Duty of Loyalty
Stockbroking firm must take appropriate organizational measure to either prevent conflicts of interest between their clients or ensure that conflicts of interests are not detrimental to the client’s interests.
Stockbroking firms must apprise the client in an appropriate manner of any disadvantage the client has incurred as a result of conflict of interest which was inevitable due to exceptional circumstances.
Clients must be treated fairly and equally. Their transactions must be treated equally under equal circumstances. Firms must be in a position to finish the client with all explanatory information if due to prevailing market conditions with respect to price, volume or timing, competing clients’ transactions in line the instructions received were not executed.
Firms must adopt chronological execution of transaction. Securities transactions must be executed or scheduled for execution by the order of instruction entry, irrespective of whether such transactions are being executed for a client’s account, the stockbroking firm’s own account or an employee account.
The principle of chronology applies unless a conflict of interest is prevented by operational segregation (e.g. of proprietary from client trading business).
Acting in the client’s best interest, stockbroking firms may deviate from the policy of chronological execution of securities transactions.