Under MIFID regulations, who is responsible for COBS?

The correct answer to the question about who is responsible for Conduct of Business Rules (COBS) under the MiFID regulations is the host state. This is because MiFID (Markets in Financial Instruments Directive) sets out regulations aimed at harmonizing the financial services rules across the European Union. Under these regulations, the host state primarily oversees the conduct of business when a firm operates in a country different from where it is based (the home state).

When a firm provides services to clients in another member state, the local regulations of the host state apply to ensure that the firm's practices are aligned with local customer protection laws, conduct obligations, and market integrity standards. Therefore, it is essential for firms to adhere to the COBS established by the host state while conducting business there.

Other choices may imply that responsibilities do not fall solely on the host state, or they may suggest that external regulatory bodies or the home state have primary responsibility, which is not accurate in the context of MiFID as it specifically assigns this regulatory oversight to the host state to protect clients in that jurisdiction.