1. Introduction
The Conflicts of Interest Policy (or 'The/the Policy' or 'This/this Policy') sets out Ebury Partners Market Cyprus ('EPM CY' or 'The/the Firm' or the 'Investment Firm') identification, documentation, escalation and management of conflicts of interest. The Policy is intended to set out the minimum standards of propriety that the Investment Firm expects from its directors and employees. Every director and employee of the Investment Firm is required, as a condition of their continued employment to read, understand and comply with this Policy.
The firm is registered at DOMS Assets Business Centre, 33 Neas Engomis Street, 2409 Engomi, Nicosia, Cyprus, and with licence number 459/25 is established under the Markets in Financial Instruments Directive 2 (MiFID II) and the Cyprus Securities and Exchanges Commission (CySEC) Laws and Directives.
Each of Investment Firm's directors and employees is an agent of the Ebury group and, as such, is obligated to act for and in the best interests of the Investment Firm, the Ebury group and, most of all, their clients. Certain personal activities or interests of a director or employee may have some connection with the Investment Firm's activities or interests but involve little or no conflicts of interest (for example charitable or civic activities). Certain interests or activities of directors and employees may involve a significant, actual or potential conflict with the interests or activities of the Investment Firm and/or its clients or may give the appearance of conflict although no actual or potential conflict exists. Each director and employee must be alert to such conflicts of interest. He/she should scrupulously examine and avoid any activity or situation in which personal behaviour directly or indirectly conflicts with the interests of the Investment Firm or its clients.
The Investment Firm and the Ebury group are fully committed to professionalism and integrity in doing business and to treating all clients fairly and in a consistent manner, as well as seeking to safeguard client interest in the course of providing the Firm's products and services. The Investment Firm and the Ebury group seek to avoid acting or behaving in a manner that has the potential for an adverse effect on a client, including its approach to dealing with conflicts of interest.
As the EPM CY will also be part of a wider group of companies, and as required by section 24 of Law 87(I), all circumstances will be taken into account which may affect the Cyprus Investment Firm on an individual basis, but also the group as a whole.
2. Legal Requirements
Since it's a regulated entity, the Investment Firm shall act in an honest, fair and professional manner that serves the best interests of its clients and in a manner that promotes market integrity when providing financial services and products.
Under Article 23 of MiFID II (as transposed in Cypriot Regulation within Law 87(I)/2017), the investment firm is required to take all appropriate steps to identify, prevent or manage conflicts of interest. These conflicts can be:
● between itself (which includes its managers, employees and tied agents, or any person directly or indirectly linked to it by control and its clients; or
● between one client and another that arise in the course of providing any investment and ancillary services (or combinations thereof), including those caused by the receipt of inducements from third parties or by the Investment Firm's own remuneration and other incentive structures
These general requirements are further explained under Articles 33 to 35 of the European Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (the 'Delegated Regulation 2017/565').
In essence, the Investment Firm's duties with respect to conflict of interests are the following:
● Identify;
● Prevent and manage;
● Disclose; and
● Record.
Where a conflict of interest exists, a disclosure, pursuant to section 29(2) of the Law, shall take place, prior to the provision of services clearly stating the conflict, taking into account the client relationship, and allowing the client to make an informed decision with respect to the investment or ancillary service in the context which the conflict of interest arises.
3. Relevant Person
Relevant person in relation to the Investment Firm means any of the following persons:
(a) a director, partner or equivalent, manager or tied agent of the firm;
(b) a director, partner or equivalent, or manager of any tied agent of the firm;
(c) an employee of the firm or of a tied agent of the firm, as well as any other natural person whose services are placed at the disposal and under the control of the firm or a tied agent of the firm and who is involved in the provision by the firm of investment services and activities;
(d) a natural person who is directly involved in the provision of services to the investment firm or to its tied agent under an outsourcing arrangement for the purpose of the provision by the firm of investment services and activities;
4. Identification of Conflicts of Interest
As mentioned above, conflicts of interest can arise between:
● interests of the Firm and directors and employees against client's interests, OR
● interests of employees against the interests of the Firm; OR
● interests of clients against other clients' interests.
EPM CY will always act in the best interest of its Clients, so that transactions are on terms which are favourable to the Client.
A Conflict of Interest under this Policy means both an actual Conflict of Interest (i.e. a Conflict of Interest that has arisen) and a potential Conflict of Interest (i.e. a Conflict of Interest that may arise given particular facts and circumstances). It also includes a perceived Conflict of Interest (i.e. a situation which may give rise to the perception of a Conflict of Interest), even where a Conflict of Interest may not in fact exist.
Conflicts of interests include the following situations:
A. the Investment Firm, the Ebury group, or a Relevant person is likely to make a financial gain, or avoid a financial loss, at the expense of a client;
B. the Investment Firm, the Ebury group, or a Relevant person has an interest in the outcome of a service provided to a 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 Investment Firm, the Ebury group, or a Relevant person has a financial or other incentive to favour the interest of another client or group of clients over the interests of a client;
D. the Investment Firm, the Ebury group, or a Relevant person carries on the same business as the client;
E. the Investment Firm, the Ebury group, or a Relevant person receives or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monetary or non-monetary benefits or services;
F. the Investment Firm, the Ebury group, or a Relevant person has an interest to maximise the trading volumes of the client, disregarding the client's objectives and requirements.
These sorts of conflicts may arise at any stage of the service provision.
To assist in the identification of Conflicts of Interest, Annex 1 provides a non-exhaustive list of :
(i) relationships where Conflicts of Interest may arise and
(ii) Conflicts of Interest scenarios, as well as
(iii) a sample of specific examples of circumstances in which these Conflicts of Interest arise.
When joining the Investment Firm, new employees will also be expected to disclose potential sources of conflict of interests.
5. Prevention and management of conflicts of interests
5.1 Ebury Standards
As a rule, conflicts of interests must be prevented and avoided or, at least, managed if they do arise.
The Investment Firm and the Ebury Group will always act in the best interest of their clients, so that transactions are effected on terms which are not less favourable to the client than if the conflict of interest had not existed.
If the Investment Firm is unable to prevent conflicts of interest, it will take specific steps to mitigate and manage risks, and to provide appropriate disclosure to clients. The Board of directors will assess, on a regular basis, situations in its products and services that may give rise to actual or potential conflicts of interest, and assess whether our policies are effective and adequate for resolving any such issues, where they do arise.
As a rule, the Investment Firm's objective is to achieve the following standards:
A. effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients;
B. the separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to, clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the firm;
C. the removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities;
D. measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment or ancillary services or activities;
E. measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities where such involvement may impair the proper management of conflicts of interest.
5.2 Responsibilities of all employees
All employees are responsible for identifying and managing Conflicts of Interest on an ongoing basis and are specifically required to:
● comply with this Policy, rules and other applicable policies and procedures relating to the identification, documentation, escalation and management of Conflicts of Interest;
● act with integrity and exercise good judgement and discretion;
● act with the requisite degree of independence and objectivity when discharging their responsibilities;
● avoid, wherever possible, situations giving rise to Conflicts of Interest due to any of the following:
○ personal financial interest;
○ family members or close personal relationships;
○ previous, current or potential future involvement in an activity or endeavour (whether at the Ebury group or externally); or
○ different roles and responsibilities at the Ebury group;
● immediately notify their Line Manager and/or Compliance and/or HR of the (suspicion of) existence and general nature of a Conflict of Interest;
● immediately disclose Conflicts of Interest to Senior Management when participating in decision making and, if the Senior Management so determines, remove themselves from the decision making process and not seek to influence such decisions any further;
● not be in a supervisory, subordinate or control relationship (having influence over conditions of employment) with closely related persons including family members or close personal relationships;
● not misuse information obtained in the course of working at the Investment Firm including in connection with dealing in investments;
● manage work-related information in accordance with all privacy legislations (EPM CY's 'GDPR' principles) and respecting information barriers and duties of confidentiality at all times;
● challenge and escalate promptly issues of concern to their supervisors and Compliance so that Conflicts of Interest may be appropriately reviewed, managed and resolved;
● upon joining the Investment Firm and on a periodic basis thereafter, complete all attestations required by Compliance; and
● comply with applicable rules which require transactions and arrangements between the Investment Firm and a related party to be carried out on an independent, arms-length basis.
5.3 Prevention and Management guidelines
To prevent and manage conflict of interests, the Investment Firm ensures compliance with the following rules:
● The provision of relevant, timely and accurate management information in order to assist Senior Management in controlling conflict of interest issues follows a well-defined process which must be established for all compliance matters in the Investment Firm.
● Management information is derived in the first instance from the Investment Firm's compliance department's monitoring processes. The Compliance team conducts a series of tests each month, weighted as to frequency based on the perceived compliance risk. The results of the compliance monitoring programme are documented as part of the Investment Firm's risk assessment process, which is regularly reviewed by Senior Management.
● In addition, the heads of each department of the Investment Firm are required to respond to the findings of the compliance monitoring programme.
● Remedial action is undertaken by the Senior Management of the Compliance Department so as to ensure that systemic or repeated failures in established procedures are addressed. Senior Management is responsible for ensuring that the heads of each department or section as appropriate are aware of their duty to manage and control potential conflicts of interest and to ensure that departmental procedures are followed.
● When reviewing new business, product initiatives or proposals, the Senior Management must ensure that any evaluation includes consideration and identification of any areas of conflict with the Investment Firm's existing business activity. Where conflicts of interest are identified, before proceeding with the new business or product the Senior Management will ensure that mitigating arrangements have been put in place to manage such conflicts. If the Investment Firm is not able to put in place adequate mitigating arrangements the Investment Firm will either decide not to proceed with the new business or product or alternatively make the necessary disclosures to its clients in accordance with the provisions stated below.
Some conflicts of interest are not permitted as a matter of law or regulation and others are permitted as long as the Investment Firm has appropriate means by which to manage them. The Investment Firm may utilise a number of means (which may be used individually or in combination) to manage a conflict of interest including:
● organisational arrangements;
● policies, procedures, systems and controls;
● disclosure designed to inform the affected parties of the conflict of interest and its likely impact on them; or
● avoidance of the service, activity or matter giving rise to the conflict of interest where the conflict of interest cannot be prevented or managed effectively using other means.
Some scenarios that are realistically possible to occur in the day to day functioning of the Investment Firm have been listed in Annex 1.
In addition to the approach mentioned above, the following guidelines must be taken into account when managing any conflict of interest in specific areas of activity:
● Employees may not approve, participate in or exert any type of influence over transactions or any other transactions in which they as Employees, or a person with whom they have financial or family ties, are named as beneficiaries.
● Employees may not request or accept payments, commissions or remuneration from Clients, suppliers, intermediaries, counterparties or any other third party in transactions carried out by the Group, and nor may they receive any type of advantage resulting from their position within the Group to favour their own interests.
● Employees may not provide professional services, paid or not, to other competing entities or companies unless expressly authorised by the Human Resources and the Compliance function as well as their Line Manager.
● No treatment or special work conditions based on personal or family relationships can be given.
Other guidelines on conflicts of interest:
● No Client must be given special treatment or conditions. Nobody must be encouraged to offer this type of treatment or conditions on the basis of personal, family or any other type of tie.
● Exclusive relationships with Clients that could give rise to excessive personal ties or could restrict access to other Group Employees or channels must be avoided.
● If it is not possible to avoid a conflict of interest the Clients must be appropriately notified before providing a service that may generate a conflict of interest.
In view of assessing a possible conflict of interest affecting Employees, the Compliance function may ask Employees to supply data or information, which they are under obligation to supply, on any recent personal or professional circumstance that may influence the fulfilment of their professional obligations and decision-making.
6. Disclosure of Conflicts of Interest to Clients
If, having identified a conflict of interest, the Investment Firm's Senior Management concludes that the Investment Firm cannot prevent risks of damage to the interest of a Client, the Investment Firm will only proceed following the resolution of its Senior Management to do so.
Such a decision to proceed will be very much the exception and will only be made once a proper consideration of the matter has been undertaken by the Investment Firm's Senior Management. Should its Senior Management resolve to proceed, it will ensure that the Investment Firm complies with its disclosure obligations. Disclosure to clients is a measure of last resort that shall be used only where the Senior Management comes to the conclusion that the effective organisational and administrative arrangements established to prevent or manage the Conflicts of Interest are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of the client will be prevented. Over-reliance on disclosure of conflicts of interest is not a form of management and shall be considered a deficiency to this Policy.
Disclosure to clients shall be decided and carried out by Senior Management with the assistance of Compliance.
The Investment Firm will ensure that the disclosure it makes to the Client(s) affected will be in a durable medium and complies with the following standards and that the following will be clearly disclosed:
● the general nature and sources of the conflict of interest;
● the steps taken by the Investment Firm to mitigate the risks of damage to the interests of the Client;
● the fact that the organisational and administrative arrangements established by the Investment Firm to prevent or manage that conflict are not sufficient to ensure, with reasonable confidence, that the risk of damage to the interests of the Client will be prevented;
● a specific description of the conflicts of interest;
● an explanation of the risks to the Client that arise as a result of the conflicts of interest;
● the disclosure will include sufficient detail to enable the Client to take an informed decision with respect to the service to be provided by the Investment Firm Firm in which the conflict of interest arises.
Even where it has made a disclosure, the Investment Firm will continue to maintain and operate effective organisational and administrative arrangements to take all appropriate steps to prevent conflicts of interest from adversely affecting the interests of Clients.
7. Client's Consent
By entering into a Client Agreement with the Investment Firm for the provision of Investment Services, the Client is consenting to an application of this Policy on them. Further, the Client consents to and authorises the Company to deal with the Client in any manner which the Company considers appropriate, notwithstanding any conflict of interest or the existence of any material interest in a transaction, without prior reference to the Client.
In the event that the Investment Firm is unable to deal with a conflict of interest situation, it shall revert to the Client.
8. Record of Conflicts of Interest
As per section 25 of Law 87(I), EPM CY shall keep and regularly update a record of the kind of investments and ancillary services which are carried out or on behalf of the Investment Firm in which a conflict of interest exists or there is a material risk of such a conflict arising as a result of the relationship with new or existing clients. This shall also apply to cases where there is an ongoing service or activity which may in the future bring raise to conflicts of interest.
The record shall include:
● a specific description of the conflict of interest;
● an explanation of the general nature and sources of the conflict of interest;
● the risks arisen as a result of the conflicts of interest;
● the steps undertaken to mitigate these risks.
This Policy and records of conflicts will be maintained and updated on a regular basis and will be retained for a minimum period of 5 years by Compliance.
9. Non-Compliance
Non-compliance with this policy may lead to disciplinary action in accordance with Ebury's disciplinary policy. In addition, breach of certain sections of this policy may amount to a criminal offence or breach of the FCA rules and could result in unlimited fines and/or imprisonment and/or regulatory sanctions.
10. Reporting a Breach of Policy Requirements
Where you become aware of a breach of this policy, you should report it immediately to the Compliance team using the process outlined in the Whistleblowing Policy.
ANNEX 1 – RISK MATRIX
Please see here the Conflicts of Interest Matrix which details a list of scenarios where conflicts may arise within the business and what controls the Group has in place:
