This Conflicts of Interest Policy (hereinafter, the “Policy”) is provided to you (our Client or prospective Client) in accordance with the Investment Services and Activities and Regulated Markets Law of 2017 L.87(I)/2017., pursuant to which R1Investing, a trading name of R1Investing authorized and best by the Cyprus Securities and Exchange Commission (CySEC) under license No. 269/15, (hereinafter the “Company”) is required to take all appropriate steps to detect and avoid conflicts of interest.
The Company is committed to act honestly, fairly and professionally and in the best interests of its Clients and to comply, in particular, with the principles set out in the above legislation and/or any other relevant Laws and/or Regulations when providing investment services and ancillary services related to such investment services.
The purpose of this document is to set out the Company’s approach in identifying and managing conflicts of interest which may arise during the course of its normal business activities. In addition, this document identifies circumstances which may give rise to a conflict of interest.
The Policy applies to all its directors, employees, any persons directly or indirectly linked to the Company (hereinafter called “Related Persons”) and refers to all interactions with all Clients.
3. General Identification of Conflicts of Interest
3.1. General Principles
When the Company deals/transacts with or on behalf of the Client, the Company (or an associate or any other person connected with the Company) may have an interest, relationship or arrangement in relation to the Transaction concerned or that it conflicts with the Client’s interest. The Company hereby identifies and discloses a range of situations and circumstances which may give rise to a conflict of interest and potentially, but not necessarily, be detrimental to the interests of one or more Clients.
The Company shall take all appropriate steps to identify conflicts of interest situations between the Company and its Related Persons, the Company and its Clients or between its Clients during the course of the provision of investment services.
The Company’s Policy, in general:
- identifies circumstances which may give rise to conflicts of interest entailing a material risk of damage to the interest of the Client
- specifies appropriate mechanisms and systems to manage the potential conflicts;
- maintains systems designed to prevent damage to our clients’ interests through identified conflicts.
The affected parties if conflict of interest arises can be the Company, its employees or its clients. More specifically, a conflict of interest may arise, between the following parties:
- Between the client and the Company;
- Between two clients of the Company;
- Between the Company and its employees;
- Between a client of the Company and an employee/ manager of the Company;
- Between Company’s Departments.
3.2. Criteria and Circumstances
For the purposes of identifying the types of conflicts of interest that may arise in the course of providing investment and ancillary services whose existence may damage the interest of a Client, the Company takes into account, whether the Company or a relevant person, is in any of the following situations, whether as a result of providing investment services or investment activities or otherwise:
- The Company or a Related Person is likely to make a financial gain or avoid a financial loss at the
expense of a Client;
- The Company or a Related 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 monies, goods or
services, other than the standard commission or fee for that service;
- The Company or a Related Person has an interest in the outcome of a service provided to the Client
or of a transaction carried out for the Client, which is distinct from the Client's interest in that
- The Company or a Related Person has a financial or other incentive to favor the interest of another
Client or group of Clients over the interests of the Client;
- The Company or a Related Person carries on the same business as the Client.
3.3. Non-Exhausting list of Circumstances of Conflicts of Interest:
While it is not feasible to define precisely or create an exhaustive list of all relevant conflicts of interest that may arise, as per the current nature, scale and complexity of the Company’s business, the following list includes circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more Clients, as a result of providing investment services:
(a) The possible use of confidential information derived from the different departments of the Company;
(b) The remuneration of Providers by the Clients through the Advisors where the interest of the Client conflicts with the interest of the Provider.
(c) the Company may have an interest in maximizing trading volumes in order to increase its commission revenue, which is inconsistent with the Client’s personal objective of minimizing transaction costs;
(d) the Company may be providing other services to associates or other Clients of the Company who may have interests in Financial Instruments or Underlying Assets, which are in conflict or in competition with the Client’s interests;
(e) the Company is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
(f) the Company may receive or pay inducements to or from third parties due to the referral of new Clients or Clients' trading;
(g) Any market information, training and discussions as regards possible market trends should not be construed as trading/investment advice. It is the client responsibility to perform its own market research before entering into any position;
(h) the Company may be matching the Client’s orders with that of another Client by acting on such other Client’s behalf as well as on the Client’s behalf;
The Client consents to and authorizes the Company to deal with or for 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. Company employees are required to comply with a policy of independence and to disregard any such material interest or conflict of interest while offering services to the Client.
3.4. Personal Transactions of Employees
All employees of the Company that are involved in activities that the Company is authorized to provide
must be aware of the restrictions on personal transactions detailed below. This section also includes
personal transactions which may be performed by persons who are employed by companies which perform an
outsourced activity to the Company, if any. In case where any prohibited personal transactions are
entered into, the Company must be notified promptly.
Employees of the Company that are involved in the provision of investment services or other activities must not enter into the personal transactions that which will cause the following:
- enter into a transaction prohibited under Regulation (EU) No 596/2014,
- misuse or cause improper disclosure of confidential information,
- enter in a transaction that is likely to conflict with any obligations of the Company, or the employee, that are stated under the law.
Where the employee has come into contact with information which is not publicly available to clients or
cannot readily be inferred from information that is so available, the employees must not act or
undertake personal transactions or trade in the execution of an unsolicited client order, on behalf of
any other person, including the Company.
The employees should also refrain from disclosing any opinion other than in the normal course of business, if the person who is given the opinion is likely to enter into a transaction which is contrary to the above. The employee should further not provide an advice or provide to anyone any information, other than in the proper course of his/her employment, especially if it is clear that the person who is receiving such information will advise another party who might acquire or dispose of financial instruments to which that information relates.
Any client’s orders that have been relayed to any employees of the Company must not be disclosed to another party. An employee of the Company who has knowledge of a potential client’s order must not carry out a personal transaction that is the same as the client order, if this will cause a conflict of interest.
4. Management of Conflicts of Interest
The following measures have been adopted by the Company for ensuring the requisite degree of independence
(list is not exhaustive):
(a) The Company undertakes ongoing monitoring of business activities to ensure that internal controls are appropriate;
(b) The Company undertakes effective procedures to prevent or control the exchange of information between Related 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;
(c) The separate supervision of Related Persons whose principal functions involve providing services to Clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the Company;
(d) Measures to prevent or limit any person from exercising inappropriate influence over the way in which the Related Person carries out investment services;
(e) Measures to prevent or control the simultaneous or sequential involvement of a Related Person in separate investment services where such involvement may impair the proper management of conflicts of interest;
(f) A policy designed to limit the conflict of interest arising from the giving and receiving of inducements;
(g) Chinese walls restricting the flow of confidential and inside information within the Company, and physical separation of departments;
(h) Procedures governing access to electronic data;
(i) Segregation of duties that may give rise to conflicts of interest if carried on by the same individual;
(j) Personal account dealing requirements applicable to Related Persons in relation to their own investments;
(k) Establishment of in-house Compliance Department to monitor and report on the above to the Company’s Board of Directors;
(l) Prohibition on officers and employees of the Company having external business interests conflicting with the interests of the Company without the prior approval of the Company's board of directors;
(m) A “need to know” policy governing the dissemination of confidential or inside information within the Company;
(n) Appointment of Internal Auditor to ensure that appropriate systems and controls are maintained and report to the Company’s Board of Directors;
(o) Establishment of the “four-eyes” principle in supervising the Company’s activities.
(p) A policy designed to ensure that clients’ orders are executed in terms favorable to them.
4.2. Specific Identification of Conflict of Interest and Measures for their Management
The Company is constantly conducting an in-depth analysis of its business and organizational arrangements including best execution arrangements, inducement practices, remuneration practices and investment research/marketing communication procedures, to ensure that all likely conflict of interest situations are identified regardless of materiality.
4.3 Disclosure of Conflict of Interest
The Company must adequately consider how to manage all conflicts of interest before resorting to disclosure. This will be a last resort after all appropriate steps have been taken.
When the measures taken by the Company to manage conflicts of interest are not sufficient to ensure with
reasonable confidence that risks of damage to clients’ interest will be prevented, the Company proceeds
with the disclosure of conflicts of interest to the client. Prior to carrying out a transaction or
before providing an investment or an ancillary service to a client, the Company must disclose any actual
or potential conflict of interest to the client. The disclosure will be made in sufficient time
and in a durable manner and shall include sufficient detail, taking into account the nature of the
client, to enable him to take an informed decision with respect to the investment or ancillary service
in the context of which the conflict of interest may arise.
Clients will be given the opportunity to decide on whether or not to continue their relationship with the Company due to the conflict disclosed, without being unreasonably prohibited to do so.
4.4 Record Keeping
The Company shall keep and regularly update a record of the kinds of investment and ancillary services or
investment activities carried out by or on behalf of the Company in which a conflict of interest
entailing a material risk of damage to the interests of one or more clients has arisen or, in the case
of an ongoing service or activity, may arise. The following documentation shall be maintained for seven
- this policy, any functional variations if applicable;
- the Conflicts Log and the Conflicts Identification and Management Map;
- rules, procedures and processes;
- training material and training records;
- Conflicts of Interest Notification Forms;
- details of any review work carried out (including any decisions made on conflicts management); and
- any other documentation used to demonstrate the management of conflicts of interest.
4.5 Enforcement and Review of the Policy
The Company’s Chief Executive Officer is responsible for clearly allocating responsibility and delegating
authority to accountable individuals to ensure that those involved are aware of their involvement and
that the Conflict Officer has a sufficient level of authority and independence in order to carry out
their responsibilities effectively.
The Company’s Senior Management is required to:
- fully engage in the implementation of policies, procedures and arrangements for the identification, management and ongoing monitoring of conflicts of interest; adopt a holistic view to ensure the identification of potential and emerging conflicts within and across business lines and to ensure that informed judgments are made with respect to materiality;
- raise awareness and ensure compliance of relevant individuals by ensuring: regular training (including to contractors and third-party service providers’ staff) both at induction and in the form of refresher training; the clear communication of policies, procedures and expectations; that awareness of conflicts procedures forms part of the performance review/appraisal process, and that the best practice is shared throughout the Company.
- sponsor robust systems and controls and effective regular reviews to ensure that strategies and controls used to manage and mitigate risks remain appropriate and effective and that appropriate warnings and disclosures are issued to clients where necessary;
- utilize management information to remain sufficiently up-to-date and informed; and
- support an independent review of the processes and procedures in place.
Individuals are required to identify new conflicts of interest arising out of the activities/ services
that they perform and engage in the process to notify line management upon identifying any potential
The Company encourages its clients to periodically review this Client Conflict of Interest Policy so that they are always aware of what information the Company collects, how it uses it and to whom it may disclose it, in accordance with the provisions of this Policy.
4.6. Amendment of the Policy and Additional Information
The Company reserves the right to review and/or amend its Policy and arrangements whenever it deems this appropriate according to the terms of the Client Agreement between the Company and the Client.
5. Client’s Consent
By entering into a Client Agreement with the Company for the provision of Investment Services, the Client is consenting to an application of this Policy on him. Further, the Client consents to and authorizes 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 interest in a Transaction, without prior reference to the Client.
In the event that the Company is unable to deal with a conflict of interest situation it shall revert to the Client.