Relationship with the Client - In transacting with any customer, employees of the Reception & Transmission of Orders Department must:
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Place client interests before his own.
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Preserve the confidentiality of information communicated by clients within the scope of the employee-client relationship. However, as may be required by law, they should report any suspected illegal activities by clients to the proper authorities.
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Refuse to participate in any business relationship or accept any gift that could reasonably be expected to affect his/her independence, objectivity, or loyalty to clients.
The employees must be able to safeguard the customer’s interest. Furthermore they must:
1. Use reasonable care and prudent judgment.
2. Not engage in practices designed to distort prices or artificially inflate trading volume with the intent to mislead market participants.
3. Deal fairly and objectively with all clients when providing information.
4. Have a reasonable and adequate basis for decisions and act only after undertaking due diligence to ensure there is sufficient knowledge about specific investments or strategies.
5. Not act, or cause others to act, on material nonpublic information that could affect the value of an investment and must ensure such information is not used as the basis of an investment decision or action.
6. Give priority to investments made on behalf of the client over those that benefit their own interests.
7. The compliance officer will be responsible for reviewing the company’s and employee transactions and to ensure the priority of client interests. Because personnel, regulations, business practices, and products constantly change, the role of the compliance officer (particularly the role of keeping the firm up to date on such matters) is that much more important. In this regard, each staff member will annually confirm in writing receipt of the procedures manual and agree to abide by its terms.
The obligation to deliver the best possible result when executing client orders applies in relation to all types of financial instruments. However, given the differences in market structures or the structure of financial instruments, it may be difficult to identify and apply a uniform standard of and procedure for best execution that would be valid and effective for all classes of instrument. Best execution obligations should therefore be applied in a manner that takes into account the different circumstances associated with the execution of orders related to particular types of financial instruments. For example, transactions involving OTC financial instruments that involve a unique contractual relationship tailored to the circumstances of the client and the investment firm is not comparable for best execution purposes with transactions involving shares traded on centralized execution venues.