WORKSHOP ON proposed CMA regulations BUSINESS

Transcript:WORKSHOP ON proposed CMA regulations BUSINESS:
WORKSHOP ON proposed CMA regulations BUSINESS CONDUCT regulation John Carson Lead Advisor to CMA Compliax Consulting Inc. Toronto, Canada Khalil Ghalayini Head of the Financial Control Unit CMA, Beirut Lebanon. September 2014 Agenda Purpose and background Principles of conduct Governance, systems and controls Dealings with clients Record keeping Client Money and client assets Business Conduct 1 Purpose of business conduct Regulation Business Conduct = Dealings with clients (sales compliance) Governance, systems and controls Compliance and supervision policies and procedures Recordkeeping Client money and assets rules Establish the rules and standards of conduct for AIs’ securities business and client relationships Set the policies, procedures, systems and controls that AIs must establish and implement Requirements to notify or report matters to the CMA Establish the rules and standards of conduct for registered persons Business Conduct 2 Background The CMA administers the Capital Markets Law (Law 161). CMA is responsible for regulating business conduct and supervising licensed institutions (capital markets activities). Banks may, but are not required to, set up subsidiaries for capital markets activities. If securities activities carried out within bank, CMA regulations and supervision programs apply only to those activities. Business Conduct Regulation replaces existing CMA Decisions and BDL circulars that cover these matters. Substantial changes to reflect international standards Regulation applies only to Approved Institutions (AIs), registered persons and relevant employees. Business Conduct 3 principles of conduct Conduct business with honesty and integrity, and due regard for clients’ interests. Use due skill, care and diligence. Ensure sound management of its business, including corporate governance, risk management and compliance. Ensure the financial soundness of its business, including maintaining adequate financial resources and controls. Ensure that client money and client assets are protected. Communicate with clients in a clear, fair and not misleading way. Ensure advice and discretionary decisions for clients are suitable. Effectively identify and minimize conflicts of interest with its clients. Business Conduct 4 corporate governance Directors must have necessary expertise to effectively oversee business Board of directors is responsible for compliance > must ensure adequate systems and controls Clear division between role of Board and management CEO is responsible for overseeing implementation of systems & controls CCO must have direct access to Board AI must file any information or records requested by CMA. Business Conduct 5 systems and controls AI must maintain systems and controls appropriate to the nature of its securities business. If CMA approves, a bank licensed