly and accurately recorded and allocated;

(b) comparable orders for Clients must be executed sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the Client require otherwise;

(c) a Retail Client must be informed of any material difficulty relevant to the proper execution of orders promptly when the Authorised Firm becomes aware of the difficulty; and

(d) make and maintain a record of:

(і) the date and time of the allocation;

(ii) the relevant Investments;

(iii) the identity of each Client concerned; and

(iv) the amount allocated to each Client and to the Authorised Firm recorded against the intended allocation as required by (a).

6.2.4. Aggregation of orders

An Authorised Firm may aggregate an order for a Client with an order for other Clients or with an order for its own account only where:

(a) it is unlikely that the aggregation will operate to the disadvantage of any Client whose orders have been aggregated;

(b) the Authorised Firm has disclosed in writing to the Client that his order may be aggregated and that the effect of the aggregation may be to his disadvantage;

(c) the Authorised Firm has made a record of the intended basis of allocation and the identity of each Client before the order is effected; and

(d) the Authorised Firm has in place written standards and policies on aggregation and allocation which are consistently applied and should include the policy that will be adopted when only part of the aggregated order has been filled.

6.2.5. Allocation of Investments

Where an Authorised Firm has aggregated a Client order with an order for other Clients or with an order for its own account, and part or all of the aggregated order has been filled, it must:

(a) promptly allocate the Investments concerned;

(b) allocate the Investments in accordance with the stated intention; and

(c) ensure the allocation is done fairly and uniformly by not giving undue preference to itself or to any of those for whom it dealt.

6.2.6. Churning

An Authorised Firm must not execute a transaction for a Client in its discretion or advise any Client to transact with a frequency or in amounts to the extent that those transactions might be deemed to be excessive. The onus will be on the Authorised Firm to ensure that such Transactions were fair and reasonable at the time they were entered into.

6.2.7. Timely execution

Once an Authorised Firm has agreed or decided to enter into a transaction for a Client, it must do so as soon as reasonably practical. An Authorised Firm may postpone the execution of a transaction if it has taken reasonable steps to ensure that it is in the best interests of the Client.

6.2.8. Averaging of prices

An Authorised Firm may execute a series of transactions on behalf of a Client within the same trading day or within such other period as may be agreed in writing by the Client, to achieve one investment decision or objective, or to meet transactions which it has aggregated. If the Authorised Firm does so, it may determine a uniform price for the transactions executed during the period, calculated as the weighted average of the various prices of the transactions in the series.

6.2.9. Records of orders and transactions

When an Authorised Firm:

(a) receives a Client order or in the exercise of its discretion decides upon a transaction;

(b) executes a transaction; or

(c) passes a Client order to another Person for execution,

it must promptly make a record of the information set out in Schedule 1.

6.3. Voice and electronic communications

6.3.1. General requirement

An Authorised Firm must, subject to COB 6.3.4, take reasonable steps to ensure that it makes and retains:

(a) recordings of voice communications, including telephone conversations, other than communications where both parties are physically present; and

(b) copies of electronic communications,

when such communications are with a Client or with another Person in relation to a Transaction, including the receiving or transmitting of related instructions.

6.3.2. Notification to Clients

The Authorised Firm must notify new and existing Clients that relevant voice communications between the Authorised Firm and its Clients in relation to a Transaction will be recorded. The Authorised Firm is only required to inform its Clients once, prior to the provision of any Investment Service to a new Client or when this obligation applies for the first time in relation to an existing Client.

6.3.3. Privately owned equipment

An Authorised Firm must take all reasonable steps to prevent an Employee or contractor from making, sending, or receiving relevant voice and electronic communications on privately owned equipment which the Authorised Firm is unable to record or copy.

6.3.4. Exemption for non-specific communications

The obligation in COB 6.3.1 does not apply in relation to relevant voice and electronic communications which are not intended to lead to the conclusion of a specific Transaction and are general conversations or communications about market conditions.

6.3.5. Record keeping

The records retained under COB 6.3.1 must be:

(a) kept accessible, such that the Authorised Firm is able to demonstrate that all relevant records are capable of being promptly accessed;

(b) maintained in comprehensible form or capable of being promptly reproduced; and

(c) protected from unauthorised alteration.

6.3.6. Length of retention period

Recordings of relevant voice communications and copies of electronic communication recordings must be retained for a minimum of six months.

6.4. Direct Electronic Access

Where an Authorised Firm provides a Client (including a Market Counterparty) with direct electronic access to an Authorised Market Institution, the Authorised Firm must:

(a) establish and maintain policies, procedures, systems and controls to limit or prevent a Client from placing an order that would result in the position limits or credit limits being exceeded; and

(b) ensure that such policies, procedures, systems and controls remain appropriate and effective on an on-going basis.

7. CONFLICTS OF INTEREST

7.1. The general obligation

In accordance with Principle 8 of the Principles for Authorised Persons in GEN, an Authorised Firm must take all reasonable steps to ensure that conflicts of interest between itself and its Clients, between its Employees and Clients and between one Client and another are identified and then prevented or managed, or disclosed, in such a way that the interests of a Client are not adversely affected.

7.2. Identifying a conflict of interest

In order to identify the conflicts of interest that may arise in the course of its business, an Authorised Firm must consider whether it or a Person linked to the firm:

(a) is likely to make a financial gain, or avoid a financial loss, at the expense of a Client;

(b) has an interest in the outcome of a service or a transaction carried out for the Client, which is different from the Client's interest;

(c) has arranged for one part of its business or a business line to provide a service or carry out a transaction for a Client that has a favourable or beneficial impact on another part or business line of the same Authorised Firm or Person linked to the firm;

(d) has any incentive to favour one Client over another Client;

(e) carries on the same business or activities as the Client; or

(f) receives an inducement from a third party in relation to a service provided to a Client.

7.3. Managing a conflict of interest

Where an Authorised Firm is aware of a conflict or potential conflict of interest, it must take all reasonable steps to prevent that conflict of interest from adversely affecting the Client by using the following arrangements as appropriate:

(a) establishing and maintaining effective organisational arrangements to prevent or manage conflicts, including information barriers to restrict the communication of the relevant information; and

(b) disclosing the conflict of interest to the Client in writing either generally or in relation to a specific transaction, the risks resulting from that conflict, and the steps taken to address the conflict.

If an Authorised Firm is unable to prevent or manage a conflict or potential conflict of interest, it must decline to act for that Client.

Guidance: Information barriers

An information barrier, also known as a «Chinese wall», is an arrangement that requires a Person involved in one part of an Authorised Firm's business to withhold information from Persons involved in another part of the business.

7.4. Inducements

7.4.1. General requirement

An Authorised Firm must have policies and procedures in place to ensure that it, or its Employee or Associate, does not offer, give, solicit or accept any inducement from a third party, such as a fee, commissions or other direct or indirect benefit, where the inducement is reasonably likely to conflict with any duty that the Authorised Firm owes to its Clients.

7.4.2. Introductions

In circumstances where an Authorised Firm introduces a Client to a third party and receives a fee, commission or other benefit in respect of that introduction, such fee, commission or other benefit received in respect of such a referral would not be a prohibited inducement under this Rule, provided that the Authorised Firm has acted in the best interests of the Client.

7.4.3. Requirement to disclose inducements

An Authorised Firm must, before providing a Financial Product or Financial Service to a Client, disclose to that Client any inducement which it, or any Associate or Employee of it, has received or may or will receive as a result of providing the Financial Product or Financial Service.

7.4.4. Disclosure in summary form

An Authorised Firm may provide the information required by COB 7.4.3 in summary form, provided it informs the client that more detailed information will be provided to the client upon request and complies with such a request.

7.4.5. Record keeping

An Authorised Firm shall maintain record of inducements disclosed under COB 7.4.3 for a period of six years after such inducement was disclosed.

7.5. Personal Transactions

7.5.1. Conditions for Personal Transactions

An Authorised Firm must establish and maintain adequate policies and procedures so as to ensure that:

(a) an Employee does not undertake a Personal Transaction unless:

(і) the Authorised Firm has, in a written notice, drawn to the attention of the Employee the conditions upon which the Employee may undertake Personal Transactions and that the contents of such a notice are made a term of his contract of employment or services;

(ii) the Authorised Firm has given its written permission to that Employee for that transaction or to transactions generally in Investments of that kind; and

(iii) the transaction will not conflict with the Authorised Firm’s duties to its Clients;

(b) it receives prompt notification or is otherwise aware of each Employee’s Personal Transactions; and

(c) if an Employee’s Personal Transactions are conducted with the Authorised Firm, each Employee’s account must be clearly identified and distinguishable from other Clients’ accounts.

7.5.2. Content of written notice

The written notice in COB 7.5.1(a)(і) must make it explicit that, if an Employee is prohibited from undertaking a Personal Transaction, he must not, except in the proper course of his employment:

(a) procure another Person to enter into such a Transaction; or

(b) communicate any information or opinion to another Person if he knows, or ought to know, that the Person will as a result, enter into such a Transaction or procure some other Person to do so.

Where an Authorised Firm has taken reasonable steps to ensure that an Employee will not be involved to any material extent in, or have access to information about, the Authorised Firm’s Regulated Activities, then the Authorised Firm need not comply with the requirements in COB 7.5.1 in respect of that Employee.

8. CLIENT ASSETS

8.1. Application

8.1.1. Purpose of COB 8

The purpose of this section is providing protection for the Client, in the event that an Authorised Firm becomes insolvent or is otherwise unable to fulfil its obligations, in relation to any Money or Investments that are held by the Authorised Firm for that Client.

8.1.2. Application of COB 8

This section applies to an Authorised Firm which:

(a) receives Money from, or holds or controls Money for or on behalf of, a Client in the course of, or in connection with, the carrying on of Investment Business in or from the AIFC;

(b) holds or controls Instruments belonging to a Client in the course of, or in connection with, the carrying on of Investment Business in or from the AIFC; or

(c) Provides Custody in or from the AIFC.

8.1.3. Meaning of «hold» and «control»

Client Assets are held or controlled by an Authorised Firm if they are:

(a) directly held by the Authorised Firm;

(b) held in an account in the name of the Authorised Firm;

(c) held by a Person, or in an account in the name of a Person, controlled by the Authorised Firm; or

(d) held in the Client’s own name, but the Authorised Firm has a mandate from the Client to manage those assets on a discretionary basis.

Guidance: Examples of Client Assets controlled by an Authorised Firm

For the purposes of COB 8.1.3, the AFSA would consider:

(і) a Person to be controlled by an Authorised Firm if that Person is inclined to act in accordance with the instructions of the Authorised Firm;

(ii) an account to be controlled by an Authorised Firm if that account is operated in accordance with the instructions of the Authorised Firm; and

(iii) if an Authorised Firm has a discretionary portfolio mandate from a Client, even though the assets are to be held in the name of the Client (for example, under a power of attorney arrangement), the Authorised Firm controls those assets as it can execute transactions relating to those assets, within the parameters set out in the mandate, in which situation the rules on mandates in COB 8.4 shall apply.

8.1.4. General requirements

An Authorised Firm which receives Money from, or holds Money for or on behalf of, a Client in the course of, or in connection with, the carrying on of Investment Business in or from the AIFC must comply with COB 8.2.

An Authorised Firm which holds Investments belonging to a Client in the course of, or in connection with, the carrying on of Investment Business in or from the AIFC or Provides Custody in or from the AIFC must comply with COB 8.3.

A Client whose Investments or Money is required to be held in compliance with either COB 8.2 or COB 8.3 is a «Segregated Client».

An Authorised Firm which controls Money or Investments belonging to a Client under a Mandate but does not receive or hold that Money or those Investments itself must comply with COB 8.4.

8.1.5. Arranging Custody

An Authorised Firm which Arranges Custody must comply with the requirements in COB 8.3.7 (on assessing the suitability of Third Party Account Providers), COB 8.3.13 (on disclosure), COB 8.3.14(2) (on client reporting) and COB 8.3.15 (on record keeping).

8.2. Client Money: Investment Business

The rules in this COB 8.2 are the Client Money Rules.

8.2.1. Meaning of «Client Money»

All Money received or held on behalf of a Client in the course of, or in connection with, the carrying on of Investment Business in or from the AIFC is Client Money, except Money which is:

(a) (where the Authorised Firm is a Bank) held as a deposit by the Authorised Firm;

(b) due and payable by the Client to the Authorised Firm for the account of the Authorised Firm. Examples of situations where Money is due and payable to an Authorised Firm includes Money which is payable to the Authorised Firm in respect of its charges or a Client purchase or in settlement of a margin payment;

(c) belongs to another Person within the Authorised Firm’s Group (unless that Person notified the Authorised Firm in writing that the beneficial owner of the Money is a Person who is not part of the Authorised Firm’s Group and has requested that the Client Money Rules should apply to such Money);

(d) in an account in the Client’s name over which the Authorised Firm has a Mandate or similar authority and which is subject to COB 8.4;

(e) received in the form of a cheque, or other payable order, made payable to a third party other than a Person or account controlled by the Authorised Firm, provided the cheque or other payable order is intended to be forwarded to the third party within one business day of receipt; or

(f) Fund Property of a Fund.

Where the Authorised Firm is a Bank and holds the Client's Money as a Deposit in accordance with (a) above, it must prior to providing the Investment Business in respect of that Money notify the Client in writing that:

(a) the Money held by the Authorised Firm is held as a Deposit and will not be subject to the Client Money Rules; and

(b) in the event that the Authorised Firm fails, the Client Money Distribution Rules will not apply.

8.2.2. Exclusion of the Client Money Rules

Where the Client is a Market Counterparty or a Professional Client, the Authorised Firm and the Client may agree to exclude the application of the Client Money Rules. Any such agreement with the Client must be in writing and must be entered into before the Authorised Firm provides Investment Business in respect of that Money.

Where the Authorised Firm proposes to exclude the application of the Client Money Rules under this COB 8.2.2, it must prior to obtaining the Client's agreement disclose to the Client in writing that the Money held by the Authorised Firm will not be subject to the protections conferred by the Client Money Rules.

8.2.3. General requirements

An Authorised Firm which receives or holds Client Money for a Segregated Client must:

(a) comply with the Client Money Rules in relation to that Client Money; and

(b) have systems and controls in place to be able to evidence its compliance with the Client Money Rules.

8.2.4. Client Money Accounts

A Client Money Account in relation to Client Money is an account which:

(a) is held with a Third Party Account Provider;

(b) is established for the purpose of holding Client Money;

(c) is maintained in the name of the Authorised Firm or a Nominee Company controlled by the Authorised Firm; and

(d) includes the words 'Client Account' in its title.

8.2.5. Requirement to pay Client Money into Client Money Account

Where an Authorised Firm receives or holds Client Money it must ensure (except where otherwise provided in COB 8.2.8) that the Client Money is paid into one or more Client Money Accounts within one day of receipt.

Where an Authorised Firm deposits any Money into a Client Money Account, such Money is Client Money until the Money is withdrawn from the Client Money Account in accordance with the Client Money Rules.

8.2.6. Client Money held for Segregated Clients in a Client Money Account

An Authorised Firm may hold Client Money belonging to a Segregated Client:

(a) in a Client Money Account solely for that Client; or

(b) in a Client Money Account containing the pooled Client Money of more than one Segregated Client.

8.2.7. Client Money Account to contain Client Money only

An Authorised Firm must:

(a) not deposit its own Money into a Client Money Account, other than where:

(і) a minimum sum is required to open the Client Money Account, or to keep it open;

(ii) the Money is received by way of mixed remittance (provided the Authorised Firm transfers out that part of the payment which is not Client Money within one day of the day on which the Authorised Firm would normally expect the remittance to be cleared);

(iii) interest credited to the account exceeds the amount payable to Segregated Clients (provided that the Money is removed within twenty-five days); or

(iv) it is to meet a shortfall in Client Money;

(b) maintain systems and controls for identifying Money which must not be in a Client Money Account and for transferring it without delay;

(c) not use Client Money belonging to one Client to satisfy an obligation of another Client; and

(d) ensure that no off-setting or debit balances occur on Client Money Accounts.

8.2.8. Exceptions to Holding Client Money in Client Money Accounts

The requirement for an Authorised Firm to pay Client Money into a Client Money Account does not apply with respect to Client Money:

(a) received in the form of cheque, or other payable order, until the Authorised Firm, or a Person or account controlled by the Authorised Firm, is in receipt of the proceeds of that cheque;

(b) temporarily held by an Authorised Firm before forwarding to a Person nominated by the Client; or

(c) in connection with a Delivery Versus Payment Transaction where:

(і) in respect of a purchase by the Client, the Client Money will be due to the Authorised Firm within one day following the Authorised Firm's fulfilment of its delivery obligation to the Client; or