Conflicts of Interest Policy
Bequant Exchange Limited and Bequant Pro Limited (“Bequant”) are required to establish, implement and maintain effective organisational and administrative arrangements appropriate to the size and organisation of Bequant, and the nature, scale and complexity of their business in order to prevent conflicts of interest from adversely affecting the interests of their clients.
This Conflicts of Interest Policy (this “Policy”) sets out the effective organisational and administrative arrangements that have been put in place by Bequant to identify, identify, prevent and manage conflicts of interest that entail a material actual or potential risk of damage to the interests of Bequant and its clients. Bequant seek to minimize conflicts and potential conflicts of interest and, if conflicts do arise, to manage them fairly and in the best legitimate interest of our clients. Bequant shall aim to act honestly, fairly and professionally in accordance with the best interests of its Clients.
This Policy has been drafted in accordance with the Virtual Financial Assets Act (Chapter 590, Laws of Malta) (the “VFA Act”), the subsidiary legislation issued in terms of the VFA Act, and the applicable rules, rulebooks and guidelines issued by the Malta Financial Services Authority from time to time (including Chapter 3: Virtual Financial Assets Rulebook (Virtual Financial Assets Rules for VFA Service Providers) (collectively, “Applicable Law”).
Confidence in Bequant’s integrity to act on behalf of its clients is central to the relationship of trust we have with our clients. This means that when providing services, Bequant will always act in the client’s best interests, putting clients’ interests ahead of its own.
The requirement to take all appropriate steps to identify, prevent or manage any conflicts of interest applies to all staff of Bequant. For the purposes of this Policy, Bequant staff shall include managers, employees and officers of Bequant, or any person directly or indirectly linked to Bequant by control.
The purpose of this Policy is to:
identify circumstances which may give rise to conflicts of interest entailing a risk of damage to customers’ interests;
summarise the arrangements Bequant has put in place to prevent or manage such identified conflicts of interest;
explain the disclosure process Bequant will follow for any identified conflict of interest it is unable to manage and which it cannot, with reasonable confidence, adequately protect from causing damage to a client.
4. IDENTIFICATION OF CONFLICTS OF INTEREST
Bequant have robust internal policies and procedures in place which require all staff to identify, document and manage any identified conflicts of interest in accordance with a formal escalation process. This enables Bequant to continually identify new conflicts of interest which may arise in the course of its business activities and to implement the measures required to adequately monitor, manage and control the potential impact of conflicts of interests on their clients.
In the course of providing services to clients, Bequant may have the following types of conflicts of interest, those:
between Bequant (including any director, senior manager, employee, officer, or any person or entity directly or indirectly linked to Bequant by control, or any person or entity directly involved in the provision of services at the disposal of Bequant or under the control of Bequant or via an outsourcing agreement (collectively, the “Relevant Persons”)) and a client where their respective interests in a particular outcome may be different;
between two or more clients of Bequant with competing interests;
between the personal interests of staff of Bequant and the interests of Bequant or its clients where those interests may be different;as a result of being part of a Group; whereby the respective interests of individual business units within Bequant may be different; between the commercial interests of third party service providers used by Bequant and the interests of Bequant or its clients where those interests may be different. between different companies and associates within the Bequant group, as applicable.
In particular, a conflict of interest may arise in circumstances where Bequant or a member of its staff:is likely to make a financial gain (or avoid a financial loss) at the expense of its client; has an interest in the outcome of the service provided to its client, which is distinct from the client’s interest in that outcome; has a financial or other incentive to favour the interests of one client (or group of clients) over the interests of another; carries on the same business as a client; receives an inducement from a third party in relation to a service provided to a client, in the form of monetary or non-monetary benefits or services; is in possession of information obtained in the ordinary course of its business which would benefit the individual, the Group or a client, but such information is not publicly known.
Bequant maintains a Conflicts of Interest Register which records all the conflicts of interests which entail a material risk of damage to the interests of one or more clients, and any conflicts of interest which may arise from time to time, and the manner in which the risks relating to those conflicts of interests are mitigated.
If the Compliance function identifies any conflict of interest, Head of Compliance should report the matter immediately to the Boards of Directors of Bequant Exchange Limited and Bequant Pro Limited (the “Boards”) and shall act expeditiously to address the conflicts of interest and/or to remedy any breach of this Policy.
5. MANAGEMENT AND PREVENTION OF CONFLICTS OF INTEREST
Bequant aim to manage any conflicts of interest which may arise from time to time, promptly and fairly. Bequant also have robust governance arrangements and management oversight in respect of its business activities. Key business decisions are taken by senior management and the Boards, who understand Bequant’s obligations to identify, manage and mitigate conflicts of interest.
Head of Compliance is tasked with investigating and monitoring any potential conflicts of interest identified by the staff and reporting directly to the Boards. The Compliance function adopts a holistic approach to the identification, investigation and monitoring of potential and emerging conflicts within and across different business lines of Bequant and ensures that the necessary actions are taken.
Bequant has adopted numerous policies and procedures to prevent and manage those conflicts of interest recognised within its business. Procedures and measures preventing or managing conflicts of interest principally include:
5.1 SEGREGATION OF FUNCTIONS AND INFORMATION BARRIERS
5.1.1 Segregation of duties
Bequant have clear reporting lines to avoid conflicts between different business units. An organisation chart is maintained by the Human Resources and updated from time to time as may be required in line with the operational set up of Bequant.
Bequant have appropriately segregated duties and functions, all acting independently of each another, and all under the separate direct or indirect supervision of the CEO, in order to avoid conflicts of interest where possible.
Bequant shall also prevent or control any Relevant Person from influencing another Relevant Person in the performance of their duties. Bequant have established clear segregated supervision with separate reporting lines to ensure that there is no inappropriate influence over the way in which a Relevant Person carries out the services for which he has been appointed or engaged. In the event that any Relevant Person feels that inappropriate influence is being exerted, the Relevant Person shall inform Head of Compliance without undue delay so that Head of Compliance may consult the CEO and the Board as to how to proceed on the matter.
5.1.2 Information Barriers
Bequant has put in place information barriers to prevent the flow of confidential information (including client information) between the business units within the Bequant. Such controls include the physical separation of departments and, where appropriate, system access restrictions.
5.2 STAFF CONDUCT AND INTEGRITY
All employees are responsible for identifying and managing conflicts of interest on an ongoing basis.
Senior Management is responsible for overseeing the identification, documentation, monitoring, escalation and management of all conflicts of interest as they arise within their relevant areas of responsibility at Bequant.
Bequant insists that in its dealings with clients its staff must use the highest standard of integrity in their actions at all times. All staff are expected to act honestly and to ensure they do not:
a) misuse their professional position to procure a personal benefit for themselves or any other person, or to cause detriment to the Bequant group and/or its customers; and
b) participate in any activity or employment which may compete with or conflict with the Bequant group’s interests or those of its clients (outside business interests).
The Remuneration Policy establishes the principles for the payment of fixed and variable remuneration (if any) of identified staff. In particular, Bequant have established the following procedures to mitigate and manage any conflicts of interest which may arise:
1) the remuneration of all Relevant Persons is established and paid out in line with Applicable Law and in line with the Remuneration Policy;
2) all relevant staff who are open to a conflict of interest are paid a basic salary including those in key support areas such as Compliance, Risk, Finance, Internal Audit and Operations. This salary is not dependent on company performance. A discretionary bonus structure does exist which is linked to a variety of factors. Payment and value of a such bonuses is at the discretion of Senior Management and notified to individuals only on payment
3) any person who may have an interest in the determination of the remuneration for any or all of the Relevant Persons (including as a result of a close family or other personal relationship with any of the Relevant Persons) shall abstain from such a discussion and decision.
Bequant has in place the Gift and Hospitality Policy to regulate the payment and/or receipt of payments, gifts, favours or other forms of inducements in the provision of the services to clients. The Policy provides clear parameters in which staff can provide or accept gifts and entertainment and ensures transparency through its requirement for all members of staff to disclose details of all gifts, entertainment and advantages it receives from or provides to clients or third parties.
Staff are not allowed to accept gifts, entertainment or any other inducement from any person which might benefit one client at the expense of another.
This does not preclude the acceptance of items of nominal or insignificant value that are not related to any particular transaction or activity of Bequant.
In addition, Bequant has in place the Inducement Policy. In accordance with the Policy, Bequant shall not accept and retain fees, commissions or any monetary or non-monetary benefits paid or provided by any third party or a person acting on behalf of a third party in relation to the provision of services to clients. All such fees, commissions or monetary benefits received from third parties in relation to the provision of services shall be transferred in full to the client. This does not preclude the acceptance of minor non-monetary benefits that are capable of enhancing the quality of service provided to a client and are of a scale and nature such that they could not be deemed to impair compliance with Bequant’s duty to act in the best interest of the client.
5.4 ORDER HANDLING
5.4.1 Best execution
In order to prohibit the preferential treatment of certain clients and to ensure Bequant’s clients receive as fair treatment as possible, all orders are required to be handled in accordance with the Bequant’s Order Handling and Best Execution Policy. This requires staff to take all sufficient steps to achieve the best overall trading result for clients; to carry out comparable client orders sequentially and promptly and to exercise consistent standards across all markets, clients and financial instruments.
No undue preference is permitted to be given to any client; including (but not limited to) situations when it would be commercially beneficial to Bequant or its staff to do so.
5.4.2 Fair and orderly market conditions
In furtherance of ensuring a fair and orderly dealing environment within the market, and to prevent staff or clients from engaging in market abuse, all Bequant staff are subject to ongoing market abuse training.
Such controls exist to ensure all business is conducted in accordance with the applicable laws with the aim to prevent insider trading, improper disclosure and market manipulation.
5.5.1 Personal Account Dealing
Bequant has a robust Personal Account Dealing Policy, procedures and monitoring programme. All staff and officers of Bequant, regardless of their position in the Bequant group, are required to sign and attest to their adherence to the Personal Account Dealing rules.
Staff and officers are not permitted to carry out personal transactions:
(i) in the same way as a client order or potential order before it is executed; or
(ii) In circumstances where such personal transactional activity could adversely affect a client or Bequant’s position or interest.
To ensure staff and officers do not take advantage of their position, by using information obtained during the course of their business to deal advantageously on their own account, Bequant’s Personal Account Dealing Policy prohibits staff and officers from front running customer orders.
It is an internal procedure that staff and officers must obtain approval by Compliance Function prior to carrying out personal account dealing in specified digital assets.
5.5.2 Customer Confidentiality
There are effective controls in place to manage the exchange of information between all Relevant Persons engaged in activities involving a risk of a conflict of interest. Information barriers also include separation of premises, personnel, reporting lines, files and IT-systems. Bequant respect the confidentiality of clients’ information by operating a “Need to Know” approach that restricts access to clients’ information to those Relevant Persons who have a real need for the information consistent with the scope of their responsibilities.
Additionally, Bequant is bound by applicable laws and regulations relating to the handling and processing of clients’ information.
To ensure a third party service provider of Bequant does not use information obtained in the course of the arrangement to obtain a commercial advantage at the detriment of the Bequant group or a client, all outsourcing arrangements are required to have service level agreements in place which meet the requirements of the Applicable Laws. These requirements require third parties to protect any confidential information obtained during the provision of the outsourced function.
5.6 COMPLIANCE MONITORING PROGRAMME
Bequant Compliance function has an established and documented compliance monitoring programme of which part of this programme focuses on conflicts of interest and recognising where there may be a potential conflict. The monitoring undertaken by Compliance includes, but is not limited to: reviewing Personal Account Dealing and Gifts and Entertainment policies and practices;communication monitoring to review staff adherence to client confidentiality rules; reviewing Inducement Policy; reviewing Remuneration policies and practices; reviewing Order handling policies and practices; reviewing Market Abuse policies and practices; reviewing training programmes.
5.7 DISCLOSURE OBLIGATIONS
Where the potential risk cannot be effectively managed with reasonable confidence to prevent the risk, Bequant shall, as a last resort, clearly disclose, in a durable medium, the specific conflict/s of interest to their clients in writing so that the client may make an informed decision about whether to deal with Bequant in the particular circumstances. The Head of Compliance shall be responsible for ensuring that the disclosures are fair, clear and not misleading.
5.8 DECLINING TO ACT
Where Bequant consider, they are not able to manage the conflict of interest in any other way Bequant may decline to act for a client.
6. CONFLICT OF INTEREST REGISTER
All Relevant Persons are required to immediately notify Bequant’s Compliance function of all actual or potential conflicts to which they are personally subject. This would include, for example, outside business interests, having a close family relationship with a client, any general trading discretion over a client’s account or any other personal situations or circumstances which could give rise to a conflict of interest or the appearance of a conflict of interest.
Bequant’s Compliance function maintains a Conflict of Interest Register to log such conflicts of interest and will determine and advise applicable mitigating circumstances and/or actions Bequant might take. Any Relevant Person that is in any doubt as to whether a personal situation or circumstance may give rise to a conflict of interest, should discuss it in confidence with the Compliance function
7. TRAINING AND MONITORING
Bequant provide training to members of staff on conflicts of interest and procedures for managing conflicts of interest.
8. REPORTING OF CONFLICTS OF INTEREST
Bequant provide training to members of staff on conflicts of interest and procedures for managing conflicts of interest.
Where a possible conflict of interest has been identified, a staff member shall initially refer such conflict of interest to his/her immediate supervisor to assist in the assessment of a material risk of damage. The staff member shall send the necessary notification, together with full details, to allow scrutiny, of:corrective and preventive actions; how these actions were considered appropriate; any conditions imposed; and whether there are still ongoing conflicts, how these are being managed and have been advised to the relevant Clients.
The Board shall receive on a frequent basis, and at least annually, written reports on all situations referred to above.
9. REVIEWING CONFLICTS OF INTEREST MANAGEMENT
Bequant will periodically review and update its conflicts of interest policy, processes and procedures at least annually and in accordance with Applicable Law.
This Policy has been approved by the Board. Any material updates to this Policy shall be discussed with the Head of Compliance, approved by the Board.