1. In accordance with the MFSA Conduct of Business Rulebook, Rizzo Farrugia is required to establish, implement and maintain an effective policy to prevent conflicts of interest from adversely affecting the interests of its Clients.
Objective of the Policy
2. The purpose of this policy is to provide information on the approach Rizzo Farrugia takes in order to avoid or identify and fairly manage the conflicts of interest that may arise during the course of its business activities.
3. The main categories of potential conflicts of interest involve those arising between the differing interests of:
i. Rizzo Farrugia and a Client;
ii. Rizzo Farrugia’s directors, or employees (each a ‘Relevant Person’) and a Client; and
iii. Two or more Clients of Rizzo Farrugia during the course of the provision of an investment service.
Definition of Conflict of Interest
4. A conflict of interest is considered to exist where in the course of providing an investment service, the interest of a Client may be adversely affected. For the purposes of identifying types of conflicts of interest that may adversely affect the interests of a client, Rizzo Farrugia shall take into account and determine whether itself or a Relevant Person:
i. Has made or is likely to make a financial gain or has avoided or is likely to avoid a financial loss at the expense of the Client;
ii. Has an interest in the outcome of a service or of a transaction carried out on behalf of a Client, which is distinct from the interest of the Client in that outcome;
iii. Has an incentive, financial or otherwise, to favour the interest of a Client or group of Clients over the interest of another Client or group of Clients; and
iv. Received 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 monetary or non-monetary benefits or services.
Identification of potential Conflicts of Interest
5. Conflicts of interest may arise in various scenarios and generally when Rizzo Farrugia is performing one or more of the following functions:
i. Creation and distribution of investment research reports;
ii. Provision of investment advice;
iii. Provision of discretionary management services;
iv. Execution of orders on the account of Rizzo Farrugia or a Relevant Person; and
v. Provision of sponsor and corporate advisory services.
Conflict management procedures
6. Rizzo Farrugia maintains and operates effective organisational and administrative procedures to fairly and promptly manage any conflicts of interest which may arise from time to time and to ensure that the persons involved in the different activities, which may give rise to a conflict of interest, carry on those activities at an appropriate level of independence. Rizzo Farrugia also undertakes ongoing monitoring of business activities to ensure that internal policies, procedures and controls are appropriate for the prevention and management of conflicts of interest.
7. Rizzo Farrugia has adopted the following measures and controls in order to manage conflicts of interest:
i. Rizzo Farrugia maintains internal procedures which set out the manner in which employees should manage instances which could lead to conflicts of interest and internal guidelines for employees, relating to the identification, prevention and management of conflicts of interest. Rizzo Farrugia also maintains a conflict of interest register through which it identifies and records conflicts of interest and documents the action taken to manage these conflicts.
ii. Rizzo Farrugia maintains personal account dealing procedures that regulate personal transactions of Relevant Persons executed through Rizzo Farrugia or through any other licenced intermediary.
iii. Rizzo Farrugia staff members may not affect personal transactions in publicly traded securities without the prior consent of the Compliance Officer of Rizzo Farrugia.
iv. Rizzo Farrugia adopts effective procedures to prevent or control the exchange of information between Relevant 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.
v. Rizzo Farrugia has procedures and arrangements that provide for the prompt, fair, and expeditious execution of Client orders. To ensure the fair treatment of all Clients’ orders, the Best Execution Policy (‘BEP’) of Rizzo Farrugia requires employees to take all sufficient steps to achieve the best possible result for the Client.
vi. The BEP clearly provides that Client orders are to be executed in accordance with the time of their receipt and the price considerations.
vii. Rizzo Farrugia may have relationships with third-parties who remunerate the company via commissions. Rizzo Farrugia ensures that any such commissions and / or non-monetary benefits provided by third parties do not impair its duty to act in the best interest of the Clients.
viii. Rizzo Farrugia has procedures in place to facilitate the identification and regulate the classification of all relevant inducements in order to ensure that such inducements do not impair Rizzo Farrugia’s ability to act in the best interests of its Clients.
ix. Rizzo Farrugia ensures that all the remuneration of Relevant Persons is carefully structured to promote sound and effective risk management whilst ensuring that such Relevant Persons act in the best interest of the Client.
x. Rizzo Farrugia has a fixed remuneration policy applicable to all directors and employees, ensuring the removal of any direct link between the remuneration of Relevant Persons and the levels of business generated by Relevant Persons, thereby ensuring the avoidance of conflict between the personal interests of Relevant Persons and the best interests of Clients.
xi. Rizzo Farrugia provides training on an ongoing basis to ensure that its Relevant Persons are aware of all obligations and procedures applicable when providing any investment service.
xii. Rizzo Farrugia, its directors and employees shall avoid placing themselves in a situation where a conflict with the interest of a Client may arise. Employees and Directors must disclose to the Compliance Officer any situations that reasonably would be expected to give rise to, or the appearance of, a conflict of interest.
xiii. Where Rizzo Farrugia has a material interest in a transaction, before undertaking the transaction for or on behalf of a client, Rizzo Farrugia shall disclose the material interest to the Client.
xiv. Rizzo Farrugia monitors the effectiveness of the Policy on an annual basis.
Last updated 03.01.2018