Decree No. 258 / 2004 Coll.
Order setting out the details of compliance with the rules on the prudent provision of investment services and more detailed arrangements for the conduct of a securities dealer with customers
Valid
Order
Effective from 01.05.2004
Text versions:
01.05.2004
30.04.2004
Zobrazeno prvních 200 z celkem 404 ustanovení tohoto předpisu.
Zobrazit celý předpis →
Pro stažení celého znění použijte tlačítko Stáhnout výše.
258
DECLARATION
of 12 March 2004
laying down details of compliance with the rules on the prudent provision of investment services and of more detailed arrangements for the conduct of a securities dealer with customers
According to Article 199 (2) (c) in conjunction with § 12 (7) and § 199 (2) (f) in conjunction with § 15 (4) of Act No. 256 / 2004 Coll., on Capital Market Business, hereinafter referred to as "the Act":
DETAILED RULES FOR THE PROVISION OF INVESTMENT SERVICES
Organisational rules
(Paragraph 12 (2) of the Act)
(1) A securities dealer and a foreign person who has its registered office in a State which is not a Member State of the European Union and provides investment services in the Czech Republic through an organisational component, on the basis of an authorisation from the Securities Commission (hereinafter referred to as "the Commission") to provide investment services through an organisational component (hereinafter referred to as "the trader"), shall adopt an organisational rules governing the organisational structure of the trader, the authorisation, duties and the workload of the managers of the trader and other employees of the trader.
(2) The trader entrusts employees, mutatis mutandis to the scope of the investment services provided in accordance with the permit (Section 6 of the Act),
(a) by a front office, provided that it has been authorised to provide an investment service under Article 4 (2) (a) and (b) or (c) of the Act;
(b) by the management of individual client portfolios, provided that they have been authorised to provide an investment service under Section 4 (2) (d) of the Act;
(c) carrying out a consultancy activity where it has been authorised to provide an investment service pursuant to Article 4 (3) (d) or (e) of the Act;
(d) settlement of transactions (back office),
(e) performance of the analytical activity, unless the analytical activity is carried out by a third party on a contractual basis;
(f) keeping accounts, unless it is provided by a third party on a contractual basis;
(g) management of the information system in accordance with Section 4, unless the activity of the AIFM is provided by a third party;
(h) performance of compliance activities in accordance with Article 6; and
(i) internal audit in accordance with § 7, unless the internal audit is carried out by a third party under the conditions laid down in § 7 (2).
(3) The trader in the internal provision provides for the obligation of the staff member responsible for the trade
(a) receive and transmit instructions from customers for their execution;
(b) to execute orders relating to investment vehicles for an external account or to trade investment vehicles for an own account for another;
(c) trade in investment vehicles for the trader's own account;
(d) comply with the limits and procedures set to limit the risk assumed;
(e) register the orders received and the transactions concluded on the basis of those instructions and transmit them in due time to the staff responsible for settling the transactions, including in the case of unexecuted or cancelled transactions; and
(f) cooperate with the settlement service to ensure settlement of transactions.
(4) The trader by internal regulation establishes an obligation on the staff responsible for the settlement of transactions
(a) to process in due time and in due time all the data transmitted by the staff responsible for trade;
(b) to check compliance with the limits and procedures laid down to limit the size of the risk accepted by an employee in charge of trading, unless the activity is provided by another employee who is not in charge of trading or managing individual client portfolios;
(c) to settle transactions in investment vehicles;
(d) ensure that the transfer of funds and investment vehicles takes place on the same date; transactions where the transfer dates of funds and investment vehicles differ, the trader shall keep a record; and
(e) carry out the activity referred to in Article 12 (4).
(5) The trader may, in particular, entrust the staff in charge of the settlement of transactions with the processing and dispatch of information on closed transactions to customers and the keeping of records containing records of when the customer was informed and the identification of the person who provided the information to the customer.
Administrative procedures
[Paragraph 12 (1) (a) of the Law]
(1) The trader shall, by his internal rules, lay down administrative procedures within the framework of the internal operation of the trader, in particular:
(a) the procedure for adopting or amending internal rules;
(b) internal control system (Sections 5 to 7);
(c) the pursuit of the activities of a trader's employee in relation to the provision of investment services by the trader;
(d) the authorization of the trader's staff to approve and sign documents in the course of the trader's activities;
(e) the procedure for the creation, processing, handling and retention of the trader's data and documents;
(f) the management and operation of the information system operated by the trader; and
(g) the rules for informing the Commission under Section 124 (5) of the Act.
(2) The trader shall, by means of an internal regulation, lay down measures to ensure the confidentiality of an employee who has obtained inside information. 1) A trader shall lay down rules on how employees act in relation to a client where the customer's required service relates to an investment instrument listed in accordance with Article 6 (3) (h), at least by not making recommendations to the client directly or indirectly concerning an investment instrument listed in accordance with Article 6 (3) (h). The trader shall also lay down rules for trading on his own account in relation to the investment instrument to which internal information relates.
Accounting procedures
[Paragraph 12 (1) (a) of the Law]
(1) The trader shall, by means of an internal regulation, adapt more detailed accounting procedures for funds and investment vehicles.
(2) The trader uses for accounting a system of separate analytical accounts created to ensure:
(a) the separation of the records of transactions in investment instruments concluded for the customers of the trader and transactions in investment instruments concluded for the trader's own account;
(b) the definition of the funds and investment instruments of individual customers of the trader; and
(c) the definition of the trader's claims and obligations relating to the provision of investment services to individual customers.
Control and security measures for data processing and recording
[Paragraph 12 (1) (b) of the Law]
(1) The trader ensures the management of the telecommunications and recording equipment information system by at least one employee to whom he entrusts such activities or by a third party under a written contract (hereinafter referred to as the administrator).
(2) The trader in the internal rules shall at least:
(a) conditions for staff access to the information system and data recorded therein, the scope of the access rights and the setting-up process, including how to decide on the scope of the access rights of individual staff members and decide on their changes;
(b) the conditions under which data obtained in connection with the performance of the trader's activities and changes thereto will be entered in the information system and the conditions for the handling of such data;
(c) a procedure for dealing with situations where the functions of the information system, telecommunications equipment or recording equipment used by the trader are malfunctioning, including the way in which the information system, telecommunications and recording equipment are replaced,
(d) measures ensuring that data stored in the information system is regularly backed up and stored for at least 10 years, 2)
(e) protection of the information system from entry and interference by unauthorised persons and from damage;
(f) the data reconstruction procedure in the event of unauthorised interference under (e) or damage to the information system;
(g) measures to ensure that employees use telecommunications equipment for the provision of investment services in accordance with § 4 (2) (a) to (d) of the Act to customers for which the trader ensures the acquisition of communications records;
(h) the rules on the use of telecommunications equipment, at least the reservation of certain telephone lines and, where applicable, other telecommunications equipment for the purposes of carrying out investment services activities pursuant to § 4 (2) (a) to (d) of the Act to customers, and the recording of communications on such telephone lines or other telecommunications equipment and their retention for at least 10 years;
(i) details of the alert referred to in point (h), which shall be at least the date and time of communication, the data identifying the consignor and the consignee, if available, and the content of the transmitted message; the trader shall ensure the possibility of obtaining complete records of communications on dedicated telephone lines or other telecommunications equipment, and the possibility of taking out the recording equipment;
(j) arrangements to ensure that the management of the recording equipment used to record the communication referred to in (h) is carried out exclusively by the controller; and
(k) measures to ensure that the records of the communication referred to in (h) cannot be subsequently altered in the recording equipment.
(3) Compliance with the obligations referred to in paragraph 2 (e) and (f) shall be ensured by the trader through the AIFM at least:
(a) regular checks on the basic functions of the technical and programming means of the information system;
(b) adequate regular updates of the technical and programming means of the information system; and
(c) using means of security.
(4) The trader shall amend the internal rules or negotiate in the contract with the AIFM, if the AIFM is a third party, the obligation of the AIFM
(a) refuse unauthorised entry into the information system by a trader's staff or any other person;
(b) to take urgent measures in the event of unauthorised entry or intervention pursuant to paragraph 2 (e) or damage to the information system; and
(c) inform of the procedure referred to in (a) and (b) of the staff member responsible for compliance (§ 6) and of the relevant manager or member of the statutory body of the trader.
Internal control system
[Paragraph 12 (1) (c) of the Law]
(1) A trader shall establish an internal control system proportionate to its size and to the extent and nature of the services provided and shall ensure that an organisational structure is established to enable the internal control system to operate effectively.
(2) The internal control system shall include:
(a) checks carried out by each member of staff in the course of the work;
(b) the check carried out by the lead employee in the course of the management activity;
(c) compliance activity (§ 6); and
(d) internal audit activities (Section 7).
(3) The trader shall adapt the internal control system by means of an internal regulation specifying in particular:
(a) the obligation of the supervisory authority to regularly evaluate the activities of the internal control system;
(b) the obligation on the staff member to carry out the check referred to in paragraph 2 (a);
(c) the obligation on the staff member to carry out the check referred to in paragraph 2 (b);
(d) the obligations of the compliance officer;
(e) the duties of the person responsible for carrying out the internal audit; and
(f) procedures to address the failure of the internal control system.
(4) A trader who uses investment intermediaries in the provision of investment services shall, by internal regulation, provide for a mechanism for controlling the activities of investment intermediaries, in particular the fulfilment of the obligations laid down in Article 32 (1) (a) and (b) of the Act. In a contract with an investment intermediary, the trader shall agree on the obligation of the investment intermediary to submit to the trader, upon request, a record of the orders received and transmitted (3) containing records of the instructions transmitted to the trader and of the information on the economic situation of the client, his experience in investing in the investment instruments and the objectives to be achieved by the required service in relation to the customers whose orders have been transmitted by the investment intermediary to the trader.
Compliance
[Paragraph 12 (1) (c) of the Law]
(1) The performance of compliance is provided by the trader through at least one employee. The statutory body of the trader shall decide on the delegation of the staff member to exercise compliance and the appeal from compliance and shall be informed by the supervisory authority of the trader; where the performance of compliance is provided by more than one employee, the statutory authority of the trader shall entrust and withdraw only their manager.
(2) The trader shall, by means of an internal regulation, lay down the obligation of the staff member responsible for compliance at least:
(a) to carry out checks on compliance of internal legislation with legislation, in particular those concerning the provision of investment services and measures against the legalisation of proceeds from crime;
(b) coordinate the development of measures to ensure compliance of the trader's activities and internal legislation with legislation and to check compliance of the proposed measures with legislation;
(c) to check compliance with the rules on the transactions of employees of the trader entered into for their own account or for the account of persons close to them and to check transactions carried out for their own account and for customers in respect of compliance with the law, 4)
(d) to coordinate the development of corrective measures and to check compliance of the proposed measures with the legislation following complaints submitted to the trader and the results of their processing;
(e) keep a register of the orders eligible for market manipulation; the trader shall adapt the rules for informing the Commission in accordance with § 124 (5) of the Act by internal regulation;
(f) maintain and keep up-to-date a list of investment vehicles admitted to trading on a regulated market or their issuers, which the trader has learned of information that is not publicly known, that instrument or issuer or other relevant facts for the development of the instrument's course or other price or yield, and the content of that information (Watch List);
(g) evaluate on an ongoing basis the information included in the list referred to in (f) without undue delay; a compliance officer shall assess whether the information included in the list referred to in point (f) fulfils the internal information characteristics; (5) an internal regulation may provide that the compliance officer cooperates with other persons designated by this internal regulation for that purpose;
(h) enter in the Special List (Restricted List) an investment instrument admitted to trading on a regulated market or its issuer, which the trader has learned about, and the content of that information, and keep that list updated;
(i) without delay draw the heads of staff responsible for the trading of investment vehicles, the management of individual portfolios and investment advice on the listing of the investment instrument or issuer referred to in point (h) and the deletion from that list;
(j) propose the manner in which the employees of the trader are regularly made aware of, and check compliance with, the internal rules, procedures and legislation governing, in particular, the provision of investment services and their changes;
(k) to control the arrangements for the use of inside information obtained by the trader;
(l) coordinate communication with public authorities and other public authorities;
(m) take action against misuse of information, data and documents acquired in the course of its activities;
(n) carry out the activities referred to in (a) to (m) professionally, independently, objectively and honestly; and
(o) maintain confidentiality of the facts which he has become aware of during or in connection with compliance.
(3) The trader shall establish the frequency with which the staff member responsible for compliance shall evaluate the information in the lists referred to in paragraph 3 (f) and (h) and the investment instrument transactions entered in those lists and submit the conclusions of the evaluation to the statutory authority and supervisory authority of the trader, but at least every six months,
(4) The lists referred to in paragraph 3 (f) and (h) shall contain at least:
(a) the date of receipt of the information;
(b) the date on which the information is entered in the list;
(c) the investment instrument or the identification of the issuer to which the information relates;
(d) a brief description of the information,
(e) details of the person who became aware of the information; and
(f) the date on which the investment instrument is deleted from the list.
(5) The trader shall, by means of an internal regulation, lay down the rules governing the keeping of the registers referred to in paragraph 3 (e), (f) and (h) and their control.
(6) The trader shall, by means of an internal regulation, lay down the powers of the staff member responsible for compliance at least:
(a) passively enter and extract from the trader's information system the data necessary for compliance;
(b) enter the individual premises of the trader;
(c) require all employees of the trader to provide the information and documents necessary for compliance; in relation to a third party who, on a contractual basis, provides the trader with the activities referred to in Article 1 (2) (e) and (f) and Article 4 (1), the trader shall ensure that the authorisation of the employee responsible for compliance is adjusted to the same extent; and
(d) to report directly to the statutory authority and to the supervisory authority of the trader on the essential facts relating to compliance.
Internal audit
[Paragraph 12 (1) (c) of the Law]
(1) The internal audit of the trader shall be carried out by the trader through at least one employee of the trader (hereinafter referred to as "the internal auditor"), except in the case referred to in paragraph 2. The statutory authority of the trader shall decide on the assignment of the staff member to carry out the internal audit and the appeal from the internal audit. The prior approval of the supervisory authority of the trader shall be required to delegate the staff member's internal audit; where the internal audit is carried out by more than one staff member, the statutory body of the trader shall delegate and withdraw only its head of staff.
(2) For the trader, an internal audit may be carried out by a third party on a contractual basis. The choice of the person shall be decided by the statutory authority of the trader and the supervisory authority of the trader shall be informed.
(3) The trader shall, by internal regulation, lay down the obligation for the internal auditor to verify and evaluate at least:
(a) the functioning of the trader's management system;
(b) the effectiveness of the internal control system;
(c) a risk management system;
(d) the completeness, evidence and accuracy of the accounts and other records of the trader;
(e) the truthfulness and credibility of the accounting, statistical and operational information and information transmitted to the statutory and supervisory bodies of the trader;
(f) compliance with obligations laid down by the trader's internal rules and regulations; and
(g) compliance performance.
(4) The internal auditor is required to carry out verifications and evaluations within the time limits set by the internal regulation according to the risk profile of the areas verified and evaluated under paragraph 3 (a) to (i), but at least once a year.
(5) Furthermore, the trader shall, by means of an internal regulation, lay down the obligation of the internal auditor to at least:
(a) carry out monitoring, verification and evaluation of procedures for the performance of the individual activities of the trader and identify the risks arising therefrom (internal audit);
(b) to notify employees or third parties who, on a contractual basis, provide the trader with certain activities under Article 1 (2) (e) and (f) and Article 4 (1) before carrying out an internal audit of its launch, provided that this does not jeopardise the purpose of the internal audit;
(c) to request written opinions on the outcome of the internal audit;
(d) draw up an internal auditor's report containing information on the internal audit carried out and a draft recommendation and submit it to the relevant management staff, statutory authority and supervisory authority of the trader;
(e) verify whether the measures taken on the basis of the proposed recommendations have been implemented within the deadlines and in what way;
(f) develop a methodology for carrying out internal audit and ensure its ongoing updating;
(g) draw up an internal auditor's activity plan for at least one calendar year;
(h) draw up at least once a calendar year a report on the activities of the internal auditor and submit it to the statutory authority and supervisory authority of the trader;
(i) notify the competent management staff, where appropriate, to the statutory body of the trader, of any facts which may raise doubts as to his unbiased nature;
(j) take measures against the misuse of information, data and documents acquired in the course of its activities;
(k) carry out the activities referred to in (a) to (j) professionally, independently, objectively and honestly; and
(l) maintain confidentiality regarding the facts which he has learned in or in connection with the internal audit.
(6) The trader shall, by means of an internal regulation, lay down the authorisation of the internal auditor at least:
(a) to enter the trader's information system passively and obtain from it the data necessary for the internal audit;
(b) enter the individual premises of the trader, if necessary for internal audit;
(c) require all employees of the trader to provide the information and documents necessary for carrying out the internal audit activity; in relation to a third party who, on a contractual basis, provides the trader with the activities referred to in Article 1 (2) (e) and (f) and Article 4 (1), the trader shall ensure that the internal auditor's authorisation is adjusted contractually,
(d) require traders' managers to report on the removal of deficiencies identified by the internal auditor; and
(e) to report directly to the statutory and supervisory bodies of the trader on the relevant facts relating to the internal audit.
Rules applicable to transactions concluded by staff
[Paragraph 12 (1) (f) of the Law]
(1) The trader shall, by internal law, lay down the conditions under which a trader's employee may enter into trade in an investment instrument for his or her account or for the account of persons close to him. 7)
(2) The internal regulation referred to in paragraph 1 shall at least adjust the manner and time limit for compliance with the obligation to report the subject-matter of the transaction to the member of staff responsible for compliance, its volume, price, place, time and manner of closure and settlement. A trader may make the conclusion of a trade subject to prior consent, which may be granted by the staff member responsible for compliance under the conditions laid down in the internal rules; in the case of trade by an employee in charge of compliance, prior agreement of the Supervisory Board is required. The staff member responsible for compliance shall keep records of the transactions referred to in paragraph 1, requests for consent and consent granted.
(3) The trader shall, by means of an internal regulation, lay down measures to prevent the trader's employee from entering into a transaction on his own account or on behalf of persons close to him in respect of investment vehicles in respect of which the customer has instructed the trader to close the transaction before that order is recorded in the trader's diary and irrevocable steps are taken to implement it.
(4) Paragraphs 1 to 3 apply mutatis mutandis to members of the statutory body and to the supervisory body of the trader.
(5) In the case of a trader who is a bank or branch of a foreign bank, paragraphs 1 to 4 shall apply mutatis mutandis. A trader who is a bank or branch of a foreign bank shall, by internal law, lay down the authorisations and obligations of the staff member authorised under paragraph 2, mutatis mutandis, in accordance with § 6.
Financial risk management and liquidity management
[Paragraph 12 (1) (d) of the Law]
(1) The trader shall adapt the financial risk management system by internal regulation, taking into account in particular the scope and nature of the services provided. In this Regulation, the trader shall identify the financial risks arising from the individual activities of the trader and shall specify in particular:
(a) the guiding principles applied by the trader in the management of financial risks;
(b) the process of developing and approving risk management methods;
(c) the responsibilities of individual members of the statutory body and staff in the management of financial risks;
(d) the rules and frequency for assessing the success of the risk management methods used and for adopting any changes thereto; and
(e) control mechanisms protecting the financial risk management system against failure.
(2) The statutory body of the trader shall ensure the establishment of an organisational structure to enable the effective implementation of the risk management strategy.
(3) The trader must use an information system enabling the statutory body and staff responsible for managing financial risks to obtain the timely and credible information necessary for the effective management of financial risks.
(4) The trader shall adapt the liquidity management system by a separate internal regulation, in which he shall lay down in particular:
(a) the definition of liquidity risk;
(b) the method of measurement and continuous monitoring of liquidity;
(c) liquidity risk management methods;
(d) the obligations of the staff responsible for carrying out the activities referred to in Article 1 (2) and a member of the statutory body in relation to individual liquidity management activities;
(e) the method and frequency of evaluation and any changes to the liquidity management methods established;
(f) a procedure for dealing with critical situations where the trader's ability to meet obligations towards customers is at risk; and
(g) control mechanisms protecting the liquidity management system from default.
(5) The statutory authority of the trader shall take organisational measures to ensure:
(a) effective management of the assets of the trader on a daily basis; and
(b) timely information by the trader's statutory and supervisory bodies on a situation in which the trader's ability to meet obligations towards customers is at risk and on measures to prevent the trader's customers from being harmed.
Procedures to limit the possibility of conflicts of interest
[Paragraph 12 (1) (e) of the Act]
(1) The trader shall prohibit the employee of the trader from
Sign in for notes, favorites and notifications
Regulation Information
| Citation | Decree No. 258 / 2004 Coll. |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 30.04.2004 |
|---|---|
| Effective from | 01.05.2004 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
Comments 0