FINANCIAL MARKET
3. DUTIES TO CLIENT
Code of Ethics
A. Integrity, Prudence, and Care
● Best execution
REVIEWER ○ Seeks to maximize the value of a clients
portfolio within the client's stated
CIRCULAR LETTER NO. CL-2010-013 investment objectives and constraints.
● To all Banks and NBFI B. Fair Dealing
● For market practitioners ● Shorten Time frame between decision and
dissemination
● First in, first out basis
1. PROFESSIONALISM ○ Processing and executing orders
● Disclosure to the clients on how they select
A. Knowledge of the Law
accounts to participate in an order and how they
● Stay informed
determine the amount of securities each account
● Review procedures
will buy or sell.
● Maintain current files
C. Client Suitability
B. Independence and Objectivity
● Only applies to the ones who have an advisory
● Gifts can be offered in the normal course of
relationship with the client.
business
● On-going process, updated annually
● However, members must not offer nor accept any
● Sustainability review can only be done if the client
gift that could compromise their independence and
fully discloses his complete financial portfolio
objectivity
D. Diligence and Reasonable Basis
● Disclosure of gift details must be submitted
F. Preservation of Confidentiality
C. Misrepresentation
● Former, current, and prospective confidential client
● Members with authority must only make the
info must be kept, unless:
presentation
○ The info concerns illegal activities
D. Misconduct
○ Disclosure is required by law
● Specific policies of the following should be
○ Client permits disclosure of the info.
implemented:
○ Fraud
○ Gambling
○ Use of drugs and abused substances 4. CONFLICTS OF INTEREST
A. Disclosure of Conflicts
B. Dealing for Personal Account
2. INTEGRITY OF CAPITAL MARKETS C. Priority of Transactions
● Blackout-period = restricted time to trade
A. Insider Information/ Material Nonpublic Information
● Disclosure of it to the public without consent is
unethical
● Not always clearly identifiable 5. DUTIES TO MARKET COUNTERPARTIES
● Requisites:
○ Not disclosed to the public A. Knowledge of Trading Conventions
○ Can change the price once disclosed B. Firmness of Price Quotation and Deals
○ Considered in decision making ● Members should be guided by the principle of
● Disclosure on limited basis creates potential “Dictum Meum Pactum” = My word is My Bond
insider trading violations
● Mosaic Theory
○ Members are free to act on the collection
of material public and non-material
non-public information without risking
violation.
● Chinese Wall/ Information Barrier
○ Best way to minimize the risk
B. Market Manipulation
