The Financial Free Zone Law 4

Whenever an authorised firm communicates any information to a person in, or from, the DIFC:

• The authorised firm must attempt to limit or avoid liability in any way when communicating with a client.

• the authorised firm must provide that information directly to another person.

• if the marketing material is intended only for retail clients, a clear statement to that effect.

• it must take reasonable steps to ensure that the communication is clear, fair and not misleading.

The DFSA rules relating to suitability apply where an authorised firm:

• undertakes a transaction with a market counterparty;

• undertakes an execution-only transaction;

• makes a financial promotion.

• undertakes the activities of accepting deposits or providing credit.

The firm would need to take into account the following when checking if the financial product or

service is suitable:

• the client’s attitude to invest in derivatives.

• the client’s investment objectives;

• Knowledge about financial markets

• The account is discretionary or non discretionary.

Where an authorised firm has knowledge of a (potential) conflict or a material interest, it must

prevent or manage that conflict by:

• relying on a written policy of dependence

• disclosing the conflict of interest to the client verbally or in writing

• establishing and maintaining effective Chinese walls

• restrict the communication in any other means.

Following is true about inducements:

• Any direct or indirect benefit the firm may receive

• commissions and other direct or indirect benefits

• Does not Applies to all Discretionary portfolio management agreement

• The details of the inducement have to be disclosed

A firm may only accept goods or services under a soft dollar agreement if they are reasonably

expected to:

• assist in the provision of investment business services to the authorised firm’s clients

• provide portfolio valuation or performance measurement services

• provide market price services.

• All of the above

Any soft dollar arrangements that a firm may have- find the odd one out.

• must be detailed in writing

• contain no price advantages

• continue to provide best execution to its clients

• ensure that the services provided by the broker are competitive.

Details on soft dollar agreement would need to be disclosed to a firm’s clients periodically which is

• Annually

• Monthly

• Every six month

• Quarterly

Authorised firms are required to establish and maintain adequate policies and procedures to ensure

that an employee does not place a personal account transaction unless

• the firm has given its written permission to that employee for the transactions in general

• rules are made a term of each company’s employee’s handbook

• the firm has provided, in writing to the employee, its rules regarding personal account transactions

• the transaction conflict with the firm’s duties to its clients

An authorised firm that prepares and publishes investment research must have procedures and

controls to ensure that:

• its investment analysts are supervised and managed effectively;

• the actual or potential conflicts of interest are post facto managed;

• the investment research issued to clients is not impartial

• the investment research contains the financial promotion disclosures