Chapter 10 Flashcards
Integrity
The firm should observe high standards of integrity and fair dealing (In other words, they should act in the best interests of their customers)
Skill, care, and diligence
A firm should act with due skill, care, and diligence
Market practices
High standards
Comply
Applies
Information about customers
Seek
Exercises
Circumstances
Investment objectives
Information for customers
Reasonable
Comprehensible
Balanced
Full
Responsibilities
Conflicts of interest
Avoid
Conflicts
Fair
Disclosure, internal rules of confidentiality
Declining to act
Customer assets
Control
Responsible
Safeguard
Proper
Segregation and identification
Financial resources
A firm should ensure that it maintains adequate financial resources to meet its investment business commitments and withstand the risks to which its business is subject
Internal organization
Organize
Internal affairs
Responsible
Employs
Suitable
Relations with regulators
A firm should deal with its regulators in an open and cooperative manner and keep the regulator promptly informed of anything concerning the firm which might be reasonably expected to be disclosed to it
Effective decision making
Decisions should only be taken by persons or organizations with the skills, information, and resources necessary to take them effectively
Clear objectives
Have clear objectives (depends on the firm)
Focus on asset allocation
Strategic asset allocation decisions should receive a level of attention that fully reflects the contribution they can make towards achieving the fund’s investment objective
Expert advice
Contracts for actuarial services and investment advice should be opened to separate competition
Explicit mandates
Internal and external
Written
Objective
Attempting
Time
Activism
Managers should incorporate an explicit strategy on activism, elucidating the circumstances in which they will intervene in a company, the approach they will use in doing so, and how they measure the effectiveness of this strategy
Appropriate benchmarks
Consultation
Limits
Active or passive
Believe
Performance measurement
Trustees should arrange for measurement of the performance of the fund and should make a formal assessment of their own procedures and decisions as trustees
Transparency (A “Statement of investment principles” should set out)
Who
Why
Objective
Allocation
Mandates
Fee
Effective operations
The selection of managers should also consider operational aspects, such as the separation of the front office and back office functions
Regular reporting
Trustees should publish their statement of investment principles and the results of their monitoring of advisers and managers, and send them annually to members of the fund. The statement should explain why the fund has decided to depart from any of these principles.
