Decree No. 429 / 2004 Coll.
Order laying down the rules governing the conduct of an investment intermediary with customers, administrative procedures and internal control mechanisms necessary for the proper performance of the investment intermediary's activities
Valid
Order
Effective from 26.07.2004
429
DECLARATION
of 23 June 2004
laying down rules for the conduct of an investment intermediary with customers, administrative procedures and internal control mechanisms necessary for the proper performance of the investment intermediary's activities
According to Section 199 (2) (h) of Act No. 256 / 2004 Coll., on Capital Market Business (hereinafter "the Act '), the Securities Commission provides:
RULES FOR THE PROCEEDING OF AN INVESTMENT ENVIRONMENT WITH THE PROHIBITION
Qualified, fair and fair provision of investment services
The investment intermediary shall provide its services in a qualified, fair and fair manner, in the best interests of customers, in particular by:
(a) provide them through trusted and competent staff, partners or members;
(b) the level 1 investment intermediary shall ensure that the activities referred to in Article 29 (1) of the Act are carried out by means of level 2 investment intermediaries that are credible and competent;
(c) proceed in accordance with the internal rules and documents referred to in Article 9 (5) and ensure that this procedure is checked;
(d) inform the customer of the procedure for the application and handling of complaints and complaints;
(e) inform the client in a clear and comprehensible manner of the manner in which the investment intermediary is remunerated;
(f) take the utmost account of its individual conditions in its dealings with the customer;
(g) take the necessary measures to avoid conflicts of interest between him and his customers; and
(h) provide equal and fair treatment to customers.
Rules for making contact with the customer
The investment intermediary shall, at first contact with the client, communicate information about itself and the services it provides, in particular:
(a) data on a person (1) the investment intermediary, with the exception of the date of birth;
(b) data relating to a person (1) transmitted by the investment intermediary to the client by the client's instructions (§ 29 (1) (b) of the Act) or, where appropriate, by a level 1 intermediary;
(c) an indication that the investment intermediary is registered with the Securities Commission;
(d) a description of the investment service provided by the investment agent; In particular, the investment intermediary shall state that it does not provide investment advice under Paragraph 29 (1) of the Act (2).
Rules for requesting information from the customer
(1) The investment intermediary requires the client to provide information on its financial situation, experience in the field of investment in investment instruments and on the intentions it intends to achieve through the required service. In obtaining information from customers, the investment intermediary shall:
(a) instruct the customer that answering the questions asked is not the responsibility of the customer and, if he does so, he does so voluntarily; where answering a question constitutes a condition for the conclusion of a contract or the receipt of an order, the investment intermediary shall also inform the client thereof;
(b) instruct the customer about the consequences of refusal to provide information by the customer or of the submission of information incomplete, inaccurate or false;
(c) instruct the customer that the information communicated by him is subject to the obligation of confidentiality under the law (3);
(d) record and evaluate, in a proven manner, information on the customer in terms of the level of customer's expertise and experience, its financial situation, service requirements and risk-related requirements, and record this information, including the evaluation, in the customer information records; This is without prejudice to the obligations of the investment intermediary under special laws (4); and
(e) where the customer refuses to provide the information, record it in the register referred to in (d).
(2) Where the client's order is not appropriate for the client in view of the information obtained from the investment intermediary, the investment intermediary shall notify the client in a verifiable manner and enter that fact in the register referred to in paragraph 1 (d).
Rules on information on the essential facts relating to the provision of the investment service
(1) The investment intermediary is obliged to inform the client before accepting the order
(a) the type of investment instrument (5) to which the order relates, including its characteristics and risks associated with the investment in that type of investment instrument;
(b) the current rate or price of the investment instrument on regulated markets or the rate or price at which the investment instrument was last traded; in the case of open-ended mutual funds, the current price of the share sheet at which the investment company buys the share sheet and the method for determining it;
(c) in a clear and comprehensible manner, on prices related to the provision of the investment service (charges);
(d) the potential risks that may be associated with the requested service or instruction;
(e) that the expected or possible returns are not guaranteed and that the return on the amount invested may not be guaranteed,
(f) new facts which could have a significant impact on the instruction not yet executed while respecting the prohibition on the use of inside information;
(g) any material contractual conditions relating to the intended investment services which may affect the client's investment decision; and
(h) the existence or absence of customer guarantee systems (6) and the conditions for granting compensation.
(2) The investment intermediary is obliged to inform the client immediately after receiving the order, unless the provision of information is ensured by the person referred to in Article 29 (1) (b) of the Act, on:
(a) the guidelines implemented; or
(b) the reason for which the order could not be executed.
Rules for the promotion of services
(1) When promoting investment services, the investment intermediary shall ensure that:
(a) the content of the promotion made it clear which investment service is offered, which investment instrument is the subject of that investment service and who is offering the investment service;
(b) where the content of the promotion of a comparison between the investment service offered, the investment instrument or the person offering the investment service, with another service, instrument or person, is all the facts which may have a significant impact on the outcome of such a comparison,
(c) the content of the promotion was a warning of the risks to which the service or investment instrument is associated. The content, scope and form of provision of risk and yield information shall be determined by the investment intermediary taking into account the nature of the investment service or investment instrument offered; where the content of the promotion is also an indication of the return on the investment service or investment instrument achieved in the past, the investment agent shall ensure that the content of the promotion also indicates that past returns are not a guarantee of future returns, that the investment contains a risk of volatility and that the return on funds originally invested is not guaranteed;
(d) the content of the promotion was not numerical estimates or forecasts of future returns associated with the provision of an investment service or an investment instrument, unless it appears from the nature of the investment service or investment instrument that such revenue is fixed;
(e) information on tax advantages related to the provision of investment services or other similar information was the content of the promotion only at the same time as information on the range of persons to whom those benefits relate and the conditions and extent of the granting of such benefits;
(f) the information used was not misleading;
(g) information on the existence of customer guarantee schemes (6) has not been able to give rise to the presumption that revenues from the investment service or investment instrument or return on investment are guaranteed;
(h) information on the Securities Commission, another domestic or foreign administration or financial market surveillance institution has not been able to give rise to the presumption that such institutions guarantee the return on investment services or return on investment, or that such institutions recommend the investment;
(i) for all the information used for the promotion, their source has been indicated; and
(j) the promotion of investment services has been graphically and figuratively addressed in accordance with the content of the promotion requirements, in particular maintaining a balance in highlighting the supremacy and clarity of the information relating to the benefits and risks of the investment.
(2) Where an investment intermediary provides investment services via the Internet, it publishes true and up-to-date information on its website.
(3) If the investment agent promotes the investment service in the form of unsolicited direct contact with the client, it shall do so only on working days between 8 and 19 hours. When reaching a client, the investment intermediary at the beginning of communication with the client will ensure that the client is not bothered by this form of service promotion.
(4) The provisions of paragraphs 1 to 3 are without prejudice to obligations under specific legislation7).
ADMINISTRATIVE PROCEDURES
Administrative procedures
(1) The administrative procedures put in place by the investment intermediary in its internal operations are at least:
(a) control and security measures for data processing and recording (Section 7);
(b) the procedure for handling complaints, ensuring that the complaint is dealt with fairly, efficiently and verifiably within a reasonable time and fully informing the customer of the outcome of the complaint;
(c) a record of complaints containing, in particular, details of the date of receipt of the complaint, the subject matter of the complaint, the date and the outcome of its processing;
(d) the process of creating, processing and handling data and documents relating to the provision of an investment service under which the tasks of individual persons and the content of such data and documents are governed by predefined rules;
(e) the procedure for the storage of data and documents, in particular by which the method and duration of their storage are governed by predetermined rules;
(f) the procedure for verifying compliance with the performance assumptions for the staff of the investment intermediary who receive and transmit instructions concerning investment instruments in which the investment intermediary continuously monitors and evaluates compliance with the requirements of law (8) and, on the basis of this evaluation, takes measures to ensure compliance with those requirements.
(2) A Level 1 investment intermediary shall, in a contract with a Level 2 investment intermediary, agree on the obligation of the Level 2 investment intermediary to comply with the rules laid down in Sections 3, 4 and 5 as they are to be processed in the form of written documents (Section 9 (5)).
(3) Level 1 investment intermediary shall inform Level 2 investment intermediaries of the facts under Section 31 of the Act without undue delay after obtaining them from a person under Section 29 (1) (b) of the Act.
Control and security measures for data processing and recording
(1) Investment intermediary
(a) ensure that the access of workers to the records of the instructions received and transmitted and the data recorded therein, the scope of the access rights and the setting-up process, including the way in which they decide on the scope of the access rights of individual employees and the decision on their amendments, is governed by the rules laid down in advance;
(b) ensure that the conditions under which data obtained in connection with the provision of an investment service by an investment intermediary and changes thereto are entered in the records of received and transmitted orders and the conditions for handling such data are governed by predefined rules;
(c) periodically advance and store data stored in the records of orders received and transmitted;
(d) ensure that records of orders received and transmitted are protected from entry and interference by unauthorised persons and from damage; and
(e) prepare the data reconstruction process in the event of unauthorised interference or damage to the records of received and transmitted instructions, and capture it in writing.
(2) The data management provided for in paragraph 1 shall be provided by the investment intermediary through a competent person.
(3) The investment intermediary shall receive and transmit the orders in a manner that ensures their relevance.
MECHANIZMUS INTERNAL CONTROL
Internal control mechanism
(1) The investment intermediary shall establish an internal control mechanism to the extent appropriate to its size and scope and nature of the investment services provided and shall ensure that an organisational structure is established to enable the internal control mechanism to operate effectively.
(2) Part of the internal control mechanism depends on the scope of its implementation
(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) an inspection by the person responsible for carrying out the internal control.
(3) The investment intermediary shall adapt internal internal control obligations for all persons referred to in paragraph 2. The investment intermediary shall further adapt the internal regulation of the internal control methodology by the person responsible for carrying out the internal control.
(4) The performance of internal control shall be carried out by the investment intermediary through at least one employee, unless the performance of internal control is carried out by a third party on a contractual basis. The person in charge of internal control may not directly participate in the provision of investment services and must be competent to exercise internal control.
(5) Person responsible for internal control
(a) monitor compliance with internal rules by the staff of the investment intermediary;
(b) checks compliance with the procedures and rules laid down in Sections 3 and 32 (1) of the Act by Level 2 investment intermediaries carrying out activities for investment intermediaries under Section 29 (1) of the Act;
(c) checks compliance of the supporting documents referred to in Article 9 (5) and internal rules with the legislation;
(d) coordinate the development of measures to ensure compliance of the investment intermediary's activities and supporting documents pursuant to Article 9 (5) and internal legislation and monitor compliance of the proposed measures with the legislation;
(e) draw up a report on the checks carried out, including a draft recommendation to remedy the deficiencies identified;
(f) verify that the measures taken on the basis of the proposed recommendations have been implemented within the deadlines and in what way;
(g) coordinate communication with public authorities and other public authorities;
(h) take measures against misuse of information, data and documents obtained in the course of its activities;
(i) carry out the activities referred to in (a) to (h) professionally, independently, objectively and honestly; and
(j) maintain confidentiality of the facts which he has learned in the exercise of internal control or in connection with it.
(6) The investment intermediary shall adjust the authorisation of the person in charge of internal control by means of an internal regulation
(a) enter passively into the register of the investment intermediary's accepted and transmitted instructions and obtain from it the data necessary for the exercise of internal control;
(b) enter the various workplaces of the investment intermediary where this is necessary for the performance of internal control; and
(c) require all employees of the investment intermediary, including, where appropriate, a third party who, on a contractual basis, provides the investment intermediary with the activities referred to in Article 29 (1) of the Act, the provision of information and documents necessary for the performance of internal control.
(7) A Level 1 investment intermediary provides in a Level 2 investment intermediary contract for the investment intermediary to submit, upon request to the Level 1 investment intermediary, the records of the orders received and transmitted pursuant to Section 32 (1) (a) of the Act containing records of the instructions transmitted to Level 1 investment intermediary and the records referred to in Section 3.
(8) The person in charge of internal control shall carry out the inspection activity within the time limits laid down in the internal regulation but at least every 6 months.
(9) The provisions of paragraphs 1 to 8 shall apply only to investment intermediaries operating under Paragraph 29 (1) of the Act through their employees, members or investment intermediaries at level 2.
COMMON AND FINAL PROVISIONS
Common provisions
(1) For the purposes of this Decree, the first-level investment intermediary shall be the investment intermediary for which another investment intermediary operates pursuant to Paragraph 29 (1) of the Act; Level 2 investment intermediary means an investment intermediary that carries out an activity under Paragraph 29 (1) of the Act for another investment intermediary.
(2) Paragraphs 1 (d) and (e), 3 and 4 (1) (a) to (e) shall not apply where the customer is a professional investor9) unless the customer so requests.
(3) Where an investment intermediary uses a third party to cover its activities pursuant to Articles 7 (2) and 8 (2) (c), it is obliged to:
(a) to take due care in the selection of a third party;
(b) in the contract to lay down obligations on a third party in order to ensure the proper performance of the activities referred to in Articles 7 (2) and 8 (2) (c);
(c) in the contract, the obligation of a third party to provide synergies to the Securities Commission in the exercise of State supervision;
(d) to check the performance of an activity under Articles 7 (2) and 8 (2) (c) provided by a third party;
(e) by an internal regulation to regulate the way in which the activities referred to in Articles 7 (2) and 8 (2) (c) are carried out in the event that the third party is not properly provided.
(4) Where an investment intermediary uses a third party to carry out its activities pursuant to Articles 7 (2) and 8 (2) (c), it shall be liable for compliance with the obligations laid down by law to the investment intermediary as if it were providing them itself.
(5) The investment intermediary shall process, in the form of written evidence, details of the application of the rules of conduct referred to in Articles 3, 4 and 5 (1) to (3) and details of the administrative procedures referred to in Articles 6 (1) (b) and (d) to (f) and 7 (1), taking into account the nature of the investment instruments in respect of which it accepts and transmits instructions and shall act in accordance with those documents. The first sentence shall not apply to Level 2 investment intermediaries.
Efficacy
This Decree shall take effect on the fifth day following its publication, with the exception of Parts Two and Three which shall take effect on 1 October 2004.
Member of the Presidium acting as Chairman:
Ing. Shimáček v. r.
1) § 2 (b) of Act No. 256 / 2004 Coll., on Capital Market Business.
2) Paragraph 4 (3) (e) of the Capital Market Act.
3) Section 117 of the Capital Market Enterprise Act.
4) Act No. 101 / 2000 Coll., on the protection of personal data and on the amendment of certain laws, as amended.
5) Section 3 of the Capital Market Enterprise Act.
6) Section 128 of the Capital Market Enterprise Act.
7) For example, Act No. 40 / 1995 Coll., on the regulation of advertising and amending and supplementing Act No. 468 / 1991 Coll., on the operation of radio and television broadcasting, as amended, as amended, Sections 44 to 54 of Act No. 513 / 1991 Coll., Commercial Code, as amended, Section 44d of Act No. 591 / 1992 Coll., on securities, as amended.
8) Paragraph 30 (2) and (3) of the Capital Market Act.
9) Paragraph 2 (a) of the Capital Market Act.
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Regulation Information
| Citation | Decree No. 429 / 2004 Coll., laying down the rules governing the conduct of an investment intermediary with customers, administrative procedures and internal control mechanisms necessary for the proper performance of the investment intermediary's activities |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 21.07.2004 |
|---|---|
| Effective from | 26.07.2004 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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