To ensure timely and efficient trades in each of the markets in which the Fund invests, only one stockbroker in each market should be used. The board should also consider buying an equity stake in each of the appointed brokers as an added profit opportunity
Question:
Which aspect of the Asset Manager Code of Professional Conduct would most likely be violated? A) Priority of transactions B) Fair dealing C) Best execution
Answer:
C is correct. The Asset Manager Code calls for the manager to maximize client portfolio value by seeking best execution for all client transactions. If trades only go through one stockbroker, best execution cannot be ensured. In addition, any equity ownership in these brokers should be disclosed because this arrangement has the potential for conflicts of interest.
Fully agree, but this wouldn’t go under “Fair dealing”?