Conflict of Interest Policy

Contents

1. Introduction

2. Regulation

3. MiFID II requirements

4. Identification of conflicts of interest

5. Managing and Recording Conflicts of Interest

5.1. Record Keeping

5.2. Training and Review

5.3. Failure to Comply

5.4. Amendments to the policy

1. Introduction

It is important to identify and manage conflicts of interest which arise or may arise in the course of providing a service. A conflict of interest may arise where a company or an employee who, owing a duty to a client, may have personal or professional interests which compete with this duty and may entail a risk of material damage to client’s interests. A situation may be a conflict of interest even if no improper act or disadvantage to the client arises from it.

Clear Capital Markets ‘the firm’ is committed to identifying, monitoring and managing all actual and potential conflicts of interest that can arise between the firm’s clients and between the firm’s clients and the firm.

The purpose of this Policy is to identify and summarise those conflicts which the firm may experience as an organisation and how it can address the challenges that such conflicts create. It also provides the firm’s clients with appropriate information relating to the policies the firm has in place to identify and manage conflicts of interest.

2. Regulation

This Policy is designed to fulfil the firm’s obligations under SYSC 10, COBS 12 and Principle for Business 8 of the FCA Handbook, the first two of which implemented the Markets in Financial Instruments Directive (“MiFID”). This policy should ensure that procedures are in place to identify, monitor and handle all potential and actual conflicts so that these are not to the detriment of the client.

Conflicts of interest are defined in the context of FCA rules as any conflicts which arise between the following when the firm is carrying out activities which are regulated by the FCA or ancillary services:

• The firm and a client; or
• A client and another client

The types of conflicts envisaged by the FCA may include situations where the firm:

a) Stands to make a financial gain, or avoid a loss, at the expense of the client;

b) Has an interest in the outcome of a service provided to the client, or a transaction carried out on their behalf, which is materially different from the interest of that client;

c) Has financial or other incentive to favour the interests of another client or group of clients over that client;

d) Carries on the same business as the client; or

e) Is likely to receive from a person other than the client an inducement, whatever the form, relating to the service provided to the client other than standard fees or commission for that service.

3. MiFID II requirements

Article 23 of the MiFID II Directive addresses conflicts of interest. The main change from MiFID 1 is that investment firms must take all appropriate steps to identify and prevent conflicts of interest in relation to receipt of inducements from third parties or by the firm’s own remuneration and other incentive structures.

SYSC 10 requires firms to have in place “appropriate” rather than “reasonable” steps to identify and manage conflicts – this has increased the burden on firms in this area.

MiFID II bans independent advisers and portfolio managers from receiving any (non-minor) monetary or nonmonetary benefits from third parties when dealing with retail and professional clients.

4. Identification of conflicts of interest

For the purposes of identifying the types of conflict of interest that may arise in the course of providing investment and ancillary services or a combination thereof and whose existence may damage the interests of a client, the firm takes into account any of the following situations, whether they are as a result of providing investment or ancillary services or investment activities or otherwise:

a) The firm or relevant person is likely to make a financial gain, or avoid a financial loss, at the expense of theclient;

b) The firm or relevant person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of a client which is distinct from the client’s interest in that outcome;

c) The firm or relevant person has a financial or other incentive to favour the interest of another client or group of clients over the interest of the said client;

d) The firm or relevant person carries on in same business as the client;  

e) The firm or relevant person receives or will receive from another other than the client, an inducement in relation to a service provided to the client in the form of a financial gain, goods or services – other than the standard fee or commission for that service.

Conflict: Personal Account Dealing
Nature of conflict and measures: The risk arising is that staff who are party to privileged information concerning investments with which we deal may trade on information which is unknown to the client for personal gain.

Personal investments are permitted strictly in accordance with our Market Abuse Policy and our Personal Account Dealing Policy. All personal account dealing must be reported to Compliance.

Conflict: Gifts

Nature of conflict and measures: This covers the risk that any gifts or hospitality provided by a third party may materially influence a recommendation provided to the client.

Conflict: Inducements

Nature of conflict and measures: This covers the risk of material inducements being given or offered which may conflict with a duty of care owing to a client.

Conflict: Remuneration

Nature of conflict and measures: This deals with the risk that remuneration policy may encourage staff to take account of their own earnings from a potential transaction rather than the best interests of the client. The firm should put in place a policy whereby all staff receive the same level of commission regardless of the project the client invests in. All staff are aware of their obligations to act in the client’s best regardless of personal benefit.

5. Managing and Recording Conflicts of Interest

The Firm recognises its responsibility to identify and manage potential conflicts of interest and as such has several internal policies and procedures in place to counter this:

• Personal Account Dealing Policy setting out personal account dealing requirements applicable to relevant persons in relation to their own investments.
• Privacy Policy governing access to electronic data.
• Chinese walls restricting the flow of confidential & inside information within the firm and departments

Gifts and Benefits Policy managing the registration of the solicitation, offer or receipt of certain benefits and to limit the giving or receiving of inducements.
If it appears for any reason that the conflict cannot be reasonably managed so as not to prejudice the best interests of the client, this will be disclosed.
In accordance with SYSC, the firm annually carries out a review and maintains a record of the types of activity carried out from which a conflict of interest may arise.
 
5.1. Record Keeping
The firm maintains a record of all activities where a conflict of interest has arisen or may arise.
 
5.2. Training and Review
All firm employees are provided with annually renewed training on how to be aware of conflicts of interest and how
to report any new or future conflicts.
 
5.3. Failure to Comply
Failure to comply with this Policy and procedures outlined above may result in disciplinary procedures being
invoked.
 
5.4. Amendments to the policy
The responsibilities contained within this document are reviewed on an annual basis and any changes made if
appropriate. Our conflicts of interest policy is available to clients upon request.