CONFLICTS OF INTEREST POLICY – GENERAL
Under FCA’s Principles for Businesses, Principle 8 requires a firm to “manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.” Under the Markets in Financial Instruments Directive (“MIFID”), Smart Insider Limited (“Smart Insider”) is required to maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to identify, monitor and manage such conflicts of interest. Smart Insider has put in place a policy to meet this obligation and set out below is a summary of that policy and the key information that is needed by clients and counterparties (together “customers”) to understand the measures Smart Insider is taking to safeguard the interests of its customers.
Smart Insider seeks to:
- identify circumstances which may give rise to conflicts of interest entailing a material risk of damage to customers’ interests;
- establish appropriate mechanisms and systems to manage those conflicts; and
- maintain systems in an effort to prevent actual damage to customers’ interests through the identified conflicts.
WHAT IS A CONFLICT OF INTEREST?
A conflict of interest under MiFID is a conflict that arises in any area of Smart Insider’s business in the course of providing its customers with a service which may benefit Smart Insider (or another customer for whom Smart Insider is acting) whilst potentially materially damaging another customer where Smart Insider owes a duty to the customer. There may be a conflict where Smart Insider (or anyone connected to Smart Insider including another Smart Insider affiliate):
- is likely to make a financial gain (or avoid a loss) at the expense of its customer;
- is interested in the outcome of the service provided to its customer where the interests of Smart Insider is distinct from that of the customer;
- has a financial or other incentive to favour the interests of one customer over another;
- carries on the same business as a customer;
- receives money, goods or services from a third party in relation to services provided to a customer other than standard fees or commissions.
Smart Insider has sought to identify conflicts of interest that exist in its business and has put in place measures it considers appropriate to the relevant conflict in an effort to monitor, manage and control the potential impact of those conflicts on its customers. The conflicts identified include:
- those between customers with competing interests;
- those between customers and Smart Insider where their respective interests in a particular outcome may be different; and
- those between the personal interests of staff of Smart Insider and the interests of Smart Insider or its customers where those interests may be different.
CONFLICTS OF INTEREST – PROCEDURES
Smart Insider has adopted internal policies and procedures in order to manage recognised conflicts of interests. These policies and procedures will be subject to our normal monitoring and review processes and include:
INTEGRITY AND STANDARDS OF CONDUCT
Smart Insider insists that in its dealings with customers its staff must use the highest standard of integrity in their actions at all times. The induction programme, training and competency procedures and monitoring programme at Smart Insider are designed to ensure that all relevant staff are familiar with and observe, inter alia, the FCA Principles for Businesses, the Statements of Principle and the Code of Practice for Approved Persons.
PERSONAL ACCOUNT DEALING
Smart Insider has a policy on Personal Account Dealing and the rules are signed off as understood by all relevant employees regardless of their position within Smart Insider.
CONFIDENTIALITY AND INFORMATION BARRIERS
Smart Insider insists on strict customer confidentiality to ensure that information is disclosed only to those entitled to receive it or otherwise with the prior approval of the Compliance Department.
INDUCEMENTS TO EMPLOYEES FROM CUSTOMERS
Staff are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one customer at the expense of another when conducting investment business. Smart Insider has a Gifts and Entertainment Policy which is part of the staff’s Policy Manual and is monitored by management on a regular basis.
All relevant staff who are open to a conflict of interest are paid a basic salary including those in key support areas such as Compliance, Finance and Back Office. This salary is not dependent on company performance. A bonus scheme does exist which is linked to the company’s performance and the performance of the individual. It is entirely discretionary.
SEPARATE SUPERVISION AND SEGREGATION OF FUNCTION
Where appropriate, Smart Insider has arranged for the separate supervision of those carrying out functions for customers whose interests may conflict, or where the interests of customers and Smart Insider may conflict and has taken steps to prevent the simultaneous or sequential involvement of a relevant person in separate services or activities where such involvement may impair the proper management of conflicts of interest.
As a last resort, where there is no other means of managing the conflict or where the measures in place do not, in the view of Smart Insider, sufficiently protect the interests of customers, the conflict of interest will be disclosed to customers to enable an informed decision to be made by the customer as to whether they wish to continue doing business with Smart Insider in that particular situation.
DECLINING TO ACT
Finally, where Smart Insider considers it is not able to manage the conflict of interest in any other way it may decline to act for a customer.
POLICY OF INDEPENDENCE
All investment research issued by Smart Insider Investment Ltd (“Smart Insider”) is independent, impartial and objective. Smart Insider does not conduct any investment business with or for its clients, other than the provision of investment research and advice. Smart Insider staff have no other responsibilities which could conflict with the interests of our clients. Smart Insider does not carry out any corporate finance business; and has no involvement in raising capital for corporate clients. Smart Insider has no other regulated or unregulated business activities which conflict with its provision of independent research.