Contents
1. Introduction
2. Purpose
3. Scope
4. General Identification of Conflicts of Interest
5. Procedures and Controls for Preventing and Managing Conflicts of Interests
6. Specific Identification of Conflict of Interest and Measures for their Management
a) Remuneration of staff
b) Commissions received by its Liquidity Provider
7. Client’s Consent
8. Record Keeping
9. Reporting
10. Disclosure of Information
11. Amendment of the Policy and Additional Information
.
1. Introduction
This summarised Conflicts of Interest Policy (“the Policy”) is provided to you (our Client
or prospective Client) in accordance with the “Law” pursuant to which the Company is
required to take all reasonable steps to detect and avoid conflicts of interest.
The Company is committed to act honestly, fairly and professionally and in the best
interests of its Clients and to comply, in particular, with the principles set out in the above
Law when providing investment services and other ancillary services related to such
investment services.
2. Purpose
The purpose of this policy is to set out the Company’s approach in identifying and
managing conflicts of interest which may arise during the course of its normal business
activities. In addition, this document identifies circumstances which may give rise to a
conflict of interest.
The Company has taken all sufficient steps to identify and prevent or manage conflicts of
Interest which may arise between the Company, including its directors, managers,
employees and any person directly or indirectly linked to the Company and its Clients or
between one Client and another that arise in the course of providing any investment and
ancillary services, or combinations thereof, including the Company’s own remuneration
scheme and other incentive structures. Therefore, this Policy sets out the necessary
procedures, controls and practices in place to ensure that any Conflicts of Interest are
identified and prevented or adequately managed. If the steps taken by the Company to
prevent or manage or mitigate conflicts of interest from negatively affect the interest of its
Clients are not sufficient, the Company shall clearly disclose to the Client through durable
medium (see section 10), the general nature and sources of conflicts of interest as well as
the risks to the Client and all the remedial actions taken to mitigate those conflict of interest.
3. Scope
The Policy applies to the following persons (hereinafter the “Relevant Persons”):
(a) Directors
(b) Managers who directly or indirectly, may affect the interest of the Clients or
potential Clients
(c) Employees who directly or indirectly, may affect the interest of the Clients or
potential Clients
(d) Persons or services outsourced who directly or indirectly may affect the interest of
the Clients or potential Clients.
4. General Identification of Conflicts of Interest
When the Company deals with or on behalf of the Client, the Company, an associate or
some other person connected with the Company, may have an interest, relationship or
arrangement in relation to the transaction concerned or that conflicts with the Client’s
interest.
The Company hereby identifies and discloses a range of situations and circumstances which
may give rise to a conflict of interest and potentially but not necessarily be detrimental to
the interests of one or more Clients.
For the purposes of identifying the types of conflicts of interest that may arise in the course
and/or as result of providing investment services or ancillary services or investment
activities or otherwise, whose existence may damage the interest of a Client, the Company
takes into account, whether the Company or a relevant person, is in any of the following
situations:
(a) The Company or a Relevant Person is likely to make a financial gain, or avoid a
financial loss, at the expense of the Client.
(b) The Company or a Relevant Person has an interest in the outcome of a service provided
to the Client or of a transaction carried out on behalf of the Client, which is district
from the Client’s interest in that outcome.
(c) The Company or a Relevant Person has a financial or other incentive to favour the
interest of another Client or group of Clients over the interests of the Client.
(d) The Company or a Relevant Person carries on the same business as the Client.
(e) The Company or a Relevant Person receives or will receive from a person other than
the Client an inducement in relation to a service provided to the Client, in the form of
monies, goods or services, other than the standard commission or fee for that service.
While it is not feasible to define precisely or create an exhaustive list of all relevant conflicts
of interest that may arise, as per the current nature, scale and complexity of the Company’s
business, the following list includes circumstances which constitute or may give rise to a
conflict of interest entailing a material risk of damage to the interests of one or more Clients,
as a result of providing investment services:
(a) The Company may be advising and providing other services to associates or other
Clients of the Company who may have interests in Financial Instruments or
Underlying Assets, which are in conflict or in competition with the Client’s
interests.
(b) The Company may have an interest in maximizing trading volumes in order to
increase its commission revenue, which is inconsistent with the Client’s personal
objective of minimizing transaction costs.
(c) The Company may receive commissions and/or other inducements from its
Liquidity provider for the transmission of Client Orders.
(d) Has an interest in the outcome of a service provided to the Client or of a transaction
carried out on behalf of the Client, which is distinct from the Client’s interest in that
outcome?
(e) Has a financial or other incentive to favour the interest of another Client or group
of Clients over the interests of the Client.
(f) The Company may have relationships with many third-party product
providers/financial institutions who may remunerate the Company via
inducements/commissions/fees and the Company may favour one over another in
the recommendation process if higher inducements/commissions/fees are provided.
(g) The Company or a Relevant Person may receive or pay inducements to or from
third parties due to the referral of new Clients or Clients’ trading in the form of
monies, goods or services, other than the standard commission or fee for that service.
(h) The Company provides a service to a Client and the Company has a material interest in the transaction.
(i) A transaction is affected in financial instruments in respect of which the Company
may benefit from a commission, fee, or non-monetary benefit payable otherwise
than by the Client; Any market information, training and discussions as regards
possible market trends should not be construed as trading/investment advice. It is
the Client’s responsibility to perform its own market research before entering into
any position.
(j) The Company may have an interest in maximizing trading volumes in order to
increase its commission revenue, which is inconsistent with the Client’s personal
objective of minimizing transaction costs.
(k) Produce or disseminate investment research may affect the best interest of the
Client.
It should be noted that the above circumstances which constitute or may give rise to a
conflict of interest, are not necessarily detrimental to the interests of Clients.
5. Procedures and Controls for Preventing and Managing Conflicts of Interests
In general, the procedures and controls that the Company follows to manage the identified
conflicts of interest include, but are not limited to, the following:
(a) The Company undertakes ongoing monitoring of business activities to ensure that
internal controls are appropriate.
(b) Effective procedures to prevent or control the exchange of information between
Relevant Persons engaged in activities involving a risk of a conflict of interest where
the exchange of that information may harm the interests of one or more Clients.
(c) The separate supervision of Relevant Persons whose principal functions involve
carrying out activities on behalf of, or providing services to, Clients whose interest
may conflict, or who otherwise represent different interests that may conflict, include
those of the Company.
(d) Measures to prevent or limit any person from exercising inappropriate influence over
the way in which a Relevant Person carries out investment or ancillary services or
activities.
(e) Measures to prevent or control the simultaneous or sequential involvement of a
Relevant Person in separate investment services where such involvement may impair
the proper management of conflicts of interest.
(f) A policy designed to limit the conflict of interest arising from the giving and receiving
of inducements.
(g) Chinese walls restricting the flow of confidential and inside information within the
Company, and physical separation of departments.
(h) Procedures governing access to electronic data.
(i) Segregation of duties that may give rise to conflicts of interest if carried on by the same
individual.
(j) Personal account dealing requirements applicable to Relevant Person in relation to
their own investments.
(k) Establishment of in-house Compliance Department for performing ongoing
monitoring to ensure that appropriate systems and controls for preventing and
managing conflict of interests are maintained and are appropriately followed, and
which reports to the Company’s Board of Directors.
(l) Prohibition on officers and employees of the Company having external business
interests conflicting with the interests of the Company without the prior approval of
the Company’s Board of Directors.
(m) A “need-to-know” policy governing the dissemination of confidential or inside
information within the Company.
(n) Appointment of Internal Auditor to ensure that appropriate systems and controls are
maintained and report to the Company’s Board of Directors.
(o) The removal of any direct link between the remuneration of Relevant Persons
principally engaged in one activity and the remuneration of, or revenues generated by,
different Relevant Persons principally engaged in another activity, where a conflict of
interest may arise in relation to those activities.
(p) Establishment of Personal Transactions Policy.
(q) Staff members are required to immediately notify the Company in case they perceive
that a conflict of interest may be created due to the undertaking of a specific task/work.
(r) Advises/recommendations on transactions are prohibited.
(s) Staff members are forbidden to accept gifts, promotions, discounts or any other
monetary or benefit in kind from Clients or third parties, which may create conflicts of
interest.
(t) Gifts of low value to Relevant Persons may be accepted after approval from the
Company.
(u) In circumstances not covered by the points above and given the nature of a conflict of
interest situation, the Compliance Officer and/or the Senior Management shall decide
whether to allow a transaction by notifying the Client, or not allow the transaction all
together.
(v) Employees are prohibited from accepting gifts or other inducements from any person
that cannot be regarded as justifiable in all circumstances.
(w) Procedures designed to limit the conflict of interest arising from the giving and
receiving of inducements unless designed to enhance the quality of service provided to
Clients.
(x) Effective procedures to ensure that the persons that produce marketing
communications and/or marketing material comply will all provisions of this Policy in
relation to conflict of interests that may arise from the performance of their duties.
(y) Before the publication of marketing communications and/or marketing material, they
are being reviewed for the purposes of verifying the accuracy of factual statements or
for ensuring that they are in line with the Company’s marketing guidelines and
requirements.
(z) Execution arrangements for obtaining the best possible result, “best execution” when
executing Client orders.
(aa) The Company shall maintain and regularly update the Conflicts of Interest register. It
shall log all the conflicts of interest that may arise as a result of the provision of
investment and ancillary services by or on behalf of the Company and it may entail a
risk of damage to the interests of one or more Clients.
(bb)The Senior Management of the Company shall receive on a frequent basis, and at least
annually, written reports on the situations referred to in the Conflicts of Interest
register.
6. Specific Identification of Conflict of Interest and Measures for their Management
The Company is constantly conducting an in-depth analysis of its business and
organisational arrangements including best execution arrangements, inducement practices,
remuneration practices and research/marketing communication procedures, to ensure that
all likely conflict of interest situations are identified regardless of materiality. The
Company has identified the following circumstances which give rise to a conflict of interest
entailing a risk of damage to the interests of one or more Clients, as a result of providing
investment services:
a) Remuneration of staff:
The Company in accordance with its governing legislation does not remunerate its
employees based on any factors that create conflicts of interest or are not in favor of the
best interest of its Clients. The Company’s employees are remunerated (fixed and variable)
based on Key Performance indicators within their departments, which are approved by the
Compliance Function and Board of Directors. In order for the Company to manage the
potential conflicts arising out of this practice, it has put in place the below procedures and
arrangements regarding the variable remuneration:
(a) The variable Remuneration is not provided until a specific period of time has passed.
Under this measure, the Company aims to lessen the risk of a short-term speculative
mindset especially in sales staff. The variable Remuneration practice is structured to
align the long-term interests of the staff and the direct and continuous best interest of
the Clients.
(b) The Company awards variable Remuneration only when the relevant departments of
the Company or/and the third-party service providers have conducted their duties
according to the regulatory requirements (act clear, fair and not misleading).
(c) The Company monitors via a variety of methods the Departments and the third party
providers that receive variable Remuneration (especially sales staff) in order to ensure
whether they are acting on the best interest of their Clients. Company records all calls
between the sales and Clients whereas Compliance performs sample checks of the
recorded calls and makes a relevant monthly report to the Board of Directors of the
Company.
(d) The Company proceeds in an on-going education of the key functions of the Company
in order to update their knowledge and be consistent with the regulatory requirements
(act clear, fair and not misleading).
b) Commissions received by its Liquidity Provider:
In some cases where the Company sends orders for execution to its Liquidity Providers, the
Company’s Liquidity Provider pays the Company a rebate commission for the order flow
sent for execution. In order for the Company to manage the potential conflicts arising out
of this practice, it has put in place the below procedures and arrangements regarding the
commissions received by its Liquidity Provider:
(a) The Company has examined this and has recorded how the commissions received from
its Liquidity Provider enhance the quality of the services provided to Clients and the
steps taken in order not to impair the Company’s duty to act honestly, fairly and
professionally in accordance with the best interests of its Clients.
(b) The Company declares that this benefit does not induce it to favour the particular
Liquidity Provider over other Liquidity Providers and it is confident that the Client
would be better off under this arrangement compared to the use/employment of other
arrangements (including other Liquidity Providers).
Measures in relation to the Company’s Structure/ Outsourced Service Providers/
Related parties:
(i) The Company has in place non-disclosure and confidentiality agreements with all
related parties, outsourced service providers or members of the group in relation to
Client’s personal information;
(ii) The Company controls the information communicated between the Company’s
entities, related parties and outsourced service providers to ensure no harm to the
Client’s interests;
(iii)The Company maintains a register of all the related party/outsourced provider
payments made and assesses them in terms of Conflicts that may negatively affect
Client’s interests. Where relevant these conflicts are disclosed in this Policy along
with the mitigating factors applied to ensure the removal of any incentives for
malpractice;
(iv)The Compliance Function has in place monitoring procedures for the services
provided by related parties and outsourced service providers.
7. Client’s Consent
By entering into a Client Agreement with the Company for the provision of Investment
Services, the Client is consenting to an application of this Policy on him. Further, the Client
consents to and authorizes the Company to deal with the Client in any manner which the
Company considers appropriate, notwithstanding any conflict of interest or the existence
of any material interest in a Transaction, without prior reference to the Client. In the event
that the Company is unable to deal with a conflict of interest situation it shall revert to the
Client.
8. Record Keeping
The Company shall maintain and regularly update the Conflict of Interest register. It shall
log all the conflicts of interest that may arise as a result of the provision of investment and
ancillary services by or on behalf of the Company and it may entail a risk of damage to the
interests of one or more clients.
9. Reporting
The Senior Management of the Company shall receive on a frequent basis, and at least
annually, written reports on the situations referred to in paragraph 8 above.
10. Disclosure of Information
The Company must adequately consider how to manage all conflicts of interest before
resorting to disclosure. This will be a last resort after all appropriate steps have been taken.
If during the course of a business relationship with a Client or group of Clients, the
organizational or administrative arrangements/measures in place are not sufficient to avoid
or manage a conflict of interest relating to that Client or group of Clients, the Company will
disclose the conflict of interest before undertaking further business with the Client or group
of Clients.
The disclosure will:
> be in a durable medium;
> clearly state that the organisational and administrative arrangements established by
the Company to prevent or manage the conflicts are not sufficient to ensure, with
reasonable confidence, that the risks of damage to the interests of the Client will be
prevented;
> include a specific description of the conflicts of interest that arise in the provision
of investment services and ancillary services;
> explain the risks to the Client that arise as a result of the conflicts of interest and the
steps undertaken to mitigate these risks;
> include sufficient detail, taking into account the nature of the Client, to enable the
Client to make an informed decision with respect to the services in the context of
which the conflict of interest arises.
If a Client decides not to go ahead with the service due to the conflict disclosed, the
Company will have no choice but to decline the provision of services if the conflict cannot
be effectively managed.
11. Amendment of the Policy and Additional Information
The Company reserves the right to review and/or amend its Policy and arrangements
whenever it deems this appropriate without notice to the Client. Should you require any
further information and/or have any questions about conflicts of interest please direct your
request and/or questions to our support team.
Should you have any questions or enquiries, please don’t hesitate to contact Centrio Global Limited (support@centrioglobal.com)
