Conflicts of Interest Policy & Inventory
Click here for Recommendation - Q2 2010
What are conflicts of interest?
Legally, a conflict of interest is where a firm puts itself in a position where its own interests conflict with the duty owed to its clients. However, the FSA uses the term to cover all conflicts inherent in and arising from performance of fiduciary duties. Our policy therefore covers:
- Conflicts of interest – where our interests conflict with our clients’
- Conflicts of duty – where our duties to one client conflict with our duty to another
- Duty of confidentiality – which we owe to our clients
FSA Requirements
FSA Principle 8 - A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another customer. The SYSC Rules also require us to have adequate systems and controls to manage risks. The new MiFID Rules require us to formally document this. It is not sufficient that we rely solely on disclosure of conflicts in customer agreements etc.
Conflicts of Interest Policy
In accordance with our regulatory requirements it is our policy to identify all potential material conflicts inherent in our business and have adequate systems and controls to avoid or mitigate their impact on customers, including disclosure to customers where appropriate.
Conflicts Inventory
Inherent Conflict Risks
Management Arrangements
Dealing with customers
1
Promotional material
That financial promotions including non-independent investment research promotions, are unfair, unclear and/or misleading.
All such material is approved by individuals assessed as competent and formally apportioned responsibility and is independently signed off by a qualified person other than the preparer.
2
Research
That research materials are disseminated in a way that provides certain clients an advantage over others.
We aim to issue research to all clients within an hour of the relevant market opening or, to all relevant clients simultaneously if research is produced intra day.
3
Third party marketers
That inappropriately licensed or disreputable firms with undisclosed remuneration arrangements are involved in attracting new clients.
Astaire Securities has no third party marketers.
4
Preferential Arrangements
That arrangements are established providing advantages for certain investors that disadvantage others.
Astaire Securities has not entered into any arrangements with particular clients that could disadvantage any other clients and ensures all research issued is distributed to clients fairly.
5
Interests in Issuers
That recommendations are made to clients where we have a material or other commercial interests and the objectivity of the recommendation is compromised.
Astaire Securities does not make research recommendations on the securities of issuers where it has had material or other commercial interests in the previous 12 months. Materials issued to promote the shares of issuers with whom we have a relationship are clearly marked as promotional material.
Executions of transactions
1
Suitability
That suitability requirements are not adhered to and that excessive transactions are undertaken.
Astaire Securities establishes its clients’ understanding of risk, their ability to withstand losses and their investment objectives prior to commencement of business and on an ongoing basis. Astaire Securities internal procedures outline how these factors should be taken into account and are independently monitored.
2
Confidentiality
That commercial or private information is not sufficiently protected.
The standards relating to the imperative of client and commercial confidentiality are clearly laid out in our internal procedures.
3
Appropriateness
That the appropriateness of relevant transactions is not established and our interests as a firm are put before those of clients.
During the client classification process Astaire Securities establishes clients’ understanding of risk and endeavours to highlight where clients’ instructions appear uncorrelated to this understanding.
4
Transaction Order Handling
That customer orders are not handled fairly in relation to other customers or the firm.
Transactions are either handled in accordance with customers specific instructions or in accordance with procedures requiring fair treatment for all customers and are independently monitored.
5
Best Execution
That transaction quality or counterpart relationships are negligently managed.
Astaire Securities has established a Best Execution Policy which is communicated to all staff and clients. Monitoring arrangements have been established to assess our adherence to this policy.
6
Affiliates
That business is routed through affiliates in inordinate amounts or on unfair terms.
Astaire Securities does not execute transactions through affiliates.
7
Bundling
That services are provided to clients in exchange for transaction commission that constitute an inducement i.e. they do not comprise either best execution or research.
Commissions are only charged for achieving best execution and for research. Astaire Securities reports to all its clients the split between these services.
Other services provided to clients by Astaire Securities are charged discretely.
8
Market Abuse
That we undertake activities that constitute market abuse, including market timing, that compromise the integrity of our investment process or product.
Astaire Securities has in place practices and policies to ensure awareness amongst all staff of its, and their, obligations and actively trains its staff to reinforce and administer its Market Abuse prevention regime.
9
Trade Errors
That the costs of client trading errors are inappropriately picked up.
Astaire Securities’s trade error resolution policy is to make good any errors arising from its own errors. Astaire Securities does not pick up the costs of errors made by clients.
10
Principal Trading
That the interests of the firm are put before those of clients e.g. front running.
Astaire Securities makes clear where it may have an interest in certain securities and its internal procedures are designed to ensure customers interest are given the highest priority.
11
PA Dealing
That the interests of staff are put before those of clients e.g. front running.
The standards expected of staff in relation to their PA deals are clearly laid out and communicated via internal procedures. All deals must be independently approved prior to execution and retrospectively reviewed.
Infrastructural Arrangements
1
Firm remuneration
That the firms remuneration arrangements are undisclosed.
Astaire Securities’s client agreements set out the basis of our remuneration in full.
2
Staff remuneration
That staff are remunerated to act in a manner that conflicts with clients objectives.
The interests of our staff are designed to correlate with the interests and financial wellbeing of our clients.
3
Recruitment and development
That inappropriate staff are hired or that staff are not adequately developed.
Astaire Securities aims to hire experienced professionals and has in place a rigorous referencing and recruitment process. This is complemented with a formal appraisal and personal development programme.
4
Key Man Risk
That reasonable arrangements to minimise the likelihood of losing key staff are not established.
Key individuals are identified on an ongoing basis and succession plans and development arrangements are adopted as appropriate.
5
Insufficient Resources
That insufficient financial or human resources are in place to ensure delivery of contractual obligations and that sufficient segregation of duties is maintained to manage risk.
Astaire Securities carries excess capital in accordance with its regulatory requirements. During its annual budgeting processes it has full regard to the need to maintain adequate resources to fulfil its contractual obligations and the maintenance of segregation of duties in key areas.
6
Gifts and entertainment (Inducements)
That the integrity of either staff or suppliers is compromised by excessive largess.
The standards expected and the internal approval and disclosure requirements with regard to inducements are clearly set out in our internal procedures.
7
Business Continuity
That inadequate arrangements are established to ensure continuance of the business in the event of a disaster.
Astaire Securities regularly tests the adequacy of key components of its plans.
