Requirement (MIFID)
Article 22 Conflicts of interest policy
Requirements MIFID - DIRECTIVE 2006/73/EC
Description
Description
1. Member States shall require investment firms to establish,
implement and maintain an effective conflicts of interest policy
set out in writing and appropriate to the size and organisation of
the firm and the nature, scale and complexity of its business.
Where the firm is a member of a group, the policy must also take
into account any circumstances, of which the firm is or should
be aware, which may give rise to a conflict of interest arising as a
result of the structure and business activities of other members of
the group.
2. The conflicts of interest policy established in accordance
with paragraph 1 shall include the following content:
(a) it must identify, with reference to the specific investment
services and activities and ancillary services carried out by
or on behalf of the investment firm, the 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;
(b) it must specify procedures to be followed and measures to
be adopted in order to manage such conflicts.
3. Member States shall ensure that the procedures and
measures provided for in paragraph 2(b) are designed to ensure
that relevant persons engaged in different business activities
involving a conflict of interest of the kind specified in
paragraph 2(a) carry on those activities at a level of independence
appropriate to the size and activities of the investment firm and
of the group to which it belongs, and to the materiality of the
risk of damage to the interests of clients.
For the purposes of paragraph 2(b), the procedures to be
followed and measures to be adopted shall include such of the
following as are necessary and appropriate for the firm to ensure
the requisite degree of independence:
(a) 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;
(b) the separate supervision of relevant persons whose
principal functions involve carrying out activities on behalf
of, or providing services to, clients whose interests may
conflict, or who otherwise represent different interests that
may conflict, including those of the firm;
(c) 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;
(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 or ancillary services or activities where such
involvement may impair the proper management of
conflicts of interest.
If the adoption or the practice of one or more of those measures
and procedures does not ensure the requisite degree of
independence, Member States shall require investment firms to
adopt such alternative or additional measures and procedures as
are necessary and appropriate for those purposes.
4. Member States shall ensure that disclosure to clients,
pursuant to Article 18(2) of Directive 2004/39/EC, is made in
a durable medium and includes sufficient detail, taking into
account the nature of the client, to enable that client to take an
informed decision with respect to the investment...
Comment
Applies to Articles 13(3) and 18(1) of Directive 2004/39/EC