SYSTEMATIC INTERNALISERS
RISK MANAGEMENT
1 . Companies executing client orders on their own account equivalent to 0.4 % ( or more ) of the total average daily volume of a stock over six months will be expected to register as a Systematic Internaliser .
2 . For bonds , client orders need to be 2.5 % or more .
3 . For structured finance , client orders need to exceed 4 %.
4 . For derivatives , client orders need to be 2.5 % or more .
1 . Firms must have a way of quantifying the level of risk that they can withstand and draw up policies identifying key threats .
2 . Firms shall have a risk management function , which operates independently .
3 . Every year ( minimum ), risk management team to produce a report to the ‘ management body ’, which also details any corrective actions .
COMPLIANCE INTERNAL AUDIT
1 . Firms must monitor their exposure to risk and have a policy to detect any risk of the business failing .
2 . Compliance teams need to operate independently .
3 . Every year ( minimum ), compliance team to produce a report to the ‘ management body ’ on risks identified from customer complaints .
4 . Compliance teams must be given the ‘ necessary authority ’, resources , expertise and access to any relevant information . It does not stipulate who decides what is ‘ relevant ’ information .
5 . Compliance pay and bonuses should not compromise objectivity .
1 . Firms should have an audit plan , which monitors systems and controls .
2 . There should be individuals responsible for internal audit who are separate and independent from other functions in the business .
3 . Internal audit should issue recommendations in a report at least every year .
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