Aggregated News From Investment Management Regulators

Client protection in case of conflict of interest: requirements for professional participants


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The Bank of Russia has approved requirements for professional participants to identify and prevent conflicts of interest, as well as to manage them. The corresponding instruction of the regulator was registered with the Ministry of Justice of Russia. The new rules should strengthen the protection of the rights and interests of investors and help them increase their confidence in the securities market.

Professional securities market participants are now prohibited from making a number of transactions with a conflict of interest that may harm clients. In the case of managers, these are transactions made not on the best available terms, as well as their own actions using information about client transactions.

The instruction defines events when a professional participant is allowed to eliminate a conflict of interest only partially, for example, if such a right is prescribed in the contract with the client. However, in this case the company must take measures to reduce the likelihood of causing damage to the client: to establish a Chinese wall between those divisions that conclude transactions in the interests of the client and transactions on behalf of the professional participant, so that they cannot receive information about each other’s transactions.

Similar requirements already exist for collective investment entities — management companies and special depositories.

The instruction comes into force on 1 April 2022.

This news item was originally published by the Central Bank of the Russian Federation (CBR RU). For more information, please see the Source Link.

Regulator Information

Abbreviation: CBR
Jurisdiction: Russian Federation

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