REGULATION RULES OF PROFESSIONAL ETHICS OF SAIFA

Transcription

1 REGULATION RULES OF PROFESSIONAL ETHICS OF SAIFA In view of article 20 par. 2 letter d of the Articles of Association of SAIFA, the Council of SAIFA enacts the following "Rules of Professional Ethics": ARTICLE 1 FIELD OF APPLICATION These Rules of Professional Ethics apply to all independent asset managers ("the Manager(s)"). Managers have the obligation to conform to the Rules of Professional Ethics within the framework of their activity of asset management. From their approval by FINMA [Swiss Financial Market Supervisory Authority], these Rules of Professional Ethics will be recognized as minimum requirements within the meaning of article 6 par. 2 of the Ordinance on Collective Investments of Capital ("OPCC"). ARTICLE 2 OTHER LEGAL AND REGULATORY PROVISIONS Managers must also conform to all the legal provisions applicable to their activities, in particular the provisions of the Swiss Code of Obligations relating to the contract of mandate and the Money Laundering Act (LBA) as well as all the regulations and directives enacted by the Council of SAIFA. ARTICLE 3 ASSET MANAGEMENT CONTRACT - FORM Managers have the obligation to conclude an asset management mandate in written form with their clients (the "Asset Management Contract") in accordance with marginal figure 8 of the Circular from FINMA 2009/1 Framework Rules for asset management. An asset management mandate is understood to mean a contract by which the client grants the Manager a mandate of discretionary management of the client's assets or a specific mandate.

2 ARTICLE 4 ASSET MANAGEMENT CONTRACT COMPULSORY ELEMENTS The Asset Management Contract or its appendices will compulsorily contain the following elements: 1. the extent of the mandate; 2. the accounts or the assets to which the mandate relates; 3. the client's risk profile; 4. the investment objectives and possible restrictions; 5. the currency of reference; 6. a distribution by class of assets 7. the method and frequency of rendering accounts to clients; 8. the amount and terms and conditions of the Manager's remuneration; 9. the possible delegation of tasks to third parties. On its web site, SAIFA publishes a standard asset management contract (the "Standard Contract") which covers all the compulsory elements quoted above. This Standard Contract may be completed by various appendices specific to each Manager. Any addition must however neither contradict nor reduce the range of the duties of the Manager provided for in the Rules of Professional Ethics. The Asset Management Contract must define the acts that the Manager has the right to accomplish, whether within the framework of management or in relation to the assets which are entrusted to him. In the case of the management mandate of the discretionary type, the operations carried out by the Manager must be limited, unless there are specific instructions from the client, to that which is provided for in the SAIFA Regulation "Investment Possibilities in the case of Discretionary Management" available on the SAIFA web site. For mandates comprising the authorization for the Manager to intervene on various futures markets, foreign exchange markets, options, warrants, derivative instruments, etc. by using the leverage effect or by calling upon any type of instruments not shown in the SAIFA Regulation "Investment Possibilities in the case of Discretionary Management", it is necessary to get the client to sign a specific mandate or a specific order for this kind of operation. The same applies to investments of the Private Equity type or those not disposing of a minimum of liquidity within the meaning of the Regulation "Investment Possibilities in the case of Discretionary Management". ARTICLE 5 GUARANTEE OF IRREPROACHABLE ACTIVITY The Manager shall give every guarantee of irreproachable activity, in particular within the meaning of the Money Laundering Act (LBA). Within the framework of his activity, he shall take the measures necessary for the prevention and the fight against money laundering and the financing of terrorism, in accordance with the legal provisions in the matter and in accordance with all the other regulations enacted by the self-regulatory organization to which he is subject. a) Duty of loyalty in the strict sense ARTICLE 6 DUTY OF LOYALTY The Manager shall look after the interests of his clients 2

3 b) Independence The Manager must have necessary freedom to decide with objectivity and in all independence of the implementation of the investment objectives for his client. c) Duty of loyalty and conflicts of interest The Manager shall take the organizational measures adapted to his size and to his structure to prevent conflicts of interests and to see to it, if need be, that the clients are not prejudiced by the appearance of such conflicts. When the organization of the Manager is not enough to prevent such conflicts of interests, the Manager must inform his clients concerned of them. d) Conflicts of interests due to the terms and conditions of remuneration The terms and conditions of the remuneration of the Manager and his employees must avoid having the effect of generating a conflict with the duty of loyalty. a) Prohibition of churning and front, parallel and after running The investments and transactions shall be carried out by the Manager in the interests of the client. The Manager must carry out transactions which are economically justifiable. The execution of transactions on the deposits of the clients without a true economic interest ("churning") is prohibited. The Manager should not exploit for his own account, in any way contrary to the principle of loyalty and good faith, the knowledge which he derives from clients' orders (prohibition of "front running", "parallel running " and "after running"). f) Duty of confidentiality The Manager shall be required to keep absolute confidentiality on all that is entrusted to him or communicated within the framework of his professional activity, subject to the provisions of the LBA or the request of the competent Swiss legal authorities. Subject to the prior agreement of his clients, the Manager is forbidden to reveal their names as a reference. 3

4 ARTICLE 7 DUTY OF DILIGENCE a) Organization The Manager shall adapt his organization according to the size of his company, the number of his clients, the volume of the assets of which he has the management as well as the investment strategies followed and the products selected. b) Respect for the investment objectives and restrictions The Manager shall ensure that the investments made for his client are permanently in agreement with the investment objectives and restrictions defined with the Client in the Asset Management Contract. A divergence between the investment objectives and restrictions defined with the client and the investment policy exercised by the Manager due to the financial movements of the markets is temporarily allowed. If this divergence persists, it must be discussed with the client as far as possible. In any case, the Manager shall act in the best interests of the client. In the event of particular directives from the client which do not correspond with the investment objectives and restrictions defined with it, the Manager shall draw the client's attention to this subject and record it in writing. c) Regular review of the investment strategies The Manager shall periodically review the investment strategies which he implements taking into account the evolution of the economy and the financial markets. d) Adequate distribution of risks The Manager will avoid, except on the express written authorization of the client, the incidence of great risks which would cause an abnormal concentration on a limited number of investments. e) Deposit of assets and power of attorney Clients' assets which are entrusted to the Manager for management shall be deposited in Switzerland with banks or traders in transferable securities, or abroad with banking establishments approved by the supervisory authorities of the country concerned. The Manager shall not accept clients' deposits nor manage the operating account. The Manager must ensure an absolute separation between his own assets or those of his company and the assets of his clients. The Manager manages the assets of his clients on deposit by relying on a written power of attorney the scope of which shall be clearly defined. f) Delegation If it is in the interests of the client, the Manager may delegate tasks relevant to the management of assets to delegatees. 4

5 The following are in particular considered as tasks relevant to the management of assets: - the monitoring of the client; - the management of the clients' assets in the strict sense; - the execution of compliance tasks; - the retention of the clients' files; - the consolidation of the client's assets. The following are not considered as tasks relevant to the management of assets, in particular: - the Manager's financial accounting; - the hosting of Internet sites which do not contain clients' data; - administrative tasks; - advice as regards tax planning; - any operation of which the goal is not directly linked to asset management. The Manager shall choose, instruct and check the delegatee carefully. The client must be made attentive to the fact that certain tasks may be delegated. The tasks delegated must be clearly defined and fixed in writing. The delegatee must possess the required professional qualifications to execute the tasks delegated in an irreproachable way. Respect for the duty of confidentiality (see Article 6 f) above) must be guaranteed by the delegatee. The delegatee must comply with codes of conduct similar to those provided for in these Rules of Professional Ethics. The Manager may be asked, at the request of the Professional Ethics Committee ("CDEP") (see Article 11 below), to provide any necessary information on this subject. In any case, the Manager remains entirely responsible for the good application of the Rules of Professional Ethics. He will retain the originals of all documents required by these Rules. Regarding the management of funds authorized by FINMA, these must in addition respect FINMA Circular 08/37 Delegation by the management and SICAV [open-end investment company]. g) Prevention or death of the Manager The Manager shall take all necessary measures in the event of prevention or death. h) Termination of the Asset Management Contract by the Manager If the Manager takes the initiative on his own head to terminate his mandate, he shall inform the client and give this latter and the depositary bank any useful information for the continuation of the management of the client's assets, and in particular successfully complete any operations initiated but not yet totally resolved. 5

6 ARTICLE 8 DUTY OF INFORMATION a) Existence of these Rules of Professional Ethics The Manager shall give his client a copy of these Rules of Professional Ethics and the client shall certify in writing that it has taken note of them and that it may consult subsequent possible updates at any time on the SAIFA web site. b) Risks linked to the defined investment objectives and restrictions At the time of the conclusion of the Asset Management Contract and during any changes to the investment objectives, the Manager shall be required to inform his client, according to its degree of experience of business and its technical knowledge in the matter, of the risks linked to the investment objectives and restrictions defined with it The Manager may observe his obligation of information in a standardized way, in particular by giving his client the booklet "Particular risks in securities trading" issued by the Swiss Bankers Association ("ASB Booklet") or any other equivalent booklet which will be indicated on the SAIFA web site. The handing-over of this standardized document should be mentioned in the Asset Management Contract. As an alternative, the client may also indicate in the Asset Management Contract that it has taken note of the existence and availability of the ASB Booklet on the SAIFA web site. The Manager does not have an obligation to inform his client of the risks linked to particular operations if the client certifies in a written declaration that it is aware of the risks linked to these operations (which must be specifically defined), and that it does not require the Manager to provide it with additional information. The Manager shall be required to inform his client if this latter asks him to provide a service for which the Manager does not possess the knowledge or adequate infrastructures. c) Important changes concerning the Manager's organization The Manager shall inform his clients of important changes taking place within his personnel, his organization and its shareholding, in so far as the Manager's clients are directly affected by these changes and provided that it is not public information. d) Rendering of accounts The Manager must regularly, as well as at the request of his clients, give an account of his management. The Manager's report to his client ("the Report") must allow this latter to verify if the investment objectives have been respected. In his Report, the Manager therefore applies the standards generally allowed in the sector in particular concerning the method of calculation used, the time period chosen and, if need be, the reference indices selected. The rendering of accounts may be made exclusively on the basis of detailed accounts established by the depositary bank ("detailed account"). The Manager will however make it clear to the client if his remuneration is taken into account in these detailed accounts. The Manager's Report must be sent to the client or put in its mail retained by the Manager or to the depositary bank, on a half-yearly basis at least. This question will be dealt with in the Asset Management Contract. The Asset Management Contract will also point out that the client can at any time obtain a detailed account, either from the Manager, or from the depositary bank. 6

7 ARTICLE 9 REMUNERATION a) Written agreement on remuneration The terms and conditions, frequency, nature and elements of the Manager's remuneration must be described in a precise and detailed way in the Asset Management Contract or its appendices. The Manager's remuneration may be calculated on the basis of sharing the profit of the performance or related to a fixed percentage of the asset values entrusted to the management or on a mixed formula between these two forms of calculation. The determination of a fixed remuneration ("Flat Fee") independent of the capital under management or of the performance may also be provided for. b) Services received from third parties The Asset Management Contract or its appendices shall define who is the beneficiary of all the services received from third parties in close connection with the execution of the mandate or on the occasion of its execution. The Manager's Asset Management Contract shall draw the clients' attention to the conflicts of interests which may result from the collection of services on the part of third parties. The Manager shall inform his clients of the calculation parameters of the services that it receives or could receive from third parties. In so far as this is possible, the Manager shall do so for each category of products such as new issues, structured products, investment funds, alternative funds, brokerages, safe custody charges, finder's fees, etc. The information to the client may be made in a standardized way, for example in the form of fact sheets. At the request of his clients and in so far as they can be individually split up with reasonable efforts, the Manager shall moreover render an account of the importance of the services already received from third parties. ARTICLE 10 MODIFICATIONS TO THE MANDATE Any modification to the management mandate, including the method of calculation of the Manager's remuneration, must be brought to the knowledge of the client as soon as possible and be the subject of an amendment to the Asset Management Contract. ARTICLE 11 CHECKING AND SANCTIONS CDEP A procedure to check the observance of the Rules of Professional Ethics and sanctions in the event of a breach of the aforesaid rules is provided for in the Implementing Regulation of these Rules of Professional Ethics, available on the SAIFA web site. SAIFA has set up an ad hoc committee, the Professional Ethics Committee (CDEP), in charge of the checking and sanctions procedure. Each Manager shall be required to consult the Professional Ethics Committee of SAIFA in case of doubt about the execution of operations deriving from his mandate and in case of doubt about the application of these Rules of Professional Ethics. 7

8 ARTICLE 12 DUTY TO INFORM CHECKING BY FINMA OR THE OAR When sanctions are considered or taken in respect of a Manager (financial intermediary directly subject to FINMA or member of a Self Regulatory Organization ("OAR")), SAIFA will inform FINMA or the OAR concerned about them. In accordance with the Articles of Association of SAIFA, the Manager agrees to the transmission, to FINMA or to the OAR concerned, of information relating to the sanctions procedure initiated by SAIFA in respect of him. ARTICLE 13 ADVERTISING Managers shall show discretion in their advertising, which should not contain deceptive or misleading information. Advertisements put out by Managers should not harm the reputation of other Managers of SAIFA. Managers are in particular not authorized to make comparisons of services or to use information concerning other Managers for advertising purposes. ARTICLE 14 REGULATIONS AND DIRECTIVES The Council of SAIFA is responsible for the development and updating of the implementing regulations and directives of these Rules of Professional Ethics. ARTICLE 15 MODIFICATION OF THE RULES OF PROFESSIONAL ETHICS Any modification of these Rules of Professional Ethics is the exclusive competence of the Council of SAIFA. An up to date version of the Rules of Professional Ethics will be available in all times on the SAIFA web site. In the event of a modification to the Rules of Professional Ethics induced by the evolution of the practice of the profession or legislation, a communication by will be sent to Managers. ARTICLE 16 TRANSITIONAL PROVISIONS Managers shall be required to adapt their asset management activity to these Rules of Professional Ethics as from their entry into force. Managers are in addition given a deadline to the 31 December 2010 to adapt their existing Asset Management Contracts to these Rules of Professional Ethics, subject to those Managers who wish to benefit from article 6 par. 2 OPCC and who will then have to adapt their Asset Management Contracts by the 30 September 2009, that is within the time provided for in the marginal number 35 of FINMA Circular 2008/8 Public offers - collective investments. 8