COBS: Conflicts of Interest

Question 1

who do the conflict of interest rules apply to

Answer 1

all clients (RC,PC,ECP)

Question 2

which principle for business is conflict of interest

Answer 2

principle for business 8

Question 3

a firm must have systems and controls in place to manage and / or disclose conflicts, true or false and what is abbreviation

Answer 3

true - SYSC

Question 4

what are the features of a conflicts of interest policy

Answer 4

in writing
identifies potential conflicts relevant to the firms operations
specifies procedure to manage the conflicts
provide retail and potential retail clients with a description of the policy

Question 5

are chinese walls mandatory

Answer 5

no

Question 6

what is the name given to dealing on investment research before giving clients time to react

Answer 6

front running

Question 7

where a firm publishes research to its clients or the public, it must ensure what?

Answer 7

that it does not receive inducement from those with a material interest
not to promise issuers favourable coverage (i.e. covered companies)
issuers covered are not permitted to review drafts of the research

Question 8

what are the two exceptions to when a firm can deal for its own account before clients have had a reasonable time to react to research

Answer 8

the firm is a market maker dealing in the normal course of business

unsolicited client orders (i.e. client calls and wants to trade)

Question 9

to who do the personal account dealing rules apply

Answer 9

all clients

Question 10

what is the purpose of the personal account dealing rules

Answer 10

arrangements to prevent inappropriate dealings

Question 11

what are the 3 types of inappropriate dealings which the personal account dealing rules try to prevent

Answer 11

dealings prohibited under the market abuse regulation
dealings that involve misuse of disclosure of confidential client info
dealings which conflict with the firms obligations to its clients

Question 12

what are the arrangements put in place under the personal account dealing rules

Answer 12

relevant persons are aware of the restrictions
relevant persons inform the firm
firm records all notifications, including a copy of transaction confirmation

Question 13

the rule on personal account dealing does not apply to personal transactions in what

Answer 13

funds managed independently
shares in certain classes of fund
life policies

on these instruments, it is believed staff are sufficiently removed from price sensitive information