Ethics Standard 1A

I am a manager located in Holland. I have clients in Holland and Sweden. Internal crossing trades are allowable under Swedish law, but not Holland’s. Per Code and Standards, internal crossing trades cannot be conducted for any client because the fund is located in Holland. If the fund was located in Sweden, would internal crossing trades be acceptable, if only applied to their Swedish clients? Or is it a violation since clients are not being treated fairly?

I would say allowable, but to keep a look out for any wording that implies they are treated unfairly. tricky.

I think if code and standards say it cannot be conducted for any client, then it cannot be conducted at all.

The code and standards did not say it cannot be conducted. My answer is that the clients would not be treated fairly if the crossing is done for only Swedish clients. The crossing should be done for all clients in Sweden. This is because the investments is no longer under the jurisdiction of Holland.

I’d think you have to pick the strictest regime, and use that. Since code and standards says not allowed, I don’t think you can.

you absolutely can if the fund is located in Sweeden. Think of it this way: you are a manager in Sweeden with only Sweedish clients - therefore you can internally cross since Sweedish laws have no restriction on this. one day a company from Holland approaches you to manage their pension fund. Just because you take on the account does not mean you can no longer internally cross for your Sweedish clients, you just can’t cross them with your Holland clients.

another note on this, if i remember right, clients must be treated FAIRLY but not necessarily EVENLY, therefore if there was disclosure about this to the Holland clients then it would be fine (i think)