Handling conflicts of interest
The Metzler Group has implemented rules and procedures for dealing with potential conflicts of interest that could affect securities and other services provided. Conflicting spheres of interest can arise within and between business areas and companies in the Metzler Group, and among members of the management, employees, other persons associated with us, external agents and clients.
Metzler has therefore implemented has a range of measures that are designed to identify, remove and avoid conflicts of interest and thus to ensure we meet our organisational obligations under the German Banking Act (KWG), the German Investment Code (KAGB), the German Securities Trading Act (WpHG), the German Investment Services Business Conduct and Organisation Ordinance (WpDVerOV) and the relevant ordinances, circulars and decrees issued by the Federal Financial Supervisory Authority (BaFin), for instance the Minimum Requirements for the Compliance Function and Additional Requirements Governing Rules of Conduct, Organisation and Transparency for Investment Services Enterprises (MaComp).
These rules and procedures are continuously monitored and updated and we disclose unavoidable conflicts of interest to our clients. In addition, our business strategy, the resultant risk strategy and our code of conduct and compliance policy reflect our basic philosophy of ensuring that wherever possible the services we provide do not entail conflicts of interest. This is demonstrated, for example, by our policy of refraining from virtually all credit business and from own-account trading in shares.
Last but not least, employees in functions of relevance for compliance are required to disclose their personal transactions so that we can identify and avoid any existing or potential conflicts of interest.
When preparing financial analyses, we therefore give priority to the necessary professional knowledge, care and conscientiousness, and disclose any potential conflicts of interest. Disclosure of possible conflicts of interest within Metzler or a company closely associated with any company in the Metzler Group are disclosed in such analyses and via the Disclosures section of our website.
We have set up procedures for business with new products and the use of new distribution channels. These cover all organisational units involved and ensure that all significant risks are taken into account. The Compliance function supports these procedures.
We also have individual regulations on dealing with conflicts of interest arising from inducements in various client segments. Here we are guided by the principle that our securities and related services should be performed with the greatest possible care, conscientiousness and expertise in the interests of our clients.
In the distribution of securities, we generally receive inducements from investment fund companies, for example, turnover-related commission payments, which are paid to us by such companies out of their management fees. Further, we receive front-load premiums where these are charged for the sale of investment units or other securities. These fees and inducements, together with any other incentives, are used to provide an efficient and reliable infrastructure for the purchase and sale of financial instruments. We inform our clients when we receive or pay such fees and disclose the details to them on request.
Finally, in connection with securities business, we also receive benefits from other service providers such as brokers, IT specialists, auditors, etc., for example, the provision free of charge of financial analyses or other information material, training and, in some cases, technical services and equipment to enable us to access third-party information and distribution systems. Accepting such benefits is not directly related to the services we provide. Rather, we use them within the Metzler Group to ensure that our services meet the high quality standards required by our clients and to steadily improve the quality of our services.
Agents who establish contact to clients with our without reference to a specific transaction or undertake individual transactions may receive a performance-related commission payment or fixed fee from us. In addition, tied agents may receive direct payments from third parties, especially fund companies and securities issuers.
Moreover, under Section 70 of the German Investment Code (KAGB), depositories are required to issue organisational and procedural regulations to ensure that they can perform their tasks without conflicts of interest between them and the investment company. Conflicts of interest may arise, for example, from the fact that the investment company desires to minimise third-party fees (transaction fees, custody fees, etc.) for performance reasons while the depository is interested in high fees.
Staff at depositories notify the management of the investment company and any other companies affected of any identified conflicts of interest within the meaning of the Alternative Fund Managers Directive (AIFMD), the German Investment Code (KAGB) and any more detailed accompanying ordinances. The management and the Compliance function then take any necessary decisions and establish procedures to ensure that all action taken is in the best interests of the assets under management and the investor.
If you have any questions about conflicts of interest, please contact the Compliance Office at Metzler Bank.
Head of Compliance
Bankhaus B. Metzler seel. Sohn & Co. KGaA
60329 Frankfurt am Main, Germany
Phone (+49 - 69) 21 04 - 3 94