FCA BS - Dealing and Managing

Question 1

Best Execution Obligation

Answer 1

Firms must establish and execute a BE policy to get best possible results for clients when executing orders

Clients must give consent to the policy

i.e price, costs, speed, (relevant to execution)

If firms wish to execute trades outside of regulated market or MTF, must get consent from client

Question 2

Notion of Reasonableness - Evaluation Criteria for determining Relative Importance

Answer 2

Characteristics of:

• Client
• Order
• Financial instruments
• Execution venue

Question 3

Competing Venues for Retail Clients

Answer 3

Firms must compare the results that would be achieved using their policy at both venues, including firms own commission and costs

Firms can select a single venue for client orders when they can show the venue consistently delivers best possible results (and are almost as good as alternative venues)

Question 4

Order Execution Policy

Answer 4

1. Account of relative importance firm assigns to execution factors and the evaluation criteria
2. List of execution venues
3. Warning that specific client instructions may prevent firm from implementing execution policy

Must be provided to retail client in good time prior to service by durable medium / website

Must be reviewed annually or when material change occurs

Question 5

Client Order Handling

Answer 5

• Order are executed promptly and accurately recorded
• Carry out comparable orders sequentially and promptly (unless market conditions make impractical)
• Inform retail client about any material difficulty upon becoming aware

Question 6

Carrying out orders in aggregation with another client order

Answer 6

1. Cannot work to disadvantage of any client
2. Must disclose to each client whose order is aggregated the potential disadvantage
3. ’Order allocation policy ‘ must be established

Question 7

Personal Account Dealing

Answer 7

Applies to any Relevant Person involved in activities which may: give rise to CoI, have access to inside info as defined by Market Abuse Regulator, or to confidential info related to a client transaction.

• Must inform firm of any personal transaction; and
• Make sure service provider has a record of the personal transaction to give to firm

Question 8

Personal Account Dealing - Rules do not apply to:

Answer 8

1. Personal transactions effected under a ‘discretionary PM service’
2. Personal transactions in units or shares in ‘collective undertakings’
3. Personal transactions in ‘Life Policies’