- Preserving the reputation of its members and of the individuals and corporate bodies active in Switzerland or anywhere in the field of futures, options and related underlying instruments;
- Establishing clear rules of conducts to its members, especially in a sector in which no specific rules and regulations exist at the time;
- Enhancing and furthering the protection granted by the law to the customers of those members of the Association who are engaged in activities related to futures, options and related underlying instruments;
- Preventing dishonest or illegal practices in these fields;
- Promoting the highest degree of professionalism and business ethics among the members of the Association;
- Preserving the good repute of the Swiss financial place and the futures and options industry world-wide, and combating illegal and unethical practices;
- Preventing money laundering;
- Promoting the use of futures, options and related instruments.
THE SWISS FUTURES AND OPTIONS ASSOCIATION HAS ISSUED THE PRESENT CODE OF CONDUCT:
SCOPE
 Only those companies or organizations which will have adhered to the present Code of Conduct will be eligible to become or remain members of the Association, being specified that the provisions of the present Code shall only apply to members of category A as defined in the By-laws of the Association.
The present Code of Conduct shall apply to all the operations and activities of the Association's members, whether conducted in the form of a company, a branch or in any other form. This applies regardless whether the Association’s member operates in Switzerland or outside Switzerland and regardless whether it is domiciled in Switzerland or outside Switzerland. This does not apply when the national law of the member in question contains similar rules of conduct and does not allow the said member to adhere to the present Code.
The present Code of Conduct does not modify in any way any of the provisions of Swiss or foreign law which govern the activities and operations of the Association's members in Switzerland or abroad.
The present Code of Conduct merely purports to set forth formally in a document binding upon the Association's members the rules of ethics applied by professionals. However, these rules may be regarded as legislation under the laws of official self-regulation.
PROCEDURES
In accordance with the provisions of Article 7.5. of the By-Laws, any amendments, modifications, additions of any of the terms and conditions of the present Code of Conduct shall be of the exclusive competence of the General Meeting of the Association and may only be voted on by “AA” members (commission houses and clearing brokers) of category A.
Suggestions with regard to amendments, additions or modifications of the terms and conditions of the present Code of Conduct must be circulated for examination to the members of the Association at least four weeks prior to the date of the Association's Annual General Meeting.
Any member of the Association who wishes to suggest amendments, modifications or additions to the present Code of Conduct must submit his proposal in writing to the board of the Association no less than six weeks prior to the Association's Annual General Meeting.
RULES AND REGULATIONS
Article 1 (general rules of conduct)
- The members owe their customers:
a. a duty of information; in particular, they shall point out to their customers the risks entailed by the transactions;
b. a duty of care; in particular, they shall ensure that the orders of their customers are fulfilled in the best manner possible;
c. a duty of loyalty; in particular, they shall ensure that any possible conflict of interests does not disadvantage their customers.
Article 2 (publicity)
- The members shall refrain from any publicity which, by its nature, wording or appearance, could be harmful to the image and reputation of the industry taken as a whole or which would purport to guarantee profits to customers in any form whatsoever, or which would emphasize profit opportunities but which would fail to simultaneously state clearly risks of losses.
- The members shall further refrain from any publicity which would directly or indirectly affect the reputation of another member of the Association.
Article 3 (remuneration)
- The members shall refrain from any publicity which by its nature, wording or appearance could create misunderstandings between the member and its client as a whole or which would purport in misleading full transparency of all commission charges (including rebates received by member), advisory and management fees, exchange and clearing fees, regulatory reporting obligations and customer’s own obligations.
- Profit participation by a member shall be properly explained to client. In case profit participation of any sorts are agreed upon, the total amount of the costs, fees and other amounts due by the client shall remain within the industry standards.
Article 4 (marketing)
The members shall refrain from using overly aggressive methods in their marketing campaigns purporting to acquire new clients for their business; they shall be particularly careful to avoid any misrepresentation in any document used vis-à-vis potential clients.
Article 5 (information of the clients)
- The members shall take whatever actions as will be necessary to advise in writing their client on risks, rights and obligations, regulatory reporting, sanctions, operation and any kind of costs and fees related to futures and options transactions and position taking on their behalf.
- The members shall take whatever action as will be necessary to keep their clients at all times fully informed and give full transparency of the positions taken for them, of any transactions conducted on their behalf, of any cash or collateral margin related to any of these transactions and positions, of any position limits set and utilized against the client’s account and of the risks connected with such operations, and of the costs, fees, rates and commissions which will be charged for or is related to the transactions and operation conducted on their behalf.
Article 6 (information about the clients)
The members shall endeavor to know, inasmuch as necessary, the financial, business and operating situation of their customers to ensure they can afford risks resulting from futures and options, shall oversee the daily exposure related with such transactions, shall ensure the customer is informed at all times and shall act accordingly.
Article 7 (segregation of funds)
The members shall take whatever steps as will be necessary in order for them to clearly segregate their own operations and accounts from those of their customers and ensure that their clients interest is protected from their own interest.
Article 8 (applicable rules and regulations)
The members shall endeavour to know, inasmuch as necessary, the rules and regulations of any exchange, clearinghouse and regulatory body applicable to trades and positions for their own account or on behalf of their customer and shall fully accept and follow those rules and regulations.
Article 9 (preventing money laundering)
The members shall, with the care which is appropriate in view of the circumstances, ensure that the funds which are entrusted to them by their customers are not of a criminal origin.
In this perspective, the members shall:
a. on entering into business relations, check the customer's identity by means of a supporting document;
b. require the customer to provide a written declaration stating who is the beneficial owner of the funds if (1) the customer is not the beneficial owner or the matter is subject to doubt; (2) the customer is a domicile company; (3) a cash transaction is effected for a large sum;
c. undertake further verification when, in the course of business relations, doubts arise as to the identity of the customer or the beneficial owner of the funds;
d. draw up and retain documents relating to transactions affected and to clarification required;
e. ensure that their staff receives adequate training and that checks are carried out.
Article 10 (members acting as experts)
1. According to the leading role played by the Association as a reference within the futures and options industry, the members shall accept to function as experts when they are requested to, either on a private basis or in the context of a judicial procedure.
2.
The members shall then act in accordance with the general standards applicable to the expertise (adequate knowledge and experience, independence, due diligence and discretion).
Article 11 (specific guidelines)
1. The Association's Board of Directors may on its own initiative issue from time to time more specific guidelines with regard to these questions or any question that it shall consider of importance for the Association itself or for a category of the Association's members. These guidelines shall have the same binding nature as the present Code of Conduct.
2.
In particular, the Board of Directors shall have this power in connection with new developments within the futures and options industry, such as internet and other electronic systems for information or trading.
SUPERVISION
The members of the Association expressly authorize the Board of Directors of the Association, or any person or company expressly empowered by the Board to that effect, to conduct investigations purporting to verify the correct application of the present Code of Conduct.
The Association's Board of Directors, or any person or company expressly empowered by it to do so, may carry out, or order, such investigations whenever it deems it desirable or necessary and without having to state any reason for doing so.
The members undertake to hold at the disposal of the Association's Board of Directors (or of the person or company expressly authorized by the board to that effect) all documents, statements, trade confirmations, commission runs, etc. used by them in their activities and to furnish all information and explanations which may be requested during the course of such investigation.
Within thirty days of completion of the investigation procedure, a copy of the inspection report shall be furnished to the member who has been so inspected.
In the light of the result of an investigation report, the Association's Board of Directors may decide to issue recommendations or sanctions against the member who is in default under the provision of the present Code of Conduct or under the provisions of the guidelines which might have been issued by the Board subsequently.
The ultimate sanction is the expulsion from the Association.
DURATION
This Agreement shall remain valid and binding vis-à-vis all members of the Association as long as they remain members.
September 2000 |
