Conflicts of Interest
Due to the nature of Kleinwort Hambros' business, a number of situations might arise in which a client's interests conflict (or could be perceived to conflict) with our interests, those of our associates or those of our other clients. In order to aim to identify and prevent or manage these potential conflicts of interest, we have established, implemented and maintain an effective internal conflicts of interest policy, as required by applicable law. Where applicable law requires a lesser standard of management of conflicts of interest than the FCA Rules, we have established, implemented and maintain our policy in accordance with the FCA Rules.
Where conflicts may arise
Our internal policies and procedures are designed to ensure that potential conflicts of interest that arise or may arise between us and our clients and between one client and another are identified.
Examples of potential conflicts of interest that could arise in the course of our providing services to our clients include, but are not limited to, the following:
- being the other party to the transaction, or acting as agent for another client or investor, or acting as principal selling our own property to a client or buying property from a client, and thereby making a profit (or loss) or taking a mark-up, mark-down or credit for our or an associate's own account;
- acting as agent or arranging a transaction for an associate or another client or investor and also acting as agent for another client in the same transaction, and receiving and retaining commission or other charges from both parties, and the price of the transaction being different from the bid or, as appropriate, offer price;
- executing a transaction for or with a client in circumstances where we have knowledge of other actual or potential transactions in the relevant security;
- having a holding in, or trading, dealing or market-making in, securities purchased or sold by or for a client.
Measures adopted to prevent and manage conflicts
We have implemented and maintain a number of procedures and measures for preventing and managing conflicts of interest that arise in the course of our business and for ensuring that our employees engaged in different business activities involving a conflict of interest carry on those activities with the requisite degree of independence. These include, but are not limited to, the following:
- Information barriers including physical separation, Chinese walls and other information barriers to regulate and restrict the flow of information between and within the different business areas;
- Segregation of duties our business areas conduct their day-to-day business independently of each other;
- Remuneration our employees are remunerated on the basis of salary and bonus. Bonus may be based on the revenues and results as a whole and on individual performance;
- Personal account dealing our employees may not deal in securities without obtaining the prior approval of the Compliance Department;
- Outside business activities our employees may not engage in outside business activities that might give rise to a real or apparent conflict of interest. All outside business activities have to be pre-approved;
- Gifts and entertainment the giving and receiving of gifts (including entertainment) to or from those doing business with the company can give rise to a real or apparent conflict of interest and is, therefore, generally prohibited subject to certain limited exceptions;
- Research all our research is produced in accordance with our policies and procedures for managing conflicts of interest that may arise in connection with research.
Where our arrangements for preventing or managing potential conflicts of interest are not sufficient to ensure, with reasonable certainty, that risks of damage to the interests of one or more clients will be prevented, we will clearly disclose all relevant details relating to the conflict to the client. This will be done before undertaking business with or for the client(s) and ask the client(s) to consent to us acting notwithstanding such conflict of interest. If we believe there is no other practicable way of preventing damage to the interests of one or more clients, we may decline to act.
Further information on conflicts of interest is available upon request.