OUTSOURCING
1 . Firms who outsource important operational functions are still liable for all regulatory obligations .
2 . Firms must be able to prove their outsourcing partner has the ability , capacity and resources to meet all regulatory obligations .
3 . The outsourced firm must be able to show it has established methods for assessing its own standard of performance .
4 . Firms must ensure overseas outsourcing partners are authorised or registered in their home country and that a co-operation agreement exists between the regulator of the firm and the regulator of the outsourced firm .
INVESTMENT RESEARCH / COMMUNICATIONS
1 . Research and communications staff should not trade in a personal capacity on the basis of knowledge obtained from corporate financial research .
2 . Chinese walls should exist between research analysts and other persons in the business that may become conflicted by learning of research findings .
3 . Financial analysts should not accept financial inducements .
4 . Financial analysts should not promise favourable coverage .
5 . Those outside of the research team should not be permitted to review a draft of investment research prior to publication .
CONFLICTS OF INTEREST POLICY
1 . Firms must have a conflicts policy which is appropriate to the size of the company .
2 . The policy must clearly identify what constitutes a ‘ conflict of interest ’.
3 . The policy must include considerations on remuneration as outlined in the pay and bonuses box .
4 . Senior management need to review the conflicts of interest policy at least once a year .
5 . Companies should not ‘ over rely ’ on employee disclosure of conflicts of interest and any attempt to do so will be frowned upon under MiFID II rules .
24 | THE TRADE MiFID II HANDBOOK www . thetradenews . com