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The mechanisms adopted by a securities firm to prevent insider trading and conflicts of interest shall at least include:
- Mechanisms shall be put in place for segregating information respectively belonging to the department of wealth management business and other departments, to prevent improper disclosure.
- The securities firm shall employ ongoing training to improve the professional ethics of wealth managers.
- Associated persons engaging in wealth management business shall put top priority on customer interests. The person in charge of the department of wealth management business shall decline approval when a transaction with a specific individual would be improper due to the likelihood of conflict with a customer's interests.
- A securities firm shall exercise tightened control over wealth managers, and prohibit them from making any agreement with a customer to share benefits or bear losses, or from directly or indirectly soliciting, agreeing to accept, or accepting improper benefits in cash, in kind, or otherwise, such as may influence the objectivity of their professional judgment or discharge of duties.
- Standards or supervisory measures shall be adopted to govern the direct or indirect acceptance by wealth managers of gifts from customers or third parties. It shall also be ensured that the adopted reward and remuneration system will not affect the objectivity and impartiality of wealth mangers when recommending certain products to customers.
- A wealth manager may not accept a customer's unlawful transaction. When a wealth manager learns from a customer of information related to his or her trading of any target product, if there exists any likelihood of conflict of interest or undue profit, the wealth manager may not engage in trading of such target products.
- Wealth managers shall recommend products based on customer suitability, and their salary and compensation shall, in a balanced manner, take into account commissions, growth of assets entrusted by customers for financial planning, and other factors. They may not recommend a product merely out of consideration for the amount of commission to be received, nor use some specific benefit or false advertising to induce a customer to buy or sell a specific product.
- A securities firm shall fully disclose the fee schedule and itemized details thereof for all products and services it provides.
- A securities firm shall fully disclose to its customers the handling fees that it actually collects for the provision of wealth management services, the commissions it obtains from recommending and selling products, and any other fees charged whatsoever.
- Unless otherwise provided by law or regulation, none of the income set out in the preceding subparagraph may be paid to any specific related party.
- When conducting wealth management business by means of trusts, for the protection of customer rights and interests, a securities firm shall establish appropriate workflow and control mechanisms to strengthen the management of trust assets and the establishment of the information firewall.
- Any place of business at which a securities firm's head office or branch unit conducts wealth management business shall be clearly indicated and kept segregated from other departments.
- A wealth manager of a securities firm's head office or branch unit, when carrying out wealth management business, shall explicitly inform clients of the department to which the wealth manager belongs, and may not engage in any conduct that may confuse clients.
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