Effecting insurance contracts is an exception to the rule requiring retail clients to be sent a client
agreement. The location of the client is irrelevant.
Which is not appropriate action for avoidance of COI?
- Disclosing an interest to a client
- Declining to act for a customer
- Relying on written COI policy
- Implementing Chinese walls in place of PAD -
✔✔
Implementing Chinese walls instead of PAD.
PAD cannot be substituted by Chinese Walls. PAD rules are mandatory.
An authorized firm, acting on behalf of client, receives buy order before market opens. Firm believes
market will open sharply lower due to SP 500 losses overnight. What to do?
- Order should be executed asap
- transaction may be postponed providing firm has obtained permission from client
- firm may delay execution if it believes in best interest of client
- transaction must be executed as soon as market opens -
✔✔
Firm may delay if it believes in best
interest of customer.
Rule states that transaction should be executed as soon as reasonably practicable. Transactions may be
delayed if the firm has taken reasonable steps to ensure the deal will not operate to the client's
disadvantage.
What must firm do when a specific client instruction would prevent a firm from following its order
execution policy?
- Decline to carry out the transaction
- Ask the client to confirm the instruction in writing
- Carry out the order as instructed
- Ignore the instruction and follow its order execution policy -
✔✔
Carry out the order as instructed.
Required by COBS
