With its directive about markets for financial instruments (“MiFID I + II”), the European legislator has placed the banks under the obligation to take precautions for dealing with conflicts of interest which could have effects on securities services so as to ensure that these services can be offered to clients in an upright environment and that impacts on the interests of clients are avoided.
Conflicts of interest can arise in the bank between clients, bank employees or other relevant persons associated with the bank when investment services and ancillary investment services are rendered.
In addition, further conflicts of interest can arise from personal relationships of relevant persons with issuers of financial instruments, e.g. through participation in supervisory boards or advisory councils or through indirect or direct participation of the bank in the relevant issuer.
Conflicts of interest are also possible when the bank participates in new issues of an issuer of financial instruments, or participates in preparing a financial analysis about the issuer, or makes or receives payments to or from an issuer.
There can also be a conflict of interest when some persons in the bank have access to information that was not yet publicly available at the time of a transaction with a client (insider information) or there are other incentives for preferring a particular financial instrument.
Any potential conflicts of interest affecting our company or any company of the Metzler Group are published on our website in the section Disclosures.
The bank is obliged to render all investment services and ancillary investment services honestly, reliably and professionally in the interests of the clients. The bank’s employees have all been sensitized accordingly. This means that the bank avoids conflicts of interest with each rendition of an investment service or ancillary investment service.
A compliance organization has been set up for this purpose. It basically covers the following measures in an assignment of tasks at several levels.
- Confidentiality areas with so-called “Chinese walls” for restricting the flow of information
- Watch lists and blacklists for monitoring transactions through which there could be conflicts of interest. Transactions involving financial instruments on watch lists are allowed, but are monitored continually. Transactions involving financial instruments on the blacklists are prohibited.
- An insider directory of all relevant persons in the bank who have insider information
- Control of the transactions effected by all compliance-relevant persons in the bank
- There is a corresponding regulation of presents/inducements that applies to the entire bank.
- The bank’s employees are continually given instruction in all topics relevant to compliance.
If, nevertheless, there should be any conflicts of interest that could not be avoided through the foregoing measures of the compliance function, then the bank points this out to its clients and refrains, in individual cases, from rendering investment services or ancillary investment services for the financial instruments affected.
Further conflicts of interest can arise through granting or receiving inducements. These can be monetary benefits (commissions, offering premiums, brokerage fees, etc.) or non-monetary benefits (research, invitations to events, promotional materials, etc.).
In the context of asset management, insofar as is agreed, the bank does not accept any inducements. If the bank receives any inducements, it passes them on to its clients in the full amount.
The bank may accept inducements when rendering miscellaneous or ancillary investment services provided that this is permissible under the regulations of the Securities Trading Act.
The bank maintains an internal directory of inducements and usage for all matters involving inducements.
Finally, the bank’s general business conditions contain detailed regulations on handling benefits, depending on the service in question. Upon request, the bank will provide the client with further details and information about dealing with conflicts of interest, including inducements.