Whole Section

  • Practice Note 4.9.3 Conflicts of Interest

    • 1. Introduction

      • 1.1

        Rule 4.9.3 provides that a Trading Member must have processes in place to minimise and manage conflicts of interest, including but not limited to separating its front and back office functions.

        Added on 3 June 20193 June 2019.

      • 1.2

        This Practice Note provides guidance on how front office and back office functions of Trading Members should be separated.

        Added on 3 June 20193 June 2019.

    • 2. Separation of Key Functions

      • 2.1

        The purpose of separating a Trading Member's various key functions is to minimise and manage conflicts of interests among these functions.

        Added on 3 June 20193 June 2019.

      • 2.2

        Examples of proper separation include:

        (a) access into the dealing or trading room to be restricted to authorised personnel only;
        (b) setting and authorising credit or trading limits on customers by senior management staff who are independent of sales and dealing functions, and are not related to the customer in question;
        (c) setting and authorising credit or trading limits on Trading Representatives by senior management staff who are independent of sales and dealing functions; and
        (d) having adequate separation of management responsibilities e.g. the heads of sales, dealing, or marketing functions should not have responsibilities over all middle and back office functions of Trading Members.

        Added on 3 June 20193 June 2019.

      • 2.3

        The basis for determining and amending trading limits should be properly documented. Adequate audit trail reports should be maintained to show all changes to trading limits, the date and time of the modifications and the authorised person who approved the changes. In addition, sufficient checks and procedures should be in place to ensure that all limits and parameters set and modified by the credit control administrator are accurate and have been approved.

        Added on 3 June 20193 June 2019.