CFD Corporate (“The Company”) is required to lay down its general conflicts of interest policy to its clients and specify the measures undertaken in identifying, overseeing and handling any conflicts of interest which may occur while engaging in business activities. The scope of such conflicts involves conflicts which may arise between The Company’s employees, directors or clients.
The purpose of this document is to set out The Company’s policy concerning the procedures carried out in the event of a conflict of interest and defining the circumstances which engender a conflict of interest. We adhere to our policy and the law by employing rigorous safety measures for the prevention and elimination of such conflicts.
Definition and Identification
The Company considers a conflict of interest as any event where either the interests of The Company or an individual client may clash with those of another client in regard to aspects such as financial gains, advancement opportunities or any other interests which involve a personal or corporate benefit. The list below includes the scenarios which may raise a conflict of interest involving material damage to the client’s interests:
The Company or a Related Individual may gain financially or evade a financial loss, at another client’s expense.
The Company or a Related Individual is in the position of receiving inducements in exchange to a service granted to the client in the form of money, goods or services, from an individual other than the client.
The Company or a Related Individual’s interest regarding to the outcome of a service granted to the client or order execution preformed on the client’s behalf, differs from the client’s interest in the said outcome.
The Related Individual is engaged in the same business activities as the client.
“Related Individual” may refer to any of the following persons:
A board of directors’ member, partner, shareholder, manager, manager of any tied agent or tied agent of The Company.
The Company’s or the tied agent’s employees, or any other natural person whose services are given to The Company’s control or a tied agent, who is involved in the provision of investment services by The Company.
A natural person who directly provides outsourcing services to The Company or its tied agent for the purpose of the provision of the investment services by The Company.
A conflict of interest may occur between the following parties:
– Between The Company and a client
– Between two of The Company’s clients
– Between The Company and its employees
– Between The Company’s clients and The Company’s managers or employees
– Between the departments of The Company
Different events may give rise to a conflict of interest, such as:
– An event where The Company may sustain or evade a financial loss by executing a client’s order.
– An event where The Company may make a financial gain by not executing a client’s order.
– An event where a market fluctuation impacts the client’s order and results in The Company’s financial loss.
– An event where The Company is compelled to reject a client’s order execution because of a market fluctuation which impacts its hedging policy, to prevent a financial loss.
Conflicts of Interest Management
The measures undertaken by The Company to ensure the necessary extent of independence are as follows:
Measures to prevent and control information exchange between Related Individuals who are involved in business activities which entail a conflict of interest risk.
Measures to separately monitor the Related Individuals who carry out orders on behalf of, or provide services to, clients whose interests may clash, or who are involved in other interests that may clash, including The Company’s interests.
Measures to prevent and limit any individual from damaging a Related Individual’s investment, by exercising inappropriate influence over the Related Individual’s investment-related activities.
Measures to prevent and control Related Individuals’ engagement in multiple investment services or activities simultaneously such as reception and transmissions of orders, or portfolio management tasks such as performance evaluation and portfolio decision taking.
Measures to eliminate any direct link between the compensation of individuals mainly involved in a particular activity and the compensation of another individual mainly involved in a different activity.
The Company has established essential information barriers for the purpose of restricting and preventing the transference of highly confidential information from one part of the business to another.
Specifically, physical barriers between The Company’s departments for the prevention of the flow of information between employees have been set up, access to documentation and data systems has been limited, and communication between certain employees engaging in different business activities has been restricted.
2. Conflicts of Interest Disclosure
Should The Company decide the measures undertaken to prevent and mitigate conflicts of interest are not sufficient to ensure the protection of a client’s interest, The Company will disclose the conflicts of interest to the client to avoid the risk of damaging the client’s interest. The Company will disclose to the client, prior to the provision of investment services or execution of orders, any existent or potential conflict of interest, in a timely manner and in lasting form. The client will then be entitled to decide on the continuation of his business relationship with The Company.
3. Conflicts of Interest Reporting
If The Company’s employee or tied agent identifies an actual or potential conflict of interest, the obligation of reporting the event to a higher authority is incumbent upon him. The assessment of the material risk involved will then be conducted together with a provision of a completed Notification Form to The Company’s compliance department, for the purpose of inspection.
The Notification Form will include the following details:
Steps to fix and preclude recurrence
The appropriateness of the steps
Any conditions imposed
Existence of any ongoing conflicts and its applied management measures
4. Marketing Communication
The Company will ensure that the written or oral proposal regarding a particular conflict of interest includes a clear statement of its full compliance with the law and regulations for the purpose of promoting The Company’s investment research independence.
5. Record Keeping
The Company is responsible for keeping and regularly updating a record of all investment services or activities performed by The Company or on its behalf, which have resulted in a conflict of interest that involved a material risk or damage to the client’s interest or of ongoing services or activities which may result in a conflict of interest.
6. The Company’s Responsibilities
The Company’s Senior Management responsibilities in regard to conflicts of interest include:
Complete involvement in the establishment and implementation of policies and procedures by the compliance department for identifying, managing and overseeing conflicts of interest as they arise.
Establishment of comprehensive guidelines to guarantee the detection of potential and arising conflicts and validity of judgments of material risk.
Ensuring employees’ full compliance with The Company’s conflicts of interest policy by ensuring the conduction of periodic training and clear communications of guidelines, procedures, and expectations.
Utilizing management and compliance information to stay up-do-date regarding any conflict of interest event.
Subsidy of front-line systems and controllers and adequate reviews to ensure the appropriateness and efficiency of the employed risk measurements and the effectiveness and promptness of risk warnings and disclosures issued to the client.