Essential Strategies for Financial Services Compliance, 2nd Edition

Appendix CCompliance in the Front Office

This appendix briefly describes the activities of four typical Front Office departments before going on to look at some of the main regulatory requirements that are of relevance to them. Note that where a requirement is shown as being relevant to a particular department, this may not be true in relation to everything that they do, depending on the exact nature of the product and/or service involved. Also note that the use of the terms ‘Client’, ‘Customer’ and ‘Eligible Counterparty’ in this section follows their FCA definitions.

Topic
Customer sales and trading	222
Investment management (asset management, portfolio management)	223
Corporate finance and investment banking	223
Research	223
Business and regulatory approvals	224
Relationship with Compliance department	225
Client's best interest rule	225
Provision of information about the firm	226
Client agreements	228
Best execution	229
Prompt execution	232
Client limit orders	233
Suitability	233
Appropriateness (for non-advised services)	234
Churning and switching	236
Aggregation and allocation	237
Order and execution records	238
Training and competence (‘T&C’)	238
Approved Persons rules	240
Inducements	241
Voice recording	241
Communicating with clients (fair, clear and not misleading communications)	242
Financial promotions	243
Client categorization	244
KYC	245
Anti-money laundering (AML) and counter-terrorist financing (‘CTF’) controls	246
Reporting suspicions ...