金融商品取引法研究会研究記録

金融商品取引法研究会
研究記録第 76 号

第号 投資助言業に係る規制―ドイツ法との比較を中心として―76

公益財団法人 日本証券経済研究所

ISBN978-4-89032-692-1 C3032 ¥550E

投資助言業に係る規制―ドイツ法との比較を中心として―公益財団法人 日本証券経済研究所
金融商品取引法研究会

投資助言業に係る規制―ドイツ法との比較を中心として―（令和３年３月 16 日開催）
報告者

神

作

裕

之

（東京大学大学院法学政治学研究科教授）
目次

Ⅰ．はじめに……………………………………………………………………… 1
１．定義………………………………………………………………………… 1
２．業法上の規制……………………………………………………………… 2
３．手数料に関する最近の動向……………………………………………… 3
４．問題提起…………………………………………………………………… 4
Ⅱ．米国法………………………………………………………………………… 5
１．投資助言業者の定義と適用除外………………………………………… 5
２．投資助言業者とブローカー・ディーラーの行為規制………………… 6
３．投資助言業者のフィデューシャリー・デューティー…………………10
４．ブローカー・ディーラーの適用除外……………………………………11
５．手数料・報酬の形態………………………………………………………13
６．実態…………………………………………………………………………15
７．フォーム CRS… …………………………………………………………15
Ⅲ．ドイツ法………………………………………………………………………16
１．投資助言の定義……………………………………………………………16
２．免許制………………………………………………………………………19
３．投資助言業者の組織上の義務……………………………………………20
４．投資助言業者の行為規制…………………………………………………22
５．独立報酬投資助言業者の特則……………………………………………27
Ⅳ．おわりに………………………………………………………………………28
討
議……………………………………………………………………………30
報告者レジュメ……………………………………………………………………52
資料……………………………………………………………………………79i金融商品取引法研究会出席者（令和３年３月 16 日）

報 告 者 神作裕

之東京大学大学院法学政治学研究科教授

会長代理

委
員
〃
〃
〃
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〃
〃
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弥

永

真

生

飯
大
尾
加
河
小
後
武
中
藤
松
松
松
松
宮

田
崎
崎
藤
村
出
藤
井
東
田
井
井
尾
尾
下

秀
貞
悠
貴
賢

総
和
一
仁
治
篤
元
浩
文
敬
予
征
一
彦
央

筑波大学ビジネスサイエンス系
ビジネス科学研究科教授
東京大学大学院法学政治学研究科准教授
野村総合研究所未来創発センターフェロー
東京都立大学大学院法学政治学研究科教授
東京大学大学院法学政治学研究科教授
立教大学大学院法務研究科教授
学習院大学法学部教授
東京大学大学院法学政治学研究科教授
西村あさひ法律事務所パートナー弁護士
名古屋大学大学院法学研究科教授
東京大学大学院法学政治学研究科教授
東京大学大学院法学政治学研究科教授
立教大学法学部教授
大阪大学大学院高等司法研究科教授
松尾国際法律事務所弁護士
ＴＭＩ総合法律事務所弁護士

オブザーバー太田原

和房

金融庁企画市場局市場課長

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一
正
友
智
秀
健
直

岸 田 吉 史森忠 之森正 孝
田 中 秀 樹窪久 子
松 本 昌 男横 田裕
塚 﨑 由 寛研 究 所 増 井 喜一郎〃
髙 木隆〃（幹事）石 川 真 衣
野村ホールディングス執行役員
大和証券グループ本社経営企画部担当部長兼法務課長
ＳＭＢＣ日興証券法務部長
みずほ証券法務部長
三菱ＵＦＪモルガン・スタンレー証券法務部長
日本証券業協会自主規制本部長
日本証券業協会自主規制本部自主規制企画部長
日本取引所グループ総務部法務グループ課長
日本証券経済研究所理事長
日本証券経済研究所常務理事
日本証券経済研究所研究員

ii

（敬称略）

投資助言業に係る規制―ドイツ法との比較を中心として―

神作会長定刻になりましたので、ただいまから第 15 回金融商品取引法研究会を始めさせていただきます。
議事に入ります前に、本日は私からご報告をさせていただくことになっておりますので、議事の運営上、会長代理の弥永先生に司会を務めていただくことになりました。以下、弥永先生にお願いしたいと思います。どうかよろ
しくお願いいたします。
弥永会長代理

本日は、先ほど会長からもご挨拶がありましたように、神作

裕之先生より「投資助言業に係る規制－ドイツ法との比較を中心として－」というテーマでご報告いただくことになっております。
それでは、神作先生、報告をよろしくお願いいたします。

［神作会長の報告］
神作会長

それでは、ご報告させていただきます。

私の本日のご報告のテーマは「投資助言業に係る規制－ドイツ法との比較を中心として－」です。

Ⅰ．はじめに
１．定義
はじめに、日本法における投資助言業の定義から申し上げます。投資助言業とは、「投資者の一方が相手方に対して、有価証券の価値等に関し、口頭、文書、その他の方法により助言を行うことを約し、相手方がそれに対し報酬を支払うことを約する投資顧問契約を締結し、当該契約に基づいて助言を行うことを業として行うこと（金商法 28 条３項１号・２条８項 11 号）」と定義されています。ポイントは、有価証券の価値等に関する助言を行うこと、
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及び報酬の支払いが要件となっている点です。
２．業法上の規制
我が国の投資助言業に対する規制の内容ですが、一般的な義務として、金商業者等に対して全般的に課されている誠実公正義務（金商法 36 条１項）
があります。投資助言業者にはそれに加えて忠実義務及び善管注意義務が課されています。なお、私法上も投資顧問契約は準委任契約であって、民法の規定に基づき善管注意義務を負い、その中には忠実義務も含まれているというのが一般的な理解であると思われます。
次に行為規制ですが、投資助言業者には金融商品取引業者に一般的に課される行為規制が適用されるとともに、追加的に固有の行為規制が課されています。
まず、共通して適用される行為規制の中心は、業務管理体制の整備義務（金商法 35 条の３）や誠実公正義務（同法 36 条）、情報提供義務（同法 37 条の３等）、適合性の原則（同法 41 条１号）などです。
適合性原則は、本日の中心的なテーマとなりますが、例えば後ほどご紹介するドイツにおいては、投資助言業者には、一般の証券業者に加えてより高いレベルの説明義務とより高いレベルの適合性原則が課されています。日本の場合には、そのような考え方はとられておらず、投資助言業者であっても金融商品取引業に共通して適用される誠実公正義務や適合性原則のほか、忠実義務などの一般的義務が課されているにすぎません。このあたりは、後でまた詳しくお話をさせていただきます。
次に、投資助言に固有の行為として、例えば、投資顧問契約の締結や解約に関し、偽計・暴行・脅迫をする行為の禁止（金商法 38 条の２第１号）や顧客勧誘に際しての損失補填の約束の禁止（同条第２号）、他の顧客の利益を図るため特定の顧客の利益を害することとなる取引を行うことを内容とした助言の禁止や（金商法 41 条の２第１号）、顧客の取引に基づく価格等の変動を利用して、自己または第三者の利益を図る目的で正当な根拠を有しない
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助言を行うことが禁止されています（同条第２号）。
特に重要なのが、投資助言業務を行う金融商品取引業者に対しては、顧客を相手方として、または顧客のために有価証券の売買等を行うことが禁止されていることです（金商法 41 条の３）。ただし、この禁止には幾つかの例外があります。すなわち、第一種金融商品取引業や登録金融機関業務としてそのような取引を行う場合には、この禁止は適用されないこととなっています。
また、顧客からの金銭・有価証券の預託の受け入れが禁止されています（金商法 41 条の４）
。この禁止についても、金商法施行令で適用が除外される場
合について幾つかの規定があります。
また、顧客に対する金銭・有価証券の貸付けも禁止されています（金商法41 条の５）。
その他の規制として、投資助言業者には、営業保証金の供託義務があります。投資助言業者の規制を金融商品取引業者一般の規制と比較すると、例えば兼業規制、主要株主規制、自己資本比率規制、金融商品責任準備金制度の適用がないという点では、投資助言業に対する業規制は、緩和されています。
すなわち、投資助言業者については、先ほど申しましたように忠実義務関係を中心に行為規制については強化されていますが、兼業規制とか開業規制についてはむしろ緩和されていると言えます。
３．手数料に関する最近の動向
証券会社や証券仲介業者の中に、従来型の個別の売買ごとに徴収する手数料にかえて、預かり資産の残高に応じてフィーを徴収する動きが生じています。後ほど、アメリカ法のところで申し上げますが、アメリカ法の理解では、
一般的に、個々の取引ごとにコミッションを課す方式が通常の証券業務の提供に係る対価の徴収方法であるのに対して、資産残高に応じてフィーを徴収する方式は、投資顧問サービスもしくは投資助言サービスの対価の一般的な徴収方法であると言われています。
日本も、もし証券会社や証券仲介業者が、預かり資産の残高に応じてフィー3

を徴収する動きが定着してくると、有価証券の売買等に伴って助言ないし助言類似の行為がなされたときに、そのようなフィーが助言に対する報酬の支払であると認められて、投資助言業に当たることにならないのか、資産残高ベースでフィーを徴収する場合には、投資助言業への該当性の問題がより強く出てくるようにも思われます。
４．問題提起投資助言業務と有価証券の売買・媒介等に係る金融商品取引業務の境界は、どのような基準に基づいて判断されるのでしょうか。また、投資助言業に係る業法上の規制には過不足がないのでしょうか。以上の２つの論点を中心に、投資助言業務と有価証券の売買・媒介等に係る金融商品取引業務を比較した
いと思います。
なお、ソフトローのレベルでは、すなわち「顧客本位の業務運営の原則」を採用している金融事業者については、同原則の２で、「高度の専門性と職業倫理を保持し、顧客に対して誠実・公正に業務を行い、顧客の最善の利益を図るべきである」と定められています。このように、ソフトローのレベル
では、忠実義務を課されていない有価証券の売買・媒介等に係る金融商品取引業者についても、顧客の最善の利益を図るべき行為規範が、法的拘束力はないものの、課されています。
また、「顧客本位の業務運営の原則」６は、「金融事業者は、顧客の資産状
況、取引経験、知識及び取引目的・ニーズを把握し、当該顧客にふさわしい金融商品・サービスの組成、販売・推奨等を行うべきである」と定めており、ここには「推奨」のみならず「販売」が含まれています。投資助言のみならず販売を行う際にも、当該顧客にふさわしい金融商品・サービスを販売すべきであることが、ソフトローのレベルにおいても定められています。

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Ⅱ．米国法
１．投資助言業者の定義と適用除外
本日はドイツ法を中心にお話しいたしますが、日本法はどちらかというとドイツ法よりも米国法に近いので、まず米国法の状況を簡単に概観した後、ドイツ法を概観したいと思います。
米国における投資助言業の定義規定は、1940 年の米国投資顧問業法 202
条（a）（11）です。資料１をご覧ください。投資助言業者とは、「報酬を得て、
直接または出版物もしくは文書により、有価証券の価値、有価証券への投資、購入または販売の適切性に関して、他者に助言する業務に従事する者、並びに、報酬を得て、通常の業務の一環として、有価証券に関する分析もしくは報告を発行し、または公表する者」と定義されています。
この定義のポイントは２つです。第１は、有価証券に係る投資助言・推奨を行うことと、第２は上記サービスに対する報酬を受け取ることです。基本
的に、先ほど述べた日本の投資助言業の定義と非常に近いと思われます。
ところが、米国では重要な適用除外があります。すなわち、ブローカー・
ディーラー（証券会社）が投資助言を行う場合について、一定の場合には投資助言には当たらないとされています。そのための要件は、次の２つです。
第１はブローカー・ディーラーが証券業務に付随して行う助言等が本業に「専ら付随して」なされることです。第２は、そのような本業に「専ら付随して」
なされる助言等の行為について「特別の報酬」を受領していないことです。
これら２つの要件を満たす場合には、投資助言業者には当たりません。
「専ら付随して」というのは英語では solely incidental、「特別の報酬」というのは special compensation と表記されています。このように、証券業者
が証券の売買に関して助言を行う場合であっても、それが証券の売買やその媒介等という本業に専ら付随してなされ、かつそのための特別の報酬を得ていないときは、ブローカー・ディーラーは投資助言業者には当たらないという適用除外規定があります。条文では、1940 年投資顧問業法 202 条（a）
（11）
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の後半部分です。資料１をご参照いただければと思います。
２．投資助言業者とブローカー・ディーラーの行為規制
米国では、投資助言業者とブローカー・ディーラーの法的地位がどのように違うと解されてきたかというと、投資助言業者はフィデューシャリー（fiduciary）であるのに対し、ブローカー・ディーラーは、フィデューシャリー
ではないというのが伝統的理解です。
米国においては、ブローカー・ディーラーと投資助言業者が個人顧客に対して助言を行うなど、実質的には同様のサービスを提供している場合があるにもかかわらず、両者の法的地位が異なるために、顧客が誤解や混乱に陥っていることが問題視されています。
ドッド＝フランク法は、SEC にブローカー・ディーラーと投資助言業者の行為規制を制定する権限を付与するとともに、いずれの規範も、つまりブローカー・ディーラーの行為規範としても、投資助言業者の行為規範としても、「顧客の最善の利益」のために行為すべきものとする規制を制定しなけ
ればならないと定めました。さらに、先ほど定義規定をご紹介した投資顧問
業法 206 条（１）及び（２）による基準、すなわち投資助言業者に課されている所定の基準よりも緩やかな基準を定めてはならないという制約を課しました。
ドッド＝フランク法に基づいて、2019 年にレギュレーション・ベストイ
ンタレストが制定されました（SEC, 17 CFR Part 240, Release No. 34-86031;
File No. S7-07-18, RIN 3235-AM35, Regulation Best Interest: The BrokerDealer Standard of Conduct Regulation Best Interest）。ブローカー・ディー
ラーの行為規制として、次のような内容を定めています。なお、レギュレー
ション・ベストインタレストは、結局のところ、ブローカー・ディーラーと投資助言業者に共通の規範を提示しないで、ブローカー・ディーラーだけを対象にしています。したがって、ドッド＝フランク法が１つのあり方として描いていた投資助言業者とブローカー・ディーラーについて同一のルールは6

実現しませんでした。ブローカー・ディーラーについてはベストインタレス
トということでレギュレーションの規律を適用する。投資助言業者については投資顧問業法を初めとする規制が適用されるという二本立ての規制が維持されています。
このように、ブローカー・ディーラーと投資助言会社の間には依然として法的差異が残ることになりました。しかし、規制の中身を見てみると、ブロー
カー・ディーラーの行為規制は、これはフィデューシャリーの定義にもよりますが、フィデューシャリーと言えなくもないというところがあります。ブローカー・ディーラーの行為規範として、個人顧客の最善の利益のために行為する義務が、ハードローとして課されることになったからです。
すなわち、ブローカー・ディーラーは、個人顧客に対して証券取引または証券を含む投資戦略を推奨するときは、推奨をしているブローカー・ディー
ラーやこれに関連する自然人の経済的またはその他の利益を個人顧客の利益に優先させることなく、推奨がなされる時点における個人顧客の最善の利益のために行動しなければなりません。このように、自分の利益や自分の関係者の利益を個人顧客の利益より優先してはなりません。そして、推奨がなされる時点における顧客のベストインタレストのために行動しなければならな
いという行為規範をハードローとして課しています。
その上で、これがベストインタレスト・レギュレーションの特徴的な規制手法だと思いますが、次の４つの義務を履行した場合には、ベストインタレ
ストに従って行動したものとしています。
この４つは、次の通りです。
第１は、開示義務です。事前に、または推奨する時点で、個人顧客に対して書面をもって開示しなければならず、その内容は、重要な手数料およびコスト、提供される商品の範囲に重要な限定があるときには当該限定について
開示しなければなりません。つまり、自分が取り扱う商品が限定されているときには、それを事前に示すことが要請されています。また、全ての利益相反に関する重要事項について開示すべきものとされています。さらに、開示7すべきときは、「完全かつ公正な開示」を行うものとされています。
第２は、注意義務です。当該推奨に伴うリスク・利益・コストを理解した
上で、それが個人顧客の少なくとも誰かの最善の利益にかなうと信じるに足る合理的な根拠があることが必要です。当該推奨が、特定の個人顧客の最善の利益にかない、かつ当該ブローカー・ディーラーの利益を当該顧客の利益に優先していないと信じるに足る合理的な根拠があることも求められています。個別の推奨のみならず、一連の推奨取引をあわせて見た場合に、当該個人顧客の投資プロファイルに照らして過大ではなく、当該個人顧客の最善の利益にかない、かつ当該ブローカー・ディーラーの利益を当該顧客の利益に優先していないと信じるに足る合理的な根拠があると言える程度の合理的な配慮、注意及び技能を用いた場合には、注意義務を尽くしたとされます。
第３は、利益相反に関する義務です。合理的に設計された利益相反についての方針・手続を策定し、実施し、エンフォースしなければなりません。当該推奨に係るあらゆる利益相反を特定し、開示するか、またはそれを排除することが求められます。この規制は、一般的なフィデューシャリーの規制よりも、むしろ厳しくなっていると言われています。と言いますのは、フィデューシャリー・デューティーの下では、従来は、利益相反関係について開示すれば足りると解されてきた面がありますが、開示するだけでは足りず、そのような利益相反関係を排除することが求められる場合が生じ得る点で、利益相反規制は厳格化されたと解されます。また、当該ブローカー・ディー
ラーと関係者の利益を個人顧客の利益よりも優先させる誘因になる全ての利益相反を特定し、これを緩和することが求められています。この点も、単に利益相反を特定するだけでなく、それに対して一定の緩和措置を講じることが必要になる点で厳格化しています。利益相反規制における開示の限界を意識し、開示を超えて、一定の利益相反を排除するとともに、顧客の最善の利益のために売買・媒介等をすることに対してバイアスを与え得る利益相反を特定した上で、緩和措置を講じるべきものとされています。恐らく実務に対して一番大きな影響が生じるのは、特定の期間内に特定の証券についてなさ
8

れるあらゆる販売競争、販売ノルマ、ボーナス、現金以外の報酬を特定し、これを排除することです。
販売競争やノルマは禁止されることになりました。
第４は、遵守義務です。上述した第１から第３までの義務、すなわち開示義務、注意義務、および、利益相反に関する義務を遵守するために合理的に設計された方針・手続を書面により策定し、それを実施しエンフォースする
義務が課されています。第１から第３までの義務がきちんと遵守されている
か、きちんと運用されているかを監視するコンプライアンス体制を構築して、それをきちんと運用し、エンフォースしなければなりません。
上述した、第１から第４の義務が履行されていれば、顧客のベストインタ
レストにかなう推奨をしたものとするという構造になっています。
先ほどドッド＝フランク法はブローカー・ディーラーと投資助言業者の行為規制をそろえるという選択肢を視野に入れていると申し上げましたけれど
も、結局差分は残っていると思われます。ただ、随分接近してきたとも言えます。接近したと評価できるのは、以下の点です。
まず、顧客のベストインタレストのために行動しなければならないという点は、両者に共通しており、ドッド＝フランク法の要請を満たしています。
さらに、利益相反関係などに係る重要事項について、完全かつ公正な開示をしなければならないという点も共通しています。しかし、依然として両者の行為規制には差分が生じているように思われます。
第１は、規制のスタイルです。投資助言業者に課されるフィデューシャ
リー・デューティーは基本的にプリンシプル・ベースであるのに対して、ブ
ローカー・ディーラーの顧客の最善の利益のために行動する義務は、具体的でルールベースの規範を含んでいる点です。これは恐らく、レギュレーショ
ン・ベストインタレストが FINRA のルールベースの自主規制を相当程度取り込んだということにもよると思われます。かなり具体的で詳細な規定が置かれています。これは、プリンシプル・ベースで規制をする投資顧問業法のスタイルとは大きく異なっています。
逆に、投資助言業者については、なぜルールベースで規制していないかと9

いうと、投資助言業者のビジネスモデルが非常に多様であるため、ルールベースで規制をすると過不足が生じるためであると推察されます。
第２に、投資助言業者は、完全かつ公正な開示と十分な情報に基づく同意によって利益相反に対処できるのに対して、ブローカー・ディーラーは、先ほど述べたように、一定の場合には開示だけでは足りずに、利益相反の緩和や排除が求められる点です。この点においては、むしろブローカー・ディー
ラーに対して、投資助言業者よりも厳格な規制が課されていると評価できる面もあると思われます。
第３に、投資助言業者の負うフィデューシャリー・デューティーは、顧客との関係全体について継続的に適用されます。これに対して、ブローカー・
ディーラーのベストインタレストに係る義務は、顧客に対し助言・推奨を行
う時点においてのみ適用されるにすぎません。このように、フィデューシャリーである投資助言業者は、顧客との間にフィデューシャリー関係がある間は、全面的かつ継続的にフィデューシャリー・デューティーを負うのに対して、ブローカー・ディーラーのベストインタレストに係る行為規範は、あくまでも顧客に対して推奨したり勧誘したりする局面だけに限られます。その結果、典型的には、投資助言業者は、顧客が口座を有している場合には、当該口座の監視義務があると言われていますが、ブローカー・ディーラーには顧客の証券口座について監視義務はないというのが米国の理解です。
３．投資助言業者のフィデューシャリー・デューティー
投資助言業者には、忠実義務が課されています。その内容は、どのようなものであるかというと、その内容は、次の３つです。
第１に、顧客の最善の利益に合致した助言を行わなければなりません。
第２に、取引の執行のために投資助言業者がブローカー・ディーラーを選択する責任がある場合には、最良執行を探らねばなりません。
第３に、顧客との関係が継続している限りにおいて、全期間を通して全面的に助言を行い、監視しなければなりません。
10

４．ブローカー・ディーラーの適用除外
ブローカー・ディーラーが投資助言を行っても、投資顧問業法の適用を除外される場合があることは前述しましたが、本日のご報告との関係ではこの点が大いに注目されます。
先ほど、ブローカー・ディーラーの助言行為が投資助言業に該当しないた
めには２つの要件があると申し上げました。「専ら（証券業務に）付随して」
助言行為がなされることという要件と、それに対して「特別の報酬」を得な
いことという要件の２つです。
SEC が「専ら（証券業務に）付随して」という要件についてどのように解釈しているかというと、提供されるサービスが口座について提供されるブ
ローカレッジ・サービスに結びついたものであり、かつ合理的に関連しているものであれば「専ら付随して」に該当するというものです。顧客口座に対してブローカー・ディーラーが裁量権を行使する場合には、「専ら付随して」とは言えないのが原則です。ただし、投資裁量権がブローカー・ディーラーに認められている場合であっても、一定の限定、たとえば期間の限定ですと
か対象の限定などがあったりすると、「専ら付随して」に該当する場合もあり得ます。
「専ら付随して」に該当するかどうかの判断にとって、SEC の解釈によれ
ば、投資助言の重要性とか頻度は関係ありません。もっとも、この論点については、米国において争いがあります。一部の有力な説は、投資助言が「専ら付随して」に当たらないためには、時たま重要ではない助言行為を行うときだけに限ると解すべきであると解します。しかし、SEC はそのような見解にはくみせずに、投資助言が重要であっても、また、非常に頻繁に助言行為が行われる場合であっても、「専ら付随して」に当たることがあり得るという考え方に立っています。
助言が証券を販売するというブローカー・ディーラーの主要なビジネスに結びついているときにだけ「専ら付随して」に該当し、証券販売と結びついていなかったり、証券の販売が主要な業務ではなく助言が主要な業務であっ11たりする場合には、「専ら付随して」には該当しないことになります。しかし、ケース・バイ・ケースで判断されることになり、必ずしも基準が明確であるとはいえません。
スライドには具体例を幾つか挙げておりますが、時間の関係で省略します。
次に、「特別の報酬」です。ブローカレッジ・サービスを全面的に提供する場合と、ディスカウント・ブローカレッジ・サービスを提供する場合とで異なるレートを用いた手数料を収受しているということだけでは、「特別の報酬」を収受しているということにはならないと解されています。
なお、登録ブローカー・ディーラーは、投資顧問業法の適用を受けるサービスを提供し、かつ、報酬を収受している場合であっても、当該口座に関してのみ、投資助言業者になります。したがって、登録ブローカー・ディーラー
が、投資助言業者になるかどうかは、あくまでも口座ごとに判断されることになります。
ここに、有名な、いわゆる「メリルリンチ・ルール」が登場してきます。
SEC は、ブローカー・ディーラーの適用除外規定に基づいて、証券会社が伝統的なコミッション・ベースの手数料ではなく、預かり資産残高に応じて手数料を徴収するフィー・ベースの手数料体系を採用するだけでは、投資顧
問業法の適用を受ける投資助言業者になるわけではないという解釈通知を公表しました。これがメリルリンチ・ルールと呼ばれるものです。
メリルリンチがフィー・ベース、すなわち預かり資産残高に応じて手数料を徴収する場合であっても、一定の場合には投資顧問業法の適用を受けず、適用除外規定に当たり得るというのが SEC の「メリルリンチ・ルール」と言われるものであったわけですが、このルールは判例によって否定されるに至 っ て い ま す。 す な わ ち、2007 年 に 有 名 な 判 例（Financial Planning
Association v. SEC, 482 F.3d 481（D. C. Cir. 2007）が出されました。判旨は、「SEC はブローカー・ディーラーが提供するフィー・ベースの手数料を収受する口座を投資顧問業法の適用から除外する権限はない」として、メリルリ
ンチ・ルールを否定しました。
12

５．手数料・報酬の形態
口座の手数料・報酬の形態ですが、理念系としてはコミッション・ベースとフィー・ベースの２つがあります。
コミッション・ベースの算定根拠は、個々の証券取引であり、取引に基づいて手数料を徴収することになります。これに対して、フィー・ベースの報酬体系の下では、口座の預かり資産残高に応じて手数料を徴収することになります。
利益相反については、コミッション・ベースの場合には過当な証券取引を誘導するおそれがある点に求められます。これに対して、フィー・ベースの場合にも利益相反のおそれがあると言われています。たしかに、コミッショ
ン・ベースに比べると利益相反のおそれは小さいと言われていますが、しかしフィー・ベースの場合には、むしろポートフォリオの見直し等に基づく必要な証券取引を抑制したり阻害したりするおそれがあると指摘されています。
業者のメリットとしては、コミッション・ベースの手数料体系は取引ごとに手数料を取りますので、必要なコストに応じて手数料を徴収することにな
ります。これに対して、フィー・ベースの報酬体系は、証券取引の多寡に依存しない安定的な収益源を確保できるというメリットがあります。
業者のデメリットとしては、メリルリンチ・ルールが普及した大きな理由
は、米国では、コミッション・ベースの手数料体系を採用していたのでは収益源が非常に不安定になるということが指摘されます。特にコミッション（手数料）の激しい引下げ競争があり、コミッション・ベースで競争に打ち勝つ
ことはなかなか難しい。さらに、フィー・ベースに比べると規制コストが高
くつくと言われています。特にコミッション・ベースの証券口座に対しては
FINRA の自主規制において非常に細かなルールベースの規制がたくさんありますので、
規制コストが高くつくと言われています。これに比べてフィー・
ベースの報酬体系は、証券取引の多寡に依存しない安定的な収益源になるというメリットがある半面、証券取引が頻繁に行われると収益を圧迫する可能性が生じます。すなわち、証券取引に基づいては手数料を徴収できないとい13

うデメリットがあります。
コミッション・ベースとフィー・ベースの２つは理念系です。その中間に、
いわばハイブリッドの報酬形態として、両者の良さをあわせ持つ報酬形態が多様に存在しています。
なお、スライドの表では、業者のメリット・デメリットについて記載しています。個人顧客のメリット・デメリットという形で記載していないのはど
うしてかと申しますと、個人顧客にとっては証券取引の多寡や資産残高などに応じて、いずれの形態が有利になるかはケース・バイ・ケースで、一概にコミッション・ベースのほうが個人顧客に有利、フィー・ベースのほうが不利ということも言えないし、逆も言えないためです。
米国においてメリルリンチ・ルールが判例によって否定された後、基本的にどのような運用がなされているかというと、コミッション・ベースか
フィー・ベースかを顧客が選択するというのが支配的な報酬体系になっているようです。すなわち、メリルリンチ・ルールが否定されて以降、証券口座
はフィー・ベースとコミッション・ベースに分かれ、顧客によって選択がなされるというのが主流になっていると思われます。
レギュレーション・ベストインタレストのもとで、証券業者が開設する証
券口座について、メリルリンチ・ルールを復活することが可能かという論点があります。レギュレーション・ベストインタレストを見ると、手数料について開示すべきことしか規定しておりません。したがって、手数料について
公正かつ完全な開示をして、さらに、先ほど申し上げたブローカー・ディー
ラーの助言行為が「専ら（本業に）付随して」なされるものであって、かつ「特別の報酬」を受けていない場合には、証券業を営みながら助言行為を行なっても投資顧問行法の適用を受けないことも可能である、という結論になるのではないかと思いますが、この点については、ぜひ後ほどご議論いただ
ければと思います。

14

６．実態
米国の実態です。
登録ブローカー・ディーラーの数、口座数、預かり資産の総額等をスライドに記載してあります。登録ブローカー・ディーラーのうち１割弱の 363 社
は、同時に投資助言業者としても登録しています。口座全体の 63％は、いわばデュアルレジスター、つまりブローカー・ディーラーの登録もしている
し、投資助言業の登録もしています。このように証券業と投資助言業の双方の登録をしている業者によって開設されている口座数が、米国全体の口座数の６割に達しています。さらに、3764 のブローカー・ディーラー業者のうち 2098 業者は、直接または間接に、投資助言業に従事する法人を支配し、またはそれによって支配され、または共通支配下にあるということです。半
数以上の登録ブローカー・ディーラーは、何らかの形で投資助言業者と同一のグループに属しており、グループ全体として見てみるとブローカー・ディー
ラーと投資助言の両方を営んでいるケースがかなりあると言えます。
７．フォーム CRS
注目すべきはフォーム CRS（Client or Customer Relationship Summary）
です。
フォーム CRS は、1940 年投資顧問業法に基づくフォーム ADV を改正するとともに、
ブローカー・ディーラー向けに 1934 年証券取引所法を改正して、ブローカー・ディーラーについてはフォーム CRS を追加するというものです。
フォーム CRS のポイントは、投資助言業者及びブローカー・ディーラー
が個人顧客と新たに関係をもとうとする場合には、みずからの法的地位について、顧客にその概要を説明するためのリレーションシップ・サマリーを交付しなければならないという点にあります。特に、ある業者が、証券業登録と投資顧問業登録をともにしている場合には、１枚のサマリーで説明するのが基本となります。別々のサマリーを作成して２枚の CRS をつくることが15

禁止されているわけではありませんが、そのような場合には、両方について均等に説明しなければならないとされています。
さらに、証券業登録か投資顧問業登録のいずれかしか登録していない場合であっても、関連会社が証券業または投資顧問業を営んでいる場合には、その旨を記載しなければなりません。そうすることで、グループレベルで、各会社が投資顧問と証券業のどちらを営んでいるのか、それぞれどのような関係にあるのかということについて開示されることになります。さらに、リレー
ションシップ・サマリーは、提供するサービス、手数料・コスト、利益相反、
行為規範、会社及び登録証券外務員の懲戒歴などについても記載することとされています。
実務的には、フォーム CRS は、ドッド＝フランク法が対処しようとした
課題に応えるために非常に有意義な入口規制になるように思われます。なお、
利益相反については、レギュレーション・ベストインタレストでかなり詳細なルールベースの規制が行われていると申し上げましたが、そこで要求されている詳細な開示事項が、フォーム CRS の記載事項とされています。

Ⅲ．ドイツ法
１．投資助言の定義
次に、ドイツにおける投資助言業者の規制について概観します。
ドイツにおいて、投資助言は、「顧客またはその代理人に対する特定の金融商品に係る取引に関する、委任規則（EU）2017/565 第９条にいう個別の推奨であって、当該推奨が当該投資者個人に関する状況の検討に基づいてなされるものであるか、または、当該投資者に適合するものとして提示されるもの」と定義されています。
この定義の大きな特徴は、助言に対して報酬を受け取るかどうかは定義には全く入っていないという点です。さらに、これは米国でも日本でも、解釈上、確立していると思いますが、個別の推奨であって、当該投資者個人に関する状況の検討－これはノウユアカストマー・ルールを前提にしていますが16

－を踏まえて顧客に対して推奨を行う、または当該投資者に適合するものとして提示することが明確に要件とされています。顧客のベストインタレストのために推奨を行うべきことが定義上明らかにされているのです。このような投資助言の定義は EU 法を反映したものですが、非常に広範な定義規定となっています。
ただし、特定の金融商品に係る取引に関する推奨が、専ら情報伝達手段を通じてなされたり、公衆に向けて発せられたりする場合には、投資助言には該当しないものとされています。
ドイツにおいては、投資助言の特徴は、投資仲介や取次ぎなど、他の有価証券サービスとともになされることが通常であると認識されている点にあります。つまり、米国は、私の理解によれば、投資助言業と証券業をできるだ
け明確に線引きしようとするという考え方に立っていると思いますが、ドイツでは発想がかなり違っており、そうではなく、むしろ証券業者というのは
通常、投資助言業者でもあるという考え方に立っているものと思われます。
それゆえ、個別の推奨に対して報酬を受領しているかどうかは、投資助言の定義にとって重要でないわけです。このような定義は、１つの魅力的な投資助言業の定義の仕方であると思います。
投資助言業に該当するかどうかの具体的な判断基準は、つぎの５つです。
第１に、単なる情報提供ではなく、推奨であること。推奨というのは、助言者の側の意見が含まれているということを意味します。もっとも、ここが難しいところだと思いますが、単なる情報の提供であっても、その情報提供を受ける側にとって、何らかの取捨選択、何らかの意思決定の助けのためになされる情報の提供であれば、推奨に該当することになるという点です。したがって、推奨と単なる情報提供の区別は非常に難しいということになります。しかしながら、基本的には推奨と情報提供の区別が第１の基準になります。
第２に、推奨が金融商品の取引に関するものであることです。特定の投資に関係しない助言は、一般的な助言であって、推奨とはなりません。
17

第３に、推奨が投資者にとって適合的なものとしてなされるか、または当該投資者の個別の状況に対する考慮に基づいてなされるものであることです。適合的なものとしてなされる推奨は、明示的でも黙示的でもよいと解されています。
また、投資者の個別の状況に関する情報を利用しない推奨であっても、既に業者がそのような情報を収集しており、それを考慮して推奨がなされていると合理的に期待される場合には、投資者の個別の状況についての情報を利用しないで行った推奨であっても、それは個別の状況に対する考慮に基づいた推奨であるとみなされます。
第４に、推奨が配布・配信チャネルを通じて非排他的になされたものではなく、また、公衆に向けられたものでないということが要件になります。したがって、新聞、雑誌、インターネットのウェブページ、テレビ、ラジオなどを通じてなされる推奨は、投資助言には当たりません。ただし、電子メー
ルなど、複数の者に向けられたメッセージの送付先が、投資勧誘のターゲッ
トになっている場合や、メッセージの内容や用いられている言語など、個別の諸事情を考慮して、複数の者に電子メールを送信した場合であっても投資助言に当たるとされることがあり得ます。
第５に、推奨が、投資者またはその代理人を特定してなされたものである
か、見込み投資者またはその代理人を特定してなされるものであることです。
逆に言うと、投資と無関係の者に対して推奨を行っても、それは投資助言とは言えません。もう一つが、コーポレート・ファイナンス上のアドバイスとの区別です。経済的なリターンやリスクヘッジのためではなく、産業上・戦
略上・企業上の目的のためになされる助言はコーポレート・ファイナンスのための助言であって、投資助言ではないと解されています。
このように、EU やドイツでは、投資助言に当たるかどうかについて、その定義が非常に広いということもあって、かなり詳細な議論がなされています。 こ の 点 に つ い て は、 資 料 ７「Understanding the definition of advice
under MiFID」をご参照いただければ幸いです。
投資助言業に該当する場合には、信用制度法によって適用が除外される場
18

合があります。すなわち、一定の場合には、投資助言が有価証券サービス業者の定義から除外されています。投資助言の定義が広いために、EU およびドイツにおいては、充実した適用除外規定が置かれています。適用除外に当たらない場合には、投資助言は金融サービス業に当たります（信用制度法１
条１ａ項）。それを他人のために営業として、または商人的な方法で営業することを必要とする規模で営む場合には、免許が必要です（信用制度法 32条１項）。
条文については、お配りしている資料に抜き出してあります。資料６「参照条文」の中で言及する主要な法令を引用し、特にスライドに掲げてある条
文は赤線を引いてありますので、ご参照いただければと思います。
それとともに、ドイツの大きな特徴は、信用制度法上、投資助言を行う業者を原則として金融サービス業者として規制するとともに、有価証券取引法
上も規制している点です。有価証券取引法上も、投資助言業は有価証券サー
ビス業に該当します。このように、投資助言業者に対しては、信用制度法上の規制と有価証券取引法上の規制が重畳的に適用されるのがドイツ法の特徴です。
ちなみに、投資助言は、旧法のもとでは有価証券サービス業ではなく、有価証券サービス付随業でした。新法のもとで、投資助言業は、付随業ではな
く有価証券サービス業に格上げされたわけです。その理由は、投資助言が個人投資家にとってますます重要になってきており、個人投資家がますます個
別の推奨に頼るようになってきているという事情があります。そのような実態を反映して、投資助言自体が有価証券サービスに該当するものとされ、より厳格な規制の対象になりました。
２．免許制
先ほど述べたように、ドイツ法の特徴は、投資助言業について、信用制度
法と有価証券取引法による二重の規制体系をとっている点にあります。ただし、有価証券サービス業の範囲をできる限り信用制度法上の金融サービス業
19

の範囲と一致させようとしています。この点も、工夫をしているところであると思います。ダブルで規制をかけますが、規制の対象は同一にして、規制をあまりに複雑にしないように留意しているのです。
なぜこのような二重の規制体系をとっているのかと言うと、有価証券取引
法は資本市場法の観点から、それ以外の金融機関に比べて有価証券サービス
業者に対して追加的な規制を課しており、したがって、投資助言業者の規制は加重されることになります。このように、規制を柔構造化して、一般的な銀行等の信用機関にプラスアルファの規制が、資本市場のプレーヤーである
有価証券サービス業を営む業者に対して、マーケットの観点から課されているのです。なお、投資助言業者については、ほかの有価証券サービス業に比べると、投資仲介業者などとともに、参入要件はかなり緩やかなものとされています。
３．投資助言業者の組織上の義務
始めに、投資助言業者の信用制度法上の地位について述べます。先ほど申しましたように、投資助言業者は信用制度法上の金融サービス提供機関になります。
金融サービス提供機関は、信用機関とともに金融機関と定義されています。
そのため、投資助言業者には、金融機関にかかる一般的な義務が課されることになります。例えば、法令遵守態勢とかリスク管理態勢の整備義務です。
そして、有価証券サービス業務を提供する企業については特則があります。
先ほど述べたように、柔構造化された規制体系が採用されており、有価証券取引法 80 条１項は、有価証券サービス業を提供する企業は、当該サービスを継続的かつ適正に行うことを確保するための態勢、及び利益相反管理態勢を整備しなければならないと規定しています。したがって、有価証券サービ
ス業者の場合には、信用制度法上義務付けられている法令遵守態勢とリスク管理態勢に加えて、利益相反管理態勢の整備が必須とされています。
そのほか、例えば投資助言に従事する従業員は、十分な知識・能力を有す20

ることが求められています。すなわち、有価証券取引法 87 条１項は、投資助言に際しては、専門的知識を有し、かつ投資助言について信頼できると有価証券サービス業者が信じる従業員だけを使用することができると規定します。そして、当該従業員が投資助言をする前に、誰が投資助言をするのか等について BaFin に届け出なければならないものとされています。このように、投資助言については上乗せ規制が課されています。
利益相反管理態勢整備義務は、時間の関係で省略しますが、投資助言業者
が英米でいうフィデューシャリー・デューティー、ドイツ法の下では顧客の利益を擁護する義務を負うことから、利益相反について非常に厳格な組織上の義務を課されています。投資助言業者は、利益相反をきちんと検知して、それを回避し、コントロールするための態勢を整備すべきものとされています。
次に、ドイツにおける投資助言業者の行為規制を概観します。
まず柱になるのは、誠実・公正に、かつ専門家として顧客の最善の利益を擁護する義務です。このような一般的義務が課されるとともに、ノウユアカ
ストマー・ルールを前提として「適合性の原則」に即して顧客に助言や推奨を行わなければなりません。以上が、投資助言業者の基本的な義務になります。
そして、有価証券の販売・媒介等の勧誘の過程で投資助言がなされる場合が多いという前提に立っているのがドイツの特徴で、私の理解では、ドイツの証券業者の多くは、投資助言も行うという前提で業務を行っています。例
外的に、有価証券の販売・媒介等の勧誘の局面で投資助言が行われないのは
どのような場合かというと、①エグゼキューションオンリーすなわち証券取引の執行だけを受託する場合と、②当該投資家に既に投資助言業者がついていて、当該投資助言者の指図に基づいて投資者が売買している場合です。このような場合には、投資助言業には当たらないとされますが、ドイツにおいては、投資助言に該当する場合が日本や米国に比較するとかなり広いと理解しています。ドイツは投資助言の範囲が非常に広くて、むしろ証券を売る場
21

合には、投資助言がなされるのが通常であるという発想に立っているものと思われます。
４．投資助言業者の行為規制
投資助言業者の行為規制については、先に述べた組織上の義務に加えて、開示・情報提供義務が、一般の有価証券販売業者よりも加重されています。
冒頭に述べたように、むしろ投資助言業者は、一般の証券会社よりも高いレ
ベルの技能を要するという前提に立って、開示・情報提供義務が加重されていると考えられます。条文をご覧ください。まず、ドイツ有価証券取引法
63 条が、有価証券サービス業者の一般的な義務を定めています。資料６の11 ページをご覧ください。63 条の表題は、「一般的な行為規制：命令への授権（Allgemeine Verhaltensregeln; Verordnungsermächtigung）」 で す。 この条文は、有価証券サービス業者の一般的な義務を定めており、説明義務とか適合性原則等について定めています。次に、資料６の 16 ページをご覧ください。ドイツ有価証券取引法 64 条は、「投資助言を行う際の特別の行為規制（Besondere Verhaltensregeln bei der Erbringung von Anlageberatung）」というタイトルです。有価証券サービス業者が投資助言をする場合の特別の行為規制として、一般の有価証券販売業者よりも重い義務が、有価証券取引法の 64 条に定められています。
例えばどのような点が加重されているかと言うと、投資分析が包括的・総合的に行われているのか、それとも、部分的に行われているのか、明らかにしなければならないものとされています。そのほか、有価証券取引の前に、基本情報書面が作成されない金融商品については、所定の情報を記載した情報提供書面を交付する義務を課しています。また、この後申し上げますが、
投資助言業者は一般の証券業者よりも重い義務を課されますが、さらに投資助言業者を２つのカテゴリーに分けて、独立報酬投資助言業者というカテゴ
リーを設けています。独立報酬投資助言業者とは、顧客からだけ報酬を受け取る投資助言業者ですが、このような独立報酬投資助言業者については、通22

常の投資助言業者よりさらに上乗せされた規制が適用されます。３層構造の規制になっているのです。これもドイツ法の大きな特徴です。独立して顧客から報酬をいただいて投資助言を行う場合には、さらに追加的な情報提供義務などの規制が課されています。
まず、有価証券サービス業者の一般的な行為規制を定める有価証券取引法
63 条から見てまいります。第１項はベストインタレスト・ルールを定めています。すなわち、有価証券サービス業者は、誠実・公正に、かつ専門職業者として顧客の最善の利益を図り、証券業務とその付随業務を提供しなければならないと規定します。第２項は、利益相反管理態勢によっては、顧客の利益を侵害するリスクを回避できると評価し得ない場合には、顧客に対してリスクの範囲を明示する義務を課しています。すなわち、利益相反管理態勢に限界がある場合には、それをきちんと開示するという義務が一般的に課されています。
投資助言業者についての特則を定める有価証券取引法 64 条によると、それに加えて顧客に対してわかりやすい形で次の情報を提供するものとされています。すなわち、第１に、独立報酬投資助言者として助言を行うものか、
それともコミッション・ベースで助言を行うものかの区別です。第２に、助言は包括的な分析に基づいて行われるものか、それとも限定された分析に基づいて行われるものかの区別です。第３に、投資助言が自己と密接な関係にある金融商品の提供者、またはその他の法的・経済的関係に密接な関係にあるため、投資助言の独立性を害し得る提供者または発行者の金融商品に限定して推奨を行うものかどうかの区別です。投資助言業者については、これらの事項に関する特別の開示義務が課されています。
第２の包括的・総合的な分析に基づく助言か、限定された分析に基づく助言かについては、単に包括的・総合的か、限定的かという文言を用いて説明するだけでは不十分であり、全ての種類の分析について、具体的な数を示しながら開示しなければならないものとされています。取り扱う金融商品の種類、発行者、リスク・コスト・複雑性など、どのような観点から推奨の対象23に加えたのかということについても情報提供しなければなりません。投資助
言業者の情報提供については、かなり厳しいルールが課されています。
次に、適合性の原則について述べます。学説も含めて非常に争われているのは、顧客に対して推奨した金融商品の適合性に係る判断について、定期的に判断を更新する義務があるかどうかがです。有価証券取引法 64 条１項３号によると、定期的に推奨した金融商品の適合性について審査を行うかどうかを投資者に知らせなければなりません。投資助言業者は、投資者に対して一回推奨したら、あとは放っておくのか、それともきちんと定期的に推奨判断を見直すのかについて事前に情報提供しなければなりません。
もっとも、一回推奨したらあとは放っておきますということが、先ほど述
べた一般的な顧客に対する顧客の最善の利益の擁護義務に照らして許されるのかどうかが議論されています。定期的に適合性審査をレビューすることまでしなくても、一定の場合には見直さなければならないでしょうという議論がなされています。
ただし、定期的に推奨を見直すことについては、投資助言業者に対し、民事法上課されている説明義務の範囲を超えてしまっているという批判もあり、ドイツで活発に議論されている論点です。
有価証券サービス業者は、顧客に対して、当該顧客にとって適合的な金融商品または有価証券サービスを推奨しなければなりません。ロボアドバイ
ザーなどを用いる場合でもルールは同じです。
推奨が適切かどうかの判断基準は次の３つです。第１は、推奨された金融商品が、顧客の投資目標とりわけ投資目的とリスク許容度にふさわしいものかどうかです。第２は、投資リスクが当該顧客にとって経済的に負担可能であるかどうかです。第３は、当該顧客は自己の知識と経験に照らして当該投資リスクを理解できるかどうかどうかです。これら３つの判断基準から、推奨が適合的なものかどうかが判断されることになります。
なお、プロ顧客については、基本的には十分な知識と経験があるということを前提に、情報収集の対象は、何のために投資するのかということと、当24

該投資者の財務状況に限定されると解されています。適格機関取引先には、
そもそもノウユアカストマー・ルールは適用されませんから（有価証券取引法 68 条１項）、今までの議論は主としてリテール投資者に対する投資助言の話です。
適合性原則の前提は、ノウユアカストマー・ルールです。すなわち、適合性判断を適切に行うために必要な顧客の情報を、業者は収集しなければなりません。収集すべき顧客の関連情報は、①通常の収入の源とその額、②流動資産・投資商品・不動産を含む現在の資産価額、③通常の金融債務、④投資
期間、負担するリスクに係る選好、リスクプロファイルおよび投資目的などの顧客の投資目標に関する情報です。有価証券サービス業者は、適切に適合性審査を行う前提として、これらの顧客情報を収集しなければならないとされています。
なお、学説でかなり争われている論点として、有価証券サービス業者は、
上述した①から④までの事項について一般的な質問をすれば足りるのか、それとも具体的な知識と経験を問わなければならず、疑わしい場合には一般的な質問だけでは不十分であって、さらに踏み込んだ質問をしなければならないのかです。
次に、投資助言者に適用される適合性にのっとった助言義務に係る特則について申し上げます。
有価証券取引法 64 条は、投資助言業者などに課される行為規制の特則を定めます。投資助言業者は、収集した顧客情報に基づいて推奨を行うわけですが、その際、顧客を類型化して、一般顧客、プロ顧客、適格取引先のいず
れかに分類する必要があります（同条３項）。必要な情報を収集できないと
きは、推奨を行ってはなりません。その場合には、顧客に対して助言できないことを明確に示すべきこととされています。顧客の側で誤った情報を提供
し、かつ有価証券サービス業者がそのことを知らなかったか、もしくは誤っていることが明白でなかった場合には、助言を行うことができます。また、顧客が必要な情報を提供することを拒否した場合には、投資助言業者は推奨25

を行ってはならないとされています。
有価証券サービス業者は全ての情報を収集する必要はなく、具体的な助言に関して顧客を評価するために必要な情報だけを収集すれば足りる等々、ノウユアカストマーについては詳細な議論があります。時間の関係で、ここも省略いたします。
適合性については、ノウユアカストマー・ルールにのっとって情報を集めたら実際に適合性の有無について審査をしなければなりません。どのような観点から審査するかが問題になります。適合性審査においては、具体的な取引について、顧客の投資目標、投資リスク及び経済的に負担可能かどうかという観点から判断するほか、当該顧客がその者の知識をもって当該リスクを理解できるかどうかが審査の対象になります。
基本的に、ここで述べる適合性の審査の内容は、ドイツで判例上発展してきている、民事法上の適合性原則、ドイツにおいては「ふさわしい助言の原則」と言われますが、その内容とほぼ一致しています。
もっとも、先ほど少し述べましたように、民事法に係る判例法理とずれる可能性があるのは、一旦推奨した後に、その推奨を見直す義務が含まれるかどうかです。一般に、民事ルールではそこまでは認められないと解されており、もし金融監督法のほうでそれが認められるということになると、民事ルー
ルと業者ルールが異なることになります。しかし、基本的には、ドイツの適合性の原則については、民事ルールと金融監督法上のルールが一致しています。
次に、これも大きな特徴ですが、ドイツには適合性報告という制度があります。投資助言業者は、契約を締結する前に適合性報告書を顧客に交付することが求められます（有価証券取引法 64 条４項）。従来は助言プロトコルという制度でした。助言プロトコルは、単に顧客と投資助言業者の会話のやりとりを記録するものでしたが、適合性報告にはかなり詳細な情報が記載されることになっています。すなわち、行った助言の概要と、行った推奨が、顧客の選好、投資目標及びその他の「顧客の属性」にどの程度適合するもので26

あるかを具体的に記載しなければなりません。
この制度は、適合性報告によって、投資助言業者が行った推奨が本当に当該顧客にとって適合的なものであるかどうか、どの程度適合的なものである
かどうか、顧客に一瞥可能な形でわかりやすく伝え、顧客に再考の機会を与えることを目的とした制度であると解されています。適合性報告の内容、方式、様式は、規則において詳細に定められています。
適合性報告は何のために行われるかというと、先ほど申しましたように、顧客がもう一度、頭を冷やして考えるということのほかに、民事訴訟で用いることが想定されています。すなわち、適合性報告は、顧客が民事訴訟で争う場合の証明手段として役に立つことが期待されているわけです。もっとも、適合性報告制度は、
決して証明責任を転換するものではありません。しかし、顧客を保護するために、金融監督法上、投資助言業者に義務付けられたものであって、訴訟において顧客の不利に援用することはできないと解されています。
次は、有価証券サービス業者の記録保存義務です（有価証券取引法 83 条
１項）
。顧客との電話や電子メールを保存しなければならない等の非常に細かなルールが定められています（同条３項）。これらの義務は、金融監督の実効性を確保するのみならず、顧客からの民事訴訟においても有用です。
５．独立報酬投資助言業者の特則前述したように、ドイツには、独立報酬投資助言業者という制度があります。独立報酬投資助言業者とは、顧客だけから報酬を収受して助言をする業者です。この制度は 2013 年に導入されました。ドイツでは従来取引手数料（コミッション）に支えられて投資助言が行われてきましたけれども、手数料に支えられた投資助言とそれには支えられていない独立報酬投資助言とを顧客が意識的に選択できるように、誰が投資助言について報酬を支払っているかを明確にして投資助言を行うという制度です。
このような制度が 2013 年に導入されて、2018 年に、内容的にはかなり共
27

通しているのですが、独立報酬投資助言業者という制度に衣替えして、現行法に至っています。独立報酬投資助言者制度とは、従来のコミッション・ベー
スの報酬体系に基づく助言が、必ずしも投資者の最善の利益に合致してこな
かったという問題意識から、顧客から報酬をきちんと得て、利益相反をきちんとコントロールした上で、しかも包括的な投資助言を行うことを目指したものです。
なお、３月 13 日現在、ドイツでは 17 社の独立報酬投資助言業者が存在しています。
独立報酬投資助言業者に対しては、さらに上乗せ規制が課されています。
すなわち、独立報酬投資助言業者は、市場に提供されている十分に広範な金融商品の品ぞろえに配慮しなければなりません。金融商品全般に目配りをして投資助言を行うことを義務づけられているのです（有価証券取引法 64 条５項）。
自己の計算で顧客と取引することは原則禁止ですが、一定の例外があります（有価証券取引法 64 条６項）。
また、利害関係のある金融商品に係る取引を推奨する際に、利益相反関係について開示する義務が課されています。
顧客以外の者から報酬を受領することが禁じられています（有価証券取引法 64 条５項２号）。
さらに、リベートの供与についての開示義務があります（有価証券取引法
70 条１項１号）。リベートをもらわないと販売することのできない金融商品があり、そのような場合にはリベートを受け取ることはできるけれども、受領したリベートはできる限り速やかに顧客に全額返還しなければならないという相当に詳細かつ具体的な規定が置かれています。

Ⅳ．おわりに
以上、米国とドイツの投資助言業者の定義と法規制の概要について簡単に見てまいりました。
日本法の投資助言業規制について参考になる論点として、
28

第１に、投資助言の定義を見直す必要があるかどうかを挙げることができます。特に投資助言の対価として報酬を収受することの要否は、比較法的に大きく分かれていました。ドイツやＥＵ法のように報酬を収受することは、投資助言の要件から外した上で、顧客から報酬を得る場合には、上乗せ規制で対処するという規制も十分にあり得る手法であると思います。報酬を収受することを投資助言の要件とするかどうかは、大きな問題であると思います。
基本的に私の理解では、1940 年の米国の投資顧問業法で意識されたのは、証券会社が行っている助言的な行為と投資顧問をどのように区別するかでした。米国法は、報酬を受け取るかどうかで区別しました。つまり、当時の1940 年以前の米国の証券実務を前提にした米国に固有の定義が日本にそのまま移入されているように思います。これが合理的なのかどうか。米国においては、証券業という本業に付随してなされた助言であって、かつ、特別の報酬を受領しているかどうかという要件の双方を充足する場合には、投資助言業者の定義から除外することとし、それぞれの要件をめぐって非常に緻密な議論をして整理しています。そのような規制手法ももちろんあり得ると思いますけれども、証券会社および証券仲介業者の手数料ないし報酬の体系が預かり資産残高ベースのフィーに移行する傾向がある中で、米国の立法の沿革と証券実務を前提にした米国における投資助言の定義を維持するかどうか
は、１つの問題であると思います。
次に、有価証券の売買等に伴う助言と、投資助言の場合とで、基本的に例
えば適合性原則の内容とか情報提供は同一の規制で良いのかという問題があるかと思います。EU やドイツの考え方は、一般の証券業者ももちろんノウ
ユアカストマーおよび適合性原則に服するわけですけれども、投資助言業者に対しては、先ほど述べたように、情報収集にしても、分析にしても、推奨にしても、より高いレベルの行為規範を課しています。米国でも日本でも、投資助言業者には一般的な忠実義務が課されてはいるのですが、ノウユアカ
ストマー・ルールおよび適合性審査さらには適合性審査に係る報告などについてルール・ベースで定める必要はないのか、立法論として検討する必要が29

あると思います。
特にノウユアカストマー・ルールが日本の金商法のもとで確立しているのかどうかは疑わしいと思っています。少なくとも投資助言業者については、
ノウユアカストマー・ルールを、ハードローとしてきちんと定める必要があると思われます。また、顧客に対する情報提供、それから助言に実際に従事する者に対する規制が十分かどうか、これらの点についてＥＵ法やドイツ法には日本法にとって参考になる部分が少なくないと感じました。
具体的な提言には至っておらず、雑駁な報告になりましたけれども、私の報告は以上です。いろいろご教示をいただければと思います。

討議

弥永会長代理大変貴重なご報告をありがとうございました。

それでは、ただいまの神作先生のご報告に対しまして、どなたからでも結構でございますので、ご質問、ご意見をいただければと思います。
なお、恐縮ですが、ご発言される前にお名前を言っていただくようにお願いいたしたいと思います。
大崎委員

神作先生、非常に詳細なご報告、誠にありがとうございました。

１点感想的なことを申し上げて、もう一個は質問をしたいのです。
最後のところで先生も日本の制度への何らかの示唆はないかという問題提起をされていたと思いますので、そこに何か資するかもしれないという観点から申しますと、ドイツの制度としてご紹介いただいた投資助言業者の従業員に資格が求められるといいますか、一定の資質が求められる制度は、日本でもぜひ導入すべきではないかと思います。
ご承知のとおり、証券外務員登録制度というのがあるわけですが、日本の場合ですと、第一種金商業者等の役職員の登録が求められていて、歴史的に見れば、証券会社の店舗の外で活動する外務員を会社が常時コントロールできないという中で、一定の資格を要求したというようなこととか、アメリカの制度を受け入れたということがあったのだと思います。しかし、専門性の30

重要性という観点からは、投資助言を提供する人も、そういう専門性を備えていることを客観的に証明できるようにしておくことが重要ではないかと思います。
それから、ご質問したかったのは、フィー・ベースかコミッション・ベー
スかということで利益相反の問題が議論されてきたことは私も承知していますが、フィー・ベースでも利益相反があるという指摘をするときに、従来はフィーを徴収する割には取引をしない、つまり何もしないでお金を取っているということが批判されてきたかと思います。
そうした取引の回数、頻度という問題だけでなく、私が最近問題だと思っておりますのは、従来、投資助言や投資顧問という業務は、顧客資産の増大につながるよう努めていれば、基本的には顧客との利益相反はないという理解があったように思われることです。しかし、本当に人生に資するファイナ
ンシャルプランニングということを考えれば、資産を取り崩して引き出していくというプロセスにおける適切なアドバイスというものも非常に重要だと思うのです。
ところが、資産を減らしていくことについてアドバイスをするということになると、投資助言業者からすると、顧客にとって良いアドバイスをすると、自分のフィー収入が、資産残高に応じたフィー・ベースの契約であっても減ることになるので、そこには根本的な利益相反があるのではないかと思います。最近アメリカのファイナンシャルプランナーの中にそういう問題提起する人がいたりするものですから、先生のご見解を伺いたいと思いました。
長くなりましてすみません。
神作会長

大崎先生、貴重なご指摘とご質問ありがとうございました。

フィー・ベースの場合に、利益相反が生じ得る事項として、本来必要な有価証券の売買を行うことに対するディスインセンティブが生じるほか、むしろ資産が減少していく側面でも顧客にとって貴重なアドバイスというのがあるのに、きちんと助言がなされて資産が取り崩される場合には、資産残高が減少するため、フィー・ベースの報酬体系ではうまくいかないのではないか
31

というご質問をいただきました。これはご指摘のとおりだと思います。
特に高齢化が進んでいくなどして、むしろ資産を取り崩して、それをどうやって生活費等に充てていくかという状況の下では、例えば有価証券を売却するときに一体どの銘柄から売却していくのかについて適切な助言をすることも、大変重要な任務であると思います。したがって、特に日本の場合には、
少子高齢化の進展に照らして、むしろ資産を取り崩していくという局面において、適切な助言を投資助言業者が行うためのインセンティブを付与する報酬体系は、確かに大崎先生が指摘されたように、資産をふやしていくという方向で考えてきたフィー・ベースの報酬体系とはかなり異なる発想に基づく報酬体系が必要になるであろうと思います。非常に重要なご指摘をいただいたと思います。
基本的には、実務において、恐らくいろいろな工夫がなされていくことになると思います。フィー・ベースとコミッション・ベースというのはあくま
でも２つの理念型にすぎませんので、この２つの間にさまざまな報酬体系があり得ます。さらに、個別の証券取引や預かり資産残高以外の要素を盛り込
んだ報酬体系ももちろん考えられるでしょうし、基本的には業者がそれぞれ工夫して開発した報酬体系を、どのような設計思想に基づいて、誰がどのくらい負担しているのかということをきちんと開示して、顧客がその中から選択していくという方向に向かっていくのではないかと推測しています。大崎先生の言われるように、資産を取り崩していく局面における投資助言のあり方というのは、これまで日本ではあまり議論されてこなかった問題ではない
かと思いますが、大変に重要な論点だと思います。
大崎先生から、何かご知見がありましたら、ぜひご教示いただければありがたいと思います。
大崎委員

アメリカのファイナンシャルプランナーでそういう問題意識を持っている人と議論したときは、それが本当に適切かというのはちょっと疑問もあるのですが、例えば顧客の所得水準に連動するようなフィーを考えるとか、そのようないろいろな試行錯誤をしているという話は聞きました。単32

純な資産残高連動だと、完全な利益相反になるのだということを強調してお
りました。
小出委員

ご報告、大変勉強になりました。ありがとうございます。私も神作先生にご指導いただいて、別の研究会でアメリカのブローカー・ディーラー
に関するレギュレーション・ベストインタレストについては勉強したこともあるのですけれども、ドイツに関しては全く勉強しておりませんで、非常におもしろく伺いました。
やや漠然としたコメントというか質問で大変申しわけないのですけれど
も、今日せっかくドイツの話とアメリカの話と日本の話のいずれもお聞きしましたので、３つの国それぞれの方向性について教えていただきたいと思うのです。
まず初めに、先生のご報告に基づくドイツ法に対する理解の確認です。ドイツ法については基本的に規制の対象も広いし、見ていると、かなり手取り
足取りというか、ルールベースで相当細かく投資助言業に対する規制がかかるようになっているという理解ですけれども、この理解が正しいのかということがまず１つです。
仮にこの理解が正しいとしますと、他方でアメリカについての私の理解を申し上げると、アメリカでレギュレーション・ベストインタレストができた
背景にあるのがドッド＝フランク法にであったというのは、私は非常に重要な意味があったと思っています。すなわち、もともとアメリカというところ
は、リテールによる投資が大変盛んであった。それがあまりにも過熱した部分があったことが、金融危機の一因であった。それに対する反省に基づいて、リテールの証券業者の投資助言業務に対しても規制強化を図るべきこととされ、そこで、ドッド＝フランク法の中で、レギュレーション・ベストインタ
レストにつながるようなブローカー・ディーラーに対する規制強化が織り込まれた、私はそういう理解をしております。
業者に対する規制を強化して、一般投資家を保護していかなければいけないという考え方自体に対してはいろいろな評価がありうるとは思うのですけ33

れども、レギュレーション・ベストインタレストというのは、そうした考え方に基づいて、それまでのアメリカのフィデューシャリー・デューティーというプリンシプル・ベースのものに比べると、ルールベースの規制を取り入れて、ドイツほどではないにせよ、細かい規制を入れていったというふうに理解をしています。
一方、日本でも、先生ご紹介のとおり、顧客本位の業務運営ということが言われるようになりましたけれども、それが、アメリカのこういったレギュ
レーション・ベストインタレストと同じような時期であったというのはたまたまであって、日本における立法事実というか、あれは「立法」ではありませんけれども、日本においてああいうような考え方が提唱されるようになったというのは、日本では逆にリテール投資家があまり証券市場に投資をしてくれないということが前提にあって、そうした証券市場をうまくリテール投
資家、家計資産につなげていくために、投資家保護を強化して、それで安心
して投資できるようにしていこうという目的で、ああいった考え方が導入されたのだというふうに私は理解しています。
日本とアメリカというのは、もちろんもともと金商法上の規制と証券法上の規制とは非常に類似している中で、最近も同じ方向を向いているように見えるのだけれども、その背景にある実態は違っているように思うのです。そう考えたとき、ドイツにこのように非常に詳細な規制が入った背景は何であったのかというのが、非常に興味があるところです。
私はドイツの状況をよく知らないのですけれども、ドイツは比較的最近リ
テール投資が伸びているという状況があるという話も伺っています。そう
いったリテール投資が伸びている状況があるから、アメリカみたいにそれに伴って生じてきた弊害を除去する目的でこういう厳しい規制が入ってきたのか。それとも、むしろ逆に、こういう厳しい規制が入ったからこそ、ドイツは非常にリテール投資が伸びたと言えるのか。
これは日本にとっても非常に参考になると思っておりまして、仮にドイツがこういう厳しい規制が入っているから、リテール投資家が安心して投資で34

きるようになったと考えるのであれば、日本もこれを見習って、顧客本位の業務運営のようなプリンシプル・ベースの規制よりも、もう少し厳しいルー
ルベースの規制を入れていくことによって、よりリテール投資家の心理を安心させるということも考えられるように思います。
そうではなくて、ドイツは元々リテールによる投資が盛んであったという状況があったのであれば、まだ日本でここまで厳しい規制を入れる必要はな
くて、むしろ日本ではプリンシプル・ベースのような形で緩やかに規制して、証券業者がより熱心に投資助言や勧誘できるようにした上で、弊害が生じた
ら、こういった規制を入れていくという方向性もあり得るのかなと思っております。そこで、ドイツにこういった規制が入った背景というか、立法事実というものを教えていただければと思います。
長くなってしまって申しわけありません。
神作会長

小出先生、非常に貴重なコメントとご質問をありがとうございます。
いただいたご質問に直接答えることにはならないとも思うのですが、私が注目しているのは、
ドイツにおいて、
投資助言業者に対して非常に詳細なルールベースの適合性原則ですとか、情報提供義務が規定された背景には、むしろ私法、すなわち民事法上、既に判例法理によって、投資助言業者や証券業者等に対して相当厳しい情報提供義務や適合性原則が課されていたことがあると思います。この点が、日本との大きな違いであるという感想を持っています。
そして、ドイツにおいては、むしろ業者ルールは、民事ルールとしてかな
り定着していたルールを業法のレベルでも確立するとともに、先ほど申しましたような金融監督法においては適合性報告書のような民事訴訟を支える機能を営む制度を創設し、民事法によるエンフォースメントを補助しています。
このように、
民事法的なエンフォースメントというのがまずベースにあって、それを基礎として、かなり具体的かつ詳細なルールベースの行為規制が導入されているものと理解しています。日本では、情報提供義務や適合性原則は、
35

むしろ、業法上の行為規制が先行し、民事ルールは、業者ルールを追随する形で発展してきたと理解していますが、この点が日本とドイツではかなり状況が異なると思います。
ＥＵ加盟国の中でもさまざまだとは思いますけれども、ドイツについては、
ＥＵ法の定める業者ルールとしての詳細な情報提供義務や適合性原則ルールを導入することについて、抵抗があまりなかったと思います。情報提供義務や適合性原則については、ほとんど民事ルールと同じルールが業法上も導入されたというのが一般的な理解だったと思います。
このように、民事法上もかなり認められていた証券業者や投資助言業者の情報提供義務や適合性原則が、EU 指令の国内法化や EU 規則を通じて業者ルールになり、ドイツの有価証券サービス業者は、BaFin の監督等に服するとともに、先ほど申しましたように、適合性報告書制度や記録保存義務などの業者ルールによって、監督の実効性を確保するとともに、民事ルールに基づいて顧客が業者と争うときの武器が、リテール投資家に与えられたという側面があると思います。私の印象ですと、適合性原則ですとか情報提供義務というのは、監督機関とか、自主規制団体だけで十分なエンフォースメントができるかというと、限界が大きく、結局、個々の投資家が行動を起こすことによって、エンフォースしていくというのが、実効性確保の中心になるという考え方がドイツでは強いと理解しています。
そのような理解からすると、ご報告で述べたルールベースのさまざまな規制が、業法としていきなり入ったのではなくて、あくまでも民事ルールとして既にかなり具体的に確立していた規範を業者ルールとして取り込むとともに、それを整備して、場合によってはプラスアルファしたと理解できると思います。
では、業法上の行為規制としても導入されたことによって、ドイツの資本市場がどのようになったのかということは、私はきちんと研究してないのですけれども、ドイツでも昔から富裕層はかなり存在し、富裕層は証券投資を活発に行ってきたと思います。ただ、投資家の裾野がなかなか広がらないと36いうのがドイツの資本市場の大きな問題点でした。ドイツでも、日本と同様、直接金融市場が間接金融市場に比べて脆弱であり、資本市場を強化する必要があるとしてそのような政策が採られてきました。したがって、小出先生ご指摘のとおり、政策的に投資家保護を図りつつ、業者規制を充実させるという面があったことも確かだと思われます。少なくとも、資本市場振興政策が導入されて以降、ドイツ証券取引所の株価は相当上昇しており、株価という面からは一定の成果があったとも考えられますが、それが法改正によるもの
であると申し上げるだけの知見がありません。
なお、ドイツでは、「灰色の市場」と呼ばれてきた、きちんと法規制されていない市場にどちらかというと洗練されていない個人投資家が勧誘されて、情報開示が不十分で不透明な中で、リスクがきわめて高く、詐欺的な投資をさせられるという問題が深刻でした。
「灰色の市場」とは、資本市場法の適用を受けない民法上の組合や人的会社に対する持分、有限会社の社員たる地位、匿名組員としての参加や信託受益権などが販売されて、投資者詐欺事件などが頻発しました。ドイツでは「灰色の市場」に対しては取引所法や目論見書法の規制が適用されず長い間立法措置も講じられなかったため、裁判所が事後的に民事法に基づいて投資者を保護してきました。すなわち、「灰色の市場」に関して判例は、目論見書責任や説明義務に基づく損害賠償責任など民事上の規律によって投資者保護を図ってきました。2004 年の投資者保護改善法による改正販売目論見書法によって、ドイツにおいて「灰色の市場」で流通している金融商品についてもようやく公法上の目論見書義務と民事法上の目論見書責任の特則が適用されることになり、一般投資家の信頼もかなり高まった面があると思います。一般に、資本市場の規律づけは、民事法上の規律と監督法上の規制があいまって、投資者保護および資本市場の機能向上という目的をよりよく実現できるのだと思います。
なお、相当に詳細なルールベースの業者ルール、特に利益相反規制は、業者のためでもあると言われています。すなわち、民事訴訟が頻発するドイツにおいて、業者の側では、業者規制はきちんと遵守していることを主張して、37

民事訴訟においてむしろ業者をディフェンドする意味もあると言われています。この点も、日本とは随分状況が違うと思います。
すなわち、ドイツでは、厳格な民事ルールや民事紛争が生じやすいことを背景に、むしろ業者の側もこういった業者ルールを求めるという面があるようです。基本的には、情報提供義務や適合性原則は、民事ルールとして課されているわけですので、むしろ業者ルールとしてもきちんとやることはやっていますよと業者の側は反論するわけです。もっとも、ここでは民事法と業法の関係という論点が生じますから、業者ルールを守っていれば、民事責任を負わないかというと、単純にはそのようなことは申せません。しかし、例
えば先ほどの法令遵守体制とか利益相反管理体制等をしっかりつくって、監督に服しながら法令を遵守して業務を行っていますということは、民事訴訟
において、業者にとってプラスになる面もあるということが指摘されています。
小出委員

今伺っていて、日本も、もともと民事法、私法のほうは大陸法であるドイツ法と親和的な部分が多いと思いますので、その意味では、ドイツが民事法をベースに規制を発展させてきた経験というのは非常に参考になる
し、今後日本でも検討していく価値が十分あるという感想を持ちました。
松井（智）委員

大変詳細なご報告をありがとうございました。

私も別の研究会でこの問題について少し別の観点で調べたことがありました。説明義務をこのように投資助言業のほうに近づけていったときには、レギュレーションコストの顧客への転嫁が進む結果、それに耐えられない零細規模の投資家が市場から排除されて、逆に投資における格差が進むのではな
いかという問題があるのではないかというようなことが、そのときの研究会
でいろいろと指摘があったかと記憶しています。
その観点で、例えばアメリカなどではロボアドバイザーのような機械的な推奨をどういうふうに扱うかとか、いろいろな議論があったかと思うのです。
したがって、ドイツでは例えばフィー・ベースのほうが望ましいといったよ
うな実務慣行があるのかどうかとか、ロボアドバイザーのようなものをレ
38

ギュレーション上どうやって扱うのかといったようなことについて伺えればと思います。
神作会長

ご質問どうもありがとうございました。

松井先生ご指摘のとおり、特に米国の議論においては、ブローカー・ディー
ラーの説明義務や適合性原則と、投資助言業者の義務とを完全に一致させる
ことに対する最も強い反対の論拠は、松井先生がご指摘された点であったと理解しています。そして、米国では、結局、そのような意見が多数を占め、2019 年に SEC が制定したレギュレーション・ベストインタレストは、ブローカー・ディーラーだけを規制対象とし、両者の行為規範を完全に一致させることを断念しました。したがって、松井先生のご指摘は、大変に重要だと思います。すなわち、ブローカー・ディーラーに対して極めて厳格な、いわばsole interest rule に基づく行為規範をルール化してしまうと、ブローカー・
ディーラーがコストとリターンへの考慮などから、相手にしない一般投資家がかなり出てきてしまって、その人たちは結局のところ、証券市場すなわち資本市場にアクセスする道を遮断されてしまうのではないかという観点は、確かに大変重要であると思います。
しかし、ドイツではあまりそのような議論はなされておりません。おそらく民事ルールが基本にあるからではないかと推測しますけれども、不適切もしくは不適合な金融商品を販売してはらならいというルールが民事法上確立していて、逆に言うと、資本市場の観点あるいは証券投資の促進という観点から、業者規制が形づくられるというよりも、むしろ民事ルールをベースに監督規制を形づくっている。これがドイツやＥＵの大きな特徴であると思います。情報提供や適合性原則については、業者ルールが民事ルールをベースにしているという点で、業者ルールをかなりの自由度をもって政策的に設計できる国とは事情がかなり異なると考えます。
そこのところが、
米国などの議論と違うところがあるのかもしれませんが、ご指摘いただいた点は本当におっしゃるとおりです。米国において一般投資家、特に零細な投資家が証券投資にアクセスし、多様な商品を購入できる。
39

そのようなチャンスを与えることが非常に重要であるという発想が、とくに米国では強いと思います。業者規制が不適切に厳し過ぎたりすると、むしろ業者がそのようなビジネスから撤退してしまう。それはよくないという発想があるのはご指摘のとおりと思います。
次に、松井先生がご指摘されたロボアドバイザーに対する規制のあり方です。ドイツでも、ロボアドバイザーはかなり発展しており広く利用されています。もっとも、ドイツ法および EU 法においては、ロボアドバイザーも基
本的には人間が投資助言をする場合とまったく同一のルールに服するということが確立しています。したがって、基本的には、ロボアドバイザーによって投資者に推奨されている商品というのは、現状では非常に安全性が高くて、現段階では、大半の投資者にとって適合的なものが多いと言われています。
しかし、この後、ロボアドバイザーがどのような金融商品を扱い、どのよ
うに展開していくかは、簡単には予測できず、いろいろな可能性があると思います。したがって、将来的には大きな問題が生じるかもしれませんけれども、現状ではあまり問題が生じてないというか、問題が生じないような運用や利用がなされている段階であると認識しています。
最後に、報酬体系については、ドイツにおいても、フィー・ベースの方が望ましいという議論が有力であるというわけでは必ずしもなく、報酬体系や報酬の額について開示をし、投資者がその中から選択するという方向が志向されていると理解しています。
十分なお答えになっておりませんけれども、松井先生から、さらにコメン
トとかご意見がありましたら、ぜひご指摘、ご教示いただければと思います。
松井（智）委員

私にも特に良いアイデアはないのですが、ただ、そのような規制が入ったことによって、全体としての投資額がどういう影響を受けたのかとか、どういう報酬体系で業務を遂行する人たちが増えたのかとか、そういったことがわかると、影響としてわかりやすいのかなと感じました。
神作会長

報酬の実態については、米国のものは、ある程度統計を見つけることができたのですけれども、ドイツについては、少し探してみたのですが、40

ご紹介できるような統計を見つけることができませんでした。もしわかりま
したら、補充させていただきたいと思います。
松尾（直）委員

神作先生、非常に詳細なご説明をいただきましてありがとうございます。
私からご質問させていただきたいのは、ご承知のとおり、もともとアメリ
カでは、1934 年証券取引所法と 1940 年投資顧問業法があって、異なる根拠法となっています。ブローカー・ディーラーのいわゆる投資助言業務については、間にある中間的なもので、その扱いをどうするかということが議論になったのだと思います。
日本はご承知のとおり、法律は別建てだったのですけれども、金商法に金融商品取引業ということで、投資助言業務も証券取引法時代の証券業も統合された。ただ、過去の別法体系をベースに、金融商品取引業を類型化して、規制内容が多少とも異なるところがあります。
ドイツの場合は、ドイツ法を存じ上げませんけれども、もともとＥＵのMiFID があって、投資サービス業という概念において幅広い業務が入っているわけです。
今回ご報告をお伺いして思ったのは、投資助言業務について厳しいことです。日本は、相対的に投資顧問業については、投資一任業務は別として、純粋な助言業務については、結局、投資家からすると、投資判断は自分が行って、取引発注も自分で行って、助言を受けるだけなのです。ですから、相対的に軽い規制になっているという考えだろうと思われるのですけれども、ドイツは、投資サービス業の中で、投資助言業について、投資家は助言を受けるだけなのに、
なぜこれほど重い規制をかけられているのか。英米法的なフィ
デューシャリーだけでは多分説明し切れないと思うのですけれども、その辺、先生に教えていただければと思います。
神作会長

松尾先生、ご質問どうもありがとうございます。

基本的にはドイツにおいて投資助言者に対して重い義務が課されているのは、何度も繰り返しで恐縮ですけれども、既に民事法上そのような義務が課
41

されていまして、民事法上は、投資助言契約は準委任契約であると解されています。準委任であるため、受任者である投資助言業者は、委任者である顧客に対して、利益相反規制を含む善管注意義務や誠実義務を負っていると解されています。これは英米におけるフィデューシャリー・デューティーの議論とも共通する点だと思いますけれども、助言を行うというのは基本的には専門家すなわち顧客よりも専門性のある人がより専門性の少ない人に対して一定のアドバイスを行うということなので、依存関係が生じるのが通常であろうと解されているものと思われます。
確かに松尾先生がおっしゃったように、助言を受けても、最終的に投資判断をするのは投資者本人ではないかというのはご指摘のとおりと思います。
けれども、英米においては、専門家等のフィデューシャリー・デューティー、
ドイツにおいては、（準）委任関係に基づく誠実義務（Treuepflicht）、ある
いは委託者の利益を擁護する義務が課され、一定の事項について推奨したり助言を与えたりするものについては、投資助言に限らず、一般的にかなり厳しい義務が民事法上課されていると理解しています。
少し脱線するかもしれませんけれども、日本でなかなか専門家が育たない
一つの理由は、専門家に係る法的ルールが、表現の仕方は適切でないかもしれませんが、日本法の場合にはやや甘いところがあるのではないかと思います。むしろ、英米やＥＵのように、専門家は、きちんと職業専門人として公正かつ誠実に、顧客の方を向いて仕事をしていくという法規範を確立する必要があると思います。さらに、特に本日のテーマで問題になっているのは、
マーケットに係る投資助言ですので、マーケットに係る投資助言については、
マーケットを向いて仕事をするのだということに留意すべきだと思います。
ドイツでは、民事法上も、また業法上も、先ほど述べたようにかなり厳格かつ詳細な助言業者の義務が課されていることに加えて、マーケットの観点か
ら、有価証券取引法は、さらにそれに追加して規制を上乗せしているという構造になっています。
専門家に対して、どのような法的ルールを課すかという、投資助言の領域
42

だけの問題ではなくて、日本法全体にかかわる問題であると思いますけれど
も、日本では専門家責任というのがなかなか発展しないということの裏腹の問題だと思います。私は、少なくともマーケットを背景とした金融商品に係る投資助言については、少なくとも欧米並みのルールを導入するのが適切ではないかと考えています。
松尾（直）委員

少し追加ですが、投資助言はちょっと軽いと申しましたけ

れども、善管注意義務と忠実義務が入っていまして、旧証券業には入れてないです。ですから、投資助言業のほうが重くなっている面もあります。
あと、やや脱線するかもしれませんが、先生がおっしゃった専門家という点ですけれども、私も専門家なのです。ただ、提供しているサービスの内容が違うということと、金融の専門家の最大の難しさは、自己の専門的知見だ
けでは必ずしも顧客の満足度を高められないことだと思います。医師でも、弁護士でも、結果を保証することはできないのですけれども、金融商品取引
業では、結果を保証できないというか、損失補填の規制があるから、むしろ結果を保証してはいけないことになっています。顧客は収益を上げたい、あるいは損失を回避したい。でも、それはマーケットによって左右されるわけです。私は自分で異なる分野の専門家をやっていて、金融の専門家というのは難しいだろうなと常に思っているのです。
そういう議論はドイツにはないのですか。要は、マーケットによって顧客の目的である収益性、損失回避が左右されてしまって、専門家もコントロー
ルできないのです。これは医師や弁護士以上にコントロールできないと思います。そういう特殊な専門家である金融の専門家について、何かそういう議論はないのでしょうか。一般論過ぎて申しわけないのですが、あるいは先生のお考えみたいなものはないでしょうか。
神作会長

まさにおっしゃるとおりで、結果がどうなるかは本当に誰にもわかりません。ただし、専門家であろうとも、結果責任を負うものではないということは確かだと思います。専門家責任は結果責任を負わせるものではありません。しかし、顧客との関係で、たとえ損失が出ても、あるいは期待し43

たような利益が出なくても、法的請求はできないということを正当化するた
めには、情報提供ですとか適合性の原則ですとか、特に利益相反規制ですとか、そのような投資助言業者が遵守すべきルールをきちっと守ってやっていれば、結果がどうであれ、責任を問われることはないという考え方に立つことになります。むしろ結果責任を問われないためにも、態勢整備義務などの組織上の義務を含む、金融監督法上のさまざまなルールが置かれている面があると思います。
さらに投資助言の場合の大きな特徴は、マーケットを常に意識していて、特に顧客だけから報酬を受け取る独立報酬助言業者というのは、ドイツにおいては、原則として、マーケットに流通している金融商品全般に目配りをして投資助言をしなければならないこととされています。顧客だけではなくて、
マーケットも意識して、注意義務を資本市場の機能発揮に資するようにアレンジしている面があると思います。そういう意味では、まさに松尾先生ご指摘のとおり、市場はどうなるかわからないという特徴をドイツはむしろ非常に強く意識して、こういった法体系を構築していると理解しています。
松尾（直）委員

もう一点、セルサイドのいわゆるアナリスト、証券会社に所属するアナリストのアナリストレポートは、投資助言との関係では、ドイツではどのように位置づけられているのでしょうか。
神作会長

ご報告の中でも申し上げました５つの基準、単なる情報提供か推奨か、また、金融商品の取引に関するものか、などスライドの 25 ～ 26 ページの①から⑤の基準を適用して判断することになります。
アナリストレポートについてもっとも問題になるのは、④の要件、すなわ
ち、「推奨が配布・配信チャネルを通じて排他性を否定する態様でなされたものではなく、また、公衆に向けられたものでないこと」の要件です。そして、投資リサーチの配信については、この要件を満たさないものとされています。解釈上、明確化が図られており、「投資リサーチの配信は、投資助言に当たらない」ものとされています。もっとも、典型的な投資リサーチの範囲を超えたタイプの配信がされたようなとき、例えば特定のグループに対し44

てだけ、そのグループのメンバーだけをターゲットにして勧誘的な要素が含まれる配信がなされる場合には、④の要件を充足する場合があり得、先ほどの①から⑤までの基準を満たせば、推奨に当たるとされます。
なお、上述した５つの基準は、そもそもドイツの基準というわけではなく、ＥＵレベルの基準ですけれども、日本法にとってもかなり参考になる基準であると感じています。
河村委員

ご報告、
大変勉強になりました。どうもありがとうございました。

今の助言に関する規制が厳しいという点にも関係するのですけれども、ドイツの実態として、証券会社が投資助言をして、その助言の結果としての発注を自社につなげていく。こういうことがあったのではないのかなということを勝手に推測したのですけれども、もしそういうことがあったとすると、それが原因で助言のところの規制が厳しくなり、また投資助言の定義についても、必ずしも報酬を要件としないということにつながっていったのではな
いかと思ったのですが、そのあたりの実態について改めて教えていただければと思います。もしかすると、既にお話しいただいているかもしれませんけ
れども、お願いします。
それからもう一点ですが、先ほどもともと民事責任、民事の部分が発展していたというお話があったと思うのですけれども、違う点として、情報提供
義務のところでしょうか、一旦推奨した後も継続的に見直していかなくてはいけないというところで、その議論が出てきた背景に何があったのでしょうか。例えば高齢者との関連の話とか、そのあたりの議論があったのかというところも教えていただければ幸いです。
神作会長

河村先生、２つのご質問どうもありがとうございました。

まず前者のご質問です。もう少しきちんと調べたり、インタビューしたりしなければならないのですが、本日は調査が間に合っておりません。したがって推測に止まりますが、ドイツでは、投資助言の範囲が広いことと相まって、
ドイツの証券会社は、証券業、すなわち証券の売買やその媒介等についての免許と、投資助言についての免許の両方を持っている場合が多いと推測して45います。米国でも、ブローカー・ディーラーの登録と投資顧問の登録の両方をする業者が一定程度存在することを申し上げましたけれども、むしろドイツは、そのようなビジネスモデルが主流であると予想しています。
そうしますと、河村先生のおっしゃるとおり、利益相反の危険性が相当に大きくなるわけですけれども、基本的に米国と同様に、ドイツやＥＵにおいても、投資助言業者に対しては、自己が当該顧客の取引の当事者になってはならないとされます。このルールは、投資助言業者の行為規範として、日米独に共通と理解しています。投資助言業者は、投資助言に係る取引について自ら本人となって取引をしてはならないというルールが課されますが、ドイツの場合には、実は例外が結構広く認められています。すなわち、事前に顧客から書面による同意を得て、かつ、一定の条件のもとであれば行うことができるとされています。実は、証券業務との兼営から生じる利益相反については、かなり規制が甘いといえると思います。
そのような行為から顧客を保護するために期待されているのが、証券業者に課される最良執行義務であると理解しています。すなわち、投資者にとっては最良執行がなされれば、不利益はないであろうという割り切りをしているとも考えられます。
また、ご報告でも申し上げたとおり、ドイツでは、投資助言業者に対しては、有価証券サービス業者として、有価証券取引法において、一般的な利益
相反管理態勢整備義務が導入されており、組織上の義務を課すことによって利益相反の問題に組織的に対処しようとしています。
なお、ドイツの有価証券取引法は、有価証券サービス業者に対して一般的に利益相反管理態勢整備義務を課すとともに、どうしてもそれによってもクリアできない利益相反については、投資者に対してきちんと開示しなければならないと規定します。このように、業法および金融監督法上の規制によって、一定の対応をしようとしています。さらに、最良執行義務についても同様で、業者ルールによって利益相反によって生じ得る不利益を実質的に排除するための措置が講じられています。しかし、それで十分かと言われると、46

これらの規制の実効性が必ずしも高いわけではないこともあり、河村先生ご指摘のとおり、業法上厳格な規制を導入するという方向に進んだと考えられるように思います。
確かにご指摘いただいた利益相反の問題は、ドイツにおいても非常に深刻な問題で、監督法上の規制が入れられたことによって、実態としてどれだけ実質的な利益相反の問題が解消しているのかについては、まだまだ調べなけ
ればいならないところが多く、不十分なお答えに止めざるを得ません。
２つ目のご質問について申し上げます。適合性判断について継続的な見直しを要するかどうか、論点になっている背景についてのご質問をいただきました。高齢者というのも一要素だと思いますけれども、典型的なケースというのは、投資者の財政状態や経済状態が大きく変わってしまったようなケースです。例えば投資者が行っていたビジネスが破綻したり、仕事を失って失業してしまったりといったケースです。何らかの事情によって経常的な収入が得られなくなったというのが、典型的なケースです。そのほか、例えば人生において大きな出来事、たとえば事故に遭ったり、病気になったり、離婚
したり、そういったさまざまな財政状態とか社会経済生活上の環境が刻々と変化していくわけで、高齢化もその一例ですが、それだけに限らず、そういっ
たさまざまな状況や環境の変化について、投資助言業者は特に重要な事項については情報を収集し直して、推奨判断を変えていく必要があるかどうかが議論されています。このような定期的な適合性審査が顧客の利益擁護義務から導かれるとして、一部の研究者は民事ルールとしても認めるべきであると主張していますが、民事ルールとしてはそこまでは認められないとする見解が多いようです。
業者ルールとしては、先ほど申し上げたように、有価証券取引法において、適合性審査について定期的にレビューする義務があるとまでは規定してないのですけれども、定期的な見直しをするかしないかということを顧客に対してきちんと開示しなければならないというルールになっています。
松井（秀）委員

非常に詳細なご報告をありがとうございました。アメリカ、
47

ドイツ、日本も含めて比較をしていただきまして、それぞれの制度が相対化され、私自身、投資助言業についてあまり詳しくないのですけれども、理解が深まりました。
１点、実は先ほどの河村先生のご質問とほぼ重なってしまうので、もうお答えいただいたようなものですけれども、先生のご報告の 24 ページの「投資助言業の定義」に関するドイツの部分で、一番下に「ドイツにおいては、
投資助言の特徴は、投資仲介や取次ぎなどの他の有価証券サービスとともになされることが通常である」というご指摘をくださっております。この点が実はドイツの制度に影響を与えているのではないか、というのが気になったところです。
先ほど河村先生からもありましたが、投資助言に報酬という概念が含まれない。これはヨーロッパの影響もあるのかもしれませんけれども、報酬概念を含めてしまうと、ある種の規制すべき対象が漏れ落ちてしまう。あるいはドイツのさまざまな事情があるかとも思いますけれども、他のサービスを兼ねているがゆえに、投資助言だけを切り離してクリアに規制をすることができない。上乗せ規制になるというのはまさにそういうことだろうと思うのです。そのようなドイツの固有の事情は、規制のあり方に反映しているのではないか。また、そのように理解することによって、アメリカや日本の制度を今後考えるときに、ドイツとどのような事情が同じで、何が違っているかを見ていくことができるのではないかと思った次第であります。
以上の次第で、ドイツの投資助言の実態と、先生がご紹介くださったドイツの制度のある種の規制の重さや広さというところとが結びついているのではないか。このあたりの認識について、以上の理解でよいかどうかをお伺いできればと思っておりました。ただ、先ほど河村先生とのやりとりでかなり答えていただいたようにも思いますので、もし既にお答えいただいているということであれば十分でございます。どうぞよろしくお願いいたします。
神作会長

松井先生、ご質問どうもありがとうございました。

私の認識が間違っているかもしれないのですが、証券会社が行っているこ48

と自体は、日本も米国もドイツもあまり違わないのではないかという気がしています。
すなわち、証券の売買やその媒介等を行う際に、証券会社やその従業員等が助言的な行為を行うというのは、どこの国でも一定程度行っているものと推測します。
米国の場合には、証券業規制が先に存在しており、それに加えて新たに投資顧問業法を制定するというときに、
松尾先生からご指摘いただいたように、両者を別の法律で規制することにして、両者の適用範囲をどのように線引きするかが非常に大きな問題になりました。その結果、報酬の収受をようけんとする投資助言の定義とブローカー・ディーラーの適用除外という、米国に独特な規制体系が形成されました。
これに対してドイツにおいては、有価証券サービスという包括的な概念の下に、有価証券の売買、その媒介等などとともに投資助言も含められ、同一の法律によって規制されています。かつては、投資助言自体が有価証券サー
ビス付随業務であったことに象徴されるように、ドイツにおいては、投資助言について独立して当該サービスの対価として報酬を収受しているかどうかは直接的には問題にしません。業者がビジネスとして行っているわけですか
ら、どこかでコストは回収していると思われるわけですけれども、報酬の収受を投資助言の要件とはせず、したがって投資助言の範囲は日米に比較するとかなり広範になります。米国のような一種のフィクションというか、特別な報酬でなければ、そして証券業に専ら付随してなされる分には、ブローカー・ディーラーは助言的な行為を行っても、投資助言業には該当しないという整理をしたわけですけれども、ドイツ法は、そのような整理をせずに、機能的に投資助言をとらえて規制していると思います。
私から見ると、むしろ米国の規制のほうがやや特殊と申しますか、先ほど申しましたように、規制の沿革ですとか、当時、証券会社が行っていた実務を背景に、投資顧問業法の規制が証券会社に適用されてしまうと、米国の場
合には、本人として取引することが原則としてできなくなるので、ブロー49

カー・ディーラーにとっては、投資顧問業者とされるとビジネスモデルに大きな影響が生じることになるのだと思います。まさにそのことは、労働省がフィデューシャリー・ルールに関する規則案を公表したときに、業界が大変な騒ぎになった原因であると思います。もっとも、投資助言業者になると原則として本人として顧客と取引できないというルール自体は、ドイツ法にも存在し、ドイツはそちらについて適用除外規定によって調整しているわけですので、どこで調整をするかという問題にすぎないのかもしれません。ドイツでは、有価証券サービス業者が、他の多くのサービスを兼ねているがゆえに、その中で投資助言だけを切り離してクリアに規制をすることができず、上乗せ規制にならざるを得ないという松井先生のご指摘は、なるほどと思うとともに、投資助言業を証券業から切り離して規制する米国法の規制、が経路依存によってやや特殊な道を進んでいるような印象を受けます。日本法は、
平成 18 年証取法改正によって、投資助言業務を金融商品取引業に取り込んだわけですから、ドイツ法のように投資助言業を定義し、規制することも、一考に値すると思いますが、民事ルールや最良執行義務などの業者規制全体を見通しながら、議論を進める必要があると思います。
松井（秀）委員

私自身もあまり詳しく研究したことがないものですから、むしろなるほどと思いながら、本日、お伺いをいたしました。
法律の制度としてのたてつけ、できた順序、あるいはアメリカの場合に関しては、先生がおっしゃったように規制の中身ゆえに、業者のインセンティ
ブが変わって、動きが変わっているということがわかりました。いずれにしても、各国の制度のありようや、業者の成り立ちが影響しているということは、非常に抽象度の高いレベルですけれども、理解をいたしました。どうもありがとうございました。また考えさせていただけばと存じます。
弥永会長代理

それでは、まだご議論もあろうかとは思いますけれども、時間も参りましたので、本日の研究会の質疑を終了させていただきたいと思います。神作先生、どうもありがとうございました。
次回の研究会は、お手元の議事次第にございますように、５月 27 日の午50

後１時から、宮下央先生よりご報告いただく予定でございます。
なお、会場は、本日と同じくこの証券団体会議室となりますが、新型コロ
ナウイルスの感染状況等に大きな変化が見られない場合には、今回同様、リ
アルとオンライン併用のハイブリッドでの開催を想定しております。
それでは、本日の研究会はこれで閉会させていただきたいと思います。

51

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78

資資 料料【配布資料】
資料１

INVESTMENT ADVISERS ACT OF 1940

資料２

SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 276[Release No. IA-5249] Commission Interpretation Regarding the Solely Incidental
Prong of the Broker-Dealer Exclusion from the Definition of Investment
Adviser

資料３

SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 276[Release No. IA-5248; File No. S7-07-18]

RIN: 3235-AM36

Commission Interpretation Regarding Standard of Conduct for Investment Advisers
資料４

SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 275[Release No. IA-2653; File No. S7-23-07]

RIN 3235-AJ96

Temporary Rule Regarding Principal Trades with Certain Advisory Clients
資料５

DIRECTIVE 2014/65/EU OF THE EUROPEAN PARLIAMENT AND OF

COUNCIL of 15 May 2014
資料６

参照条文（ドイツ法関係）

資料７

Understanding the definition of advice under MiFID

資料８

esma Guidelines for the assessment of knowledge and competence

資料９

REGULATIONS COMMISSION DELEGATED REGULATION (EU) 2017/565
of 25 April 2016

79

DEFINITIONS

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As Amended Through P.L. 115-417, Enacted January 03, 2019

SEC. 202. ø80b–2¿ (a) When used in this title, unless the context otherwise requires, the following definitions shall apply:

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VerDate Mar 15 201080

SEC. 201. ø80b–1¿ Upon the basis of facts disclosed by therecord and report of the Securities and Exchange Commission
made pursuant to section 30 of the Public Utility Holding Company
Act of 1935, and facts otherwise disclosed and ascertained, it is
hereby found that investment advisers are of national concern, in
that, among other things—(1) their advice, counsel, publications, writings, analyses,
and reports are furnished and distributed, and their contracts,
subscription agreements, and other arrangements with clientsare negotiated and performed, by the use of the mails andmeans and instrumentalities of interstate commerce;(2) their advice, counsel, publications, writings, analyses,
and reports customarily relate to the purchase and sale of securities traded on national securities exchanges and in interstate over-the-counter markets, securities issued by companies
engaged in business in interstate commerce, and securities
issued by national banks and member banks of the Federal Reserve System; and(3) the foregoing transactions occur in such volume as substantially to affect interstate commerce, national securities exchanges, and other securities markets, the national banking
system and the national economy.

FINDINGS

TITLE II—INVESTMENT ADVISERS

øNote: While this publication does not represent an official version of any Federal
statute, substantial efforts have been made to ensure the accuracy of its contents.
The official version of Federal law is found in the United States Statutes at Largeand in the United States Code. The legal effect to be given to the Statutes at
Large and the United States Code is established by statute (1 U.S.C. 112, 204).¿øCurrency: This publication is a compilation of the text of title II of chapter 686
of the 76th Congress. It was last amended by the public law listed in the As
Amended Through note above and below at the bottom of each page of the pdf
version and reflects current law through the date of the enactment of the public
law listed at https://www.govinfo.gov/app/collection/comps/¿[As Amended Through P.L. 115–417, Enacted January 03, 2019][Title II of Chapter 686 of the 76th Congress]øReferences in brackets ø¿ are to title 15, United States Code¿INVESTMENT ADVISERS ACT OF 1940

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As Amended Through P.L. 115-417, Enacted January 03, 2019(1) ‘‘Assignment’’ includes any direct or indirect transfer or
hypothecation of an investment advisory contract by the assignor or of a controlling block of the assignor’s outstanding
voting securities by a security holder of the assignor; but if theinvestment adviser is a partnership, no assignment of an investment advisory contract shall be deemed to result from thedeath or withdrawal of a minority of the members of the investment adviser having only a minority interest in the business of the investment adviser, or from the admission to theinvestment adviser of one or more members who, after such
admission, shall be only a minority of the members and shallhave only a minority interest in the business.
(2) ‘‘Bank’’ means (A) a banking institution organizedunder the laws of the United States or a Federal savings association, as defined in section 2(5) of the Home Owners’ Loan
Act, (B) a member bank of the Federal Reserve System, (C)any other banking institution, savings association, as definedin section 2(4) of the Home Owners’ Loan Act, or trust company, whether incorporated or not, doing business under thelaws of any State or of the United States, a substantial portionof the business of which consists of receiving deposits or exercising fiduciary powers similar to those permitted to nationalbanks under the authority of the Comptroller of the Currency,
and which is supervised and examined by State or Federal authority having supervision over banks or savings associations,and which is not operated for the purpose of evading the provisions of this title, and (D) a receiver, conservator, or other liquidating agent of any institution or firm included in clauses(A), (B), or (C) of this paragraph.
(3) The term ‘‘broker’’ has the same meaning as given in
section 3 of the Securities Exchange Act of 1934.
(4) ‘‘Commission’’ means the Securities and Exchange
Commission.
(5) ‘‘Company’’ means a corporation, a partnership, an association, a joint-stock company, a trust, or any organizedgroup of persons, whether incorporated or not; or any receiver,trustee in a case under title 11 of the United States Code, orsimilar official, or any liquidating agent for any of the foregoing, in his capacity as such.
(6) ‘‘Convicted’’ includes a verdict, judgment, or plea of
guilty, or a finding of guilt on a plea of nolo contendere, if suchverdict, judgment, plea, or finding has not been reversed, set
aside, or withdrawn, whether or not sentence has been imposed.
(7) The term ‘‘dealer’’ has the same meaning as given in
section 3 of the Securities Exchange Act of 1934, but does notinclude an insurance company or investment company.
(8) ‘‘Director’’ means any director of a corporation or any
person performing similar functions, with respect to any organization, whether incorporated or unincorporated.
(9) ‘‘Exchange’’ means any organization, association, orgroup of persons, whether incorporated or unincorporated,which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securi-Sec. 202

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資料１

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INVESTMENT ADVISERS ACT OF 1940

Sec. 202

ties or for otherwise performing with respect to securities thefunctions commonly performed by a stock exchange as thatterm is generally understood, and includes the market place
and the market facilities maintained by such exchange.
(10) ‘‘Interstate commerce’’ means trade, commerce, transportation, or communication among the several States, or between any foreign country and any State, or between any Stateand any place or ship outside thereof.
(11) ‘‘Investment adviser’’ means any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or
selling securities, or who, for compensation and as part of aregular business, issues or promulgates analyses or reports
concerning securities; but does not include (A) a bank, or any
bank holding company as defined in the Bank Holding Company Act of 1956, which is not an investment company, exceptthat the term ‘‘investment adviser’’ includes any bank or bankholding company to the extent that such bank or bank holding
company serves or acts as an investment adviser to a registered investment company, but if, in the case of a bank, suchservices or actions are performed through a separately identifiable department or division, the department or division, andnot the bank itself, shall be deemed to be the investment adviser; (B) any lawyer, accountant, engineer, or teacher whose
performance of such services is solely incidental to the practiceof his profession; (C) any broker or dealer whose performanceof such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor; (D) the publisher of any bona fide newspaper, news magazine or business or financial publication ofgeneral and regular circulation; (E) any person whose advice,analyses, or reports relate to no securities other than securities
which are direct obligations of or obligations guaranteed as toprincipal or interest by the United States, or securities issued
or guaranteed by corporations in which the United States has
a direct or indirect interest which shall have been designatedby the Secretary of the Treasury, pursuant to section 3(a)(12)of the Securities Exchange Act of 1934, as exempted securities
for the purposes of that Act; (F) any nationally recognized statistical rating organization, as that term is defined in section
3(a)(62) of the Securities Exchange Act of 1934, unless such organization engages in issuing recommendations as to purchasing, selling, or holding securities or in managing assets,consisting in whole or in part of securities, on behalf of others;; 1 (G) any family office, as defined by rule, regulation, ororder of the Commission, in accordance with the purposes ofthis title; or (H) such other persons not within the intent of

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As Amended Through P.L. 115-417, Enacted January 03, 2019

1 Effective on July 21, 2011, section 409(a) of Public Law 111–203 amends section 202(a)(11)by striking ‘‘or (G)’’ and inserting the following: ‘‘; (G) any family office, as defined by rule, regulation, or order of the Commission, in accordance with the purposes of this title; or (H)’’ (shown
above). Such amendment probably should not have included a semicolon at the beginning of theinserted language.

3

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As Amended Through P.L. 115-417, Enacted January 03, 2019

this paragraph, as the Commission may designate by rules andregulations or order.
(12) ‘‘Investment company’’, affiliated person, and ‘‘insurance company’’ have the same meanings as in the Investment
Company Act of 1940. ‘‘Control’’ means the power to exercise
a controlling influence over the management or policies of acompany, unless such power is solely the result of an official
position with such company.
(13) ‘‘Investment supervisory services’’ means the giving ofcontinuous advice as to the investment of funds on the basisof the individual needs of each client.
(14) ‘‘Means or instrumentality of interstate commerce’’ includes any facility of a national securities exchange.
(15) ‘‘National securities exchange’’ means an exchange
registered under section 6 of the Securities Exchange Act of1934.
(16) ‘‘Person’’ means a natural person or a company.
(17) The term ‘‘person associated with an investment adviser’’ means any partner, officer, or director of such investment adviser (or any person performing similar functions), or
any person directly or indirectly controlling or controlled bysuch investment adviser, including any employee of such investment adviser, except that for the purposes of section 203of this title (other than subsection (f) thereof), persons associated with an investment adviser whose functions are clerical or
ministerial shall not be included in the meaning of such term.
The Commission may by rules and regulations classify, for the
purposes of any portion or portions of this title, persons, including employees controlled by an investment adviser.
(18) ‘‘Security’’ means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, votingtrust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put,call, straddle, option, or privilege on any security (including acertificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or
any put, call, straddle, option, or privilege entered into on anational securities exchange relating to foreign currency, or, ingeneral, any interest or instrument commonly known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or
warrant or right to subscribe to or purchase any of the foregoing.
(19) ‘‘State’’ means any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, or any otherpossession of the United States.
(20) ‘‘Underwriter’’ means any person who has purchasedfrom an issuer with a view to, or sells for an issuer in connection with, the distribution of any security, or participates or
has a direct or indirect participation in any such undertaking,or participates or has a participation in the direct or indirect

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underwriting of any such undertaking; but such term shall notinclude a person whose interest is limited to a commission
from an underwriter or dealer not in excess of the usual andcustomary distributor’s or seller’s commission. As used in thisparagraph the term ‘‘issuer’’ shall include in addition to anissuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirectcommon control with the issuer.
(21) ‘‘Securities Act of 1933’’, ‘‘Securities Exchange Act of
1934’’, and ‘‘Trust Indenture Act of 1939’’, mean those Acts, respectively, as heretofore or hereafter amended.
(22) ‘‘Business development company’’ means any company
which is a business development company as defined in section
2(a)(48) of title I of this Act and which complies with section
55 of title I of this Act, except that—(A) the 70 per centum of the value of the total assets
condition referred to in sections 2(a)(48) and 55 of title Iof this Act shall be 60 per centum for purposes of determining compliance therewith;(B) such company need not be a closed-end company
and need not elect to be subject to the provisions of sections 55 through 65 of title I of this Act; and(C) the securities which may be purchased pursuant tosection 55(a) of title I of this Act may be purchased fromany person.
For purposes of this paragraph, all terms in sections 2(a)(48)
and 55 of title I of this Act shall have the same meaning set
forth in such title as if such company were a registered closedend investment company, except that the value of the assets ofa business development company which is not subject to theprovisions of sections 55 through 65 of title I of this Act shallbe determined as of the date of the most recent financial statements which it furnished to all holders of its securities, andshall be determined no less frequently than annually.
(23) ‘‘Foreign securities authority’’ means any foreign government, or any governmental body or regulatory organization
empowered by a foreign government to administer or enforce
its laws as they relate to securities matters.
(24) ‘‘Foreign financial regulatory authority’’ means any(A) foreign securities authority, (B) other governmental body or
foreign equivalent of a self-regulatory organization empoweredby a foreign government to administer or enforce its laws relating to the regulation of fiduciaries, trusts, commercial lending,insurance, trading in contracts of sale of a commodity for future delivery, or other instruments traded on or subject to therules of a contract market, board of trade or foreign equivalent,or other financial activities, or (C) membership organization afunction of which is to regulate the participation of its members in activities listed above.
(25) ‘‘Supervised person’’ means any partner, officer, director (or other person occupying a similar status or performing
similar functions), or employee of an investment adviser, orother person who provides investment advice on behalf of the

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investment adviser and is subject to the supervision and control of the investment adviser.
(26) The term ‘‘separately identifiable department or division’’ of a bank means a unit—(A) that is under the direct supervision of an officer orofficers designated by the board of directors of the bank as
responsible for the day-to-day conduct of the bank’s investment adviser activities for one or more investment companies, including the supervision of all bank employees engaged in the performance of such activities; and(B) for which all of the records relating to its investment adviser activities are separately maintained in or extractable from such unit’s own facilities or the facilities ofthe bank, and such records are so maintained or otherwise
accessible as to permit independent examination and enforcement by the Commission of this Act or the Investment
Company Act of 1940 and rules and regulations promulgated under this Act or the Investment Company Act of1940.
(27) The terms ‘‘security future’’ and ‘‘narrow-based security index’’ have the same meanings as provided in section
3(a)(55) of the Securities Exchange Act of 1934.
(28) The term ‘‘credit rating agency’’ has the same meaning as in section 3 of the Securities Exchange Act of 1934.
(29) The term ‘‘private fund’’ means an issuer that would
be an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), but for section 3(c)(1) or 3(c)(7) of that Act.
(30) The term ‘‘foreign private adviser’’ means any investment adviser who—(A) has no place of business in the United States;(B) has, in total, fewer than 15 clients and investors
in the United States in private funds advised by the investment adviser;(C) has aggregate assets under management attributable to clients in the United States and investors in the
United States in private funds advised by the investment
adviser of less than $25,000,000, or such higher amount as
the Commission may, by rule, deem appropriate in accordance with the purposes of this title; and(D) neither—(i) holds itself out generally to the public in the
United States as an investment adviser; nor(ii) acts as—(I) an investment adviser to any investmentcompany registered under the Investment Company Act of 1940; or(II) a company that has elected to be a business development company pursuant to section 54of the Investment Company Act of 1940 (15 U.S.C.
80a–53), and has not withdrawn its election.

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2 Effective July 21, 2011, sections 402(a) and 770 of Public Law 111–203 provides for amendments to insert new paragraphs (29)–(30) and a second paragraph (29), respectively (shown
above). The second paragraph (29) that precedes subsection (b) probably should be redesignatedas paragraph (31).
3 Section 303(d) of the National Securities Markets Improvment Act of 1996 (P.L. 104–290;
110 Stat. 3438) amended section 203 of the Investment Advisers Act of 1940 by striking ‘‘subsection (b) of this section’’ and inserting ‘‘subsection (b) and section 203A’’. This compilation reflects this amendment even though the italicized words were not in the underlying law at thetime of the amendment.
4 See also 7 U.S.C. 2, 2a, 6m. øPrinted in appendix to this volume.¿

SEC. 203. ø80b–3¿ (a) Except as provided in subsection (b) andsection 203A 3, it shall be unlawful for any investment adviser, unless registered under this section, to make use of the mails or anymeans or instrumentality of interstate commerce in connection
with his or its business as an investment adviser. 4(b) The provisions of subsection (a) shall not apply to—(1) any investment adviser, other than an investment adviser who acts as an investment adviser to any private fund,
all of whose clients are residents of the State within whichsuch investment adviser maintains his or its principal officeand place of business, and who does not furnish advice or issue
analyses or reports with respect to securities listed or admitted
to unlisted trading privileges on any national securities exchange;(2) any investment adviser whose only clients are insurance companies;(3) any investment adviser that is a foreign private adviser;(4) any investment adviser that is a charitable organization, as defined in section 3(c)(10)(D) of the Investment Company Act of 1940, or is a trustee, director, officer, employee, orvolunteer of such a charitable organization acting within thescope of such person’s employment or duties with such organi-

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INVESTMENT ADVISERS ACT OF 1940(29) 2 The terms ‘‘commodity pool’’, ‘‘commodity pool operator’’, ‘‘commodity trading advisor’’, ‘‘major swap participant’’,‘‘swap’’, ‘‘swap dealer’’, and ‘‘swap execution facility’’ have thesame meanings as in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a).
(b) No provision in this title shall apply to, or be deemed to include, the United States, a State, or any political subdivision of aState, or any agency, authority, or instrumentality of any one ormore of the foregoing, or any corporation which is wholly owned directly or indirectly by any one or more of the foregoing, or any officer, agent, or employee of any of the foregoing acting as such in thecourse of his official duty, unless such provision makes specific reference thereto.
(c) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION, AND CAPITAL FORMATION.—Whenever pursuant to this title
the Commission is engaged in rulemaking and is required to consider or determine whether an action is necessary or appropriate
in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote
efficiency, competition, and capital formation.

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zation, whose advice, analyses, or reports are provided only to
one or more of the following:(A) any such charitable organization;(B) a fund that is excluded from the definition of aninvestment company under section 3(c)(10)(B) of the Investment Company Act of 1940; or(C) a trust or other donative instrument described in
section 3(c)(10)(B) of the Investment Company Act of 1940,or the trustees, administrators, settlors (or potential settlors), or beneficiaries of any such trust or other instrument;(5) any plan described in section 414(e) of the Internal
Revenue Code of 1986, any person or entity eligible to establish
and maintain such a plan under the Internal Revenue Code of1986, or any trustee, director, officer, or employee of or volunteer for any such plan or person, if such person or entity, acting in such capacity, provides investment advice exclusively to,or with respect to, any plan, person, or entity or any company,
account, or fund that is excluded from the definition of an investment company under section 3(c)(14) of the Investment
Company Act of 1940;(6)(A) any investment adviser that is registered with theCommodity Futures Trading Commission as a commodity trading advisor whose business does not consist primarily of acting
as an investment adviser, as defined in section 202(a)(11) of
this title, and that does not act as an investment adviser to—(i) an investment company registered under title I of
this Act; or(ii) a company which has elected to be a business development company pursuant to section 54 of title I of thisAct and has not withdrawn its election; or(B) any investment adviser that is registered with theCommodity Futures Trading Commission as a commodity trading advisor and advises a private fund, provided that, if after
the date of enactment of the Private Fund Investment Advisers
Registration Act of 2010, the business of the advisor should become predominately the provision of securities-related advice,
then such adviser shall register with the Commission;(7) any investment adviser, other than any entity that has
elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–54), who solely advises—(A) small business investment companies that are licensees under the Small Business Investment Act of 1958;(B) entities that have received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the
Small Business Investment Act of 1958, which notice or license has not been revoked; or(C) applicants that are affiliated with 1 or more licensed small business investment companies described insubparagraph (A) and that have applied for another license under the Small Business Investment Act of 1958,
which application remains pending; orSec. 203

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As Amended Through P.L. 115-417, Enacted January 03, 2019(8) any investment adviser, other than an entity that has
elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940 (15 U.S.C. 80a–53), who solely advises—(A) rural business investment companies (as defined in
section 384A of the Consolidated Farm and Rural Development Act (7 U.S.C. 2009cc)); or(B) companies that have submitted to the Secretary ofAgriculture an application in accordance with section
384D(b) of the Consolidated Farm and Rural Development
Act (7 U.S.C. 2009cc–3(b)) that—(i) have received from the Secretary of Agriculture
a letter of conditions, which has not been revoked; or(ii) are affiliated with 1 or more rural business investment companies described in subparagraph (A).
(c)(1) An investment adviser, or any person who presently contemplates becoming an investment adviser, may be registered byfiling with the Commission an application for registration in suchform and containing such of the following information and documents as the Commission, by rule, may prescribe as necessary or
appropriate in the public interest or for the protection of investors:(A) the name and form of organization under which the investment adviser engages or intends to engage in business; thename of the State or other sovereign power under which suchinvestment adviser is organized; the location of his or its principal office, principal place of business, and branch offices, ifany; the names and addresses of his or its partners, officers,
directors, and persons performing similar functions or, if suchan investment adviser be an individual, of such individual; andthe number of his or its employees;(B) the education, the business affiliations for the past ten
years, and the present business affiliations of such investment
adviser and of his or its partners, officers, directors, and persons performing similar functions and of any controlling person
thereof;(C) the nature of the business of such investment adviser,
including the manner of giving advice and rendering analyses
or reports;(D) a balance sheet certified by an independent public accountant and other financial statements (which shall, as theCommission specifies, be certified);(E) the nature and scope of the authority of such investment adviser with respect to clients’ funds and accounts;(F) the basis or bases upon which such investment adviser
is compensated;(G) whether such investment adviser, or any person associated with such investment adviser, is subject to any disqualification which would be a basis for denial, suspension, or revocation of registration of such investment adviser under theprovisions of subsection (e) of this section; and(H) a statement as to whether the principal business ofsuch investment adviser consists or is to consist of acting as
investment adviser and a statement as to whether a substan-

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As Amended Through P.L. 115-417, Enacted January 03, 2019tial part of the business of such investment adviser, consists or
is to consist of rendering investment supervisory services.
(2) Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents) the Commission shall—(A) by order grant such registration; or(B) institute proceedings to determine whether registration
should be denied. Such proceedings shall include notice of thegrounds for denial under consideration and opportunity forhearing and shall be concluded within one hundred twenty
days of the date of the filing of the application for registration.
At the conclusion of such proceedings the Commission, byorder, shall grant or deny such registration. The Commission
may extend the time for conclusion of such proceedings for up
to ninety days if it finds good cause for such extension andpublishes its reasons for so finding or for such longer period as
to which the applicant consents.
The Commission shall grant such registration if the Commission
finds that the requirements of this section are satisfied and thatthe applicant is not prohibited from registering as an investment
adviser under section 203A. The Commission shall deny such registration if it does not make such a finding or if it finds that if theapplicant were so registered, its registration would be subject tosuspension or revocation under subsection (e) of this section.
(d) Any provision of this title (other than subsection (a) of thissection) which prohibits any act, practice, or course of business if
the mails or any means or instrumentality of interstate commerce
are used in connection therewith shall also prohibit any such act,
practice, or course of business by any investment adviser registeredpursuant to this section or any person acting on behalf of such aninvestment adviser, irrespective of any use of the mails or anymeans or instrumentality of interstate commerce in connection
therewith.
(e) The Commission, by order, shall censure, place limitations
on the activities, functions, or operations of, suspend for a period
not exceeding twelve months, or revoke the registration of any investment adviser if it finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or revocation is in the public interest and that such investment adviser, or any person associated with such investment
adviser, whether prior to or subsequent to becoming so associated—(1) has willfully made or caused to be made in any application for registration or report required to be filed with theCommission under this title, or in any proceeding before theCommission with respect to registration, any statement which
was at the time and in the light of the circumstances underwhich it was made false or misleading with respect to any material fact, or has omitted to state in any such application orreport any material fact which is required to be stated therein.
(2) has been convicted within ten years preceding the filingof any application for registration or at any time thereafter ofany felony or misdemeanor or of a substantially equivalentcrime by a foreign court of competent jurisdiction which theCommission finds—Sec. 203

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As Amended Through P.L. 115-417, Enacted January 03, 2019(A) involves the purchase or sale of any security, thetaking of a false oath, the making of a false report, bribery, perjury, burglary, any substantially equivalent activity however denominated by the laws of the relevant foreign government, or conspiracy to commit any such offense;(B) arises out of the conduct of the business of abroker, dealer, municipal securities dealer, investment adviser, bank, insurance company, government securities
broker, government securities dealer, fiduciary, transfer
agent, credit rating agency, foreign person performing afunction substantially equivalent to any of the above, or
entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent statute or regulation;(C) involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds
or securities or substantially equivalent activity however
denominated by the laws of the relevant foreign government; or(D) involves the violation of section 152, 1341, 1342, or1343 or chapter 25 or 47 of title 18, United States Code,or a violation of substantially equivalent foreign statute.
(3) has been convicted during the 10-year period preceding
the date of filing of any application for registration, or at any
time thereafter, of—(A) any crime that is punishable by imprisonment for
1 or more years, and that is not described in paragraph(2); or(B) a substantially equivalent crime by a foreign courtof competent jurisdiction.
(4) is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction, including any foreign court of competent jurisdiction, from acting as
an investment adviser, underwriter, broker, dealer, municipal
securities dealer, government securities broker, government securities dealer, transfer agent, credit rating agency, foreign
person performing a function substantially equivalent to any of
the above, or entity or person required to be registered under
the Commodity Exchange Act or any substantially equivalentstatute or regulation, or as an affiliated person or employee of
any investment company, bank, insurance company, foreign
entity substantially equivalent to any of the above, or entity or
person required to be registered under the Commodity Exchange Act or any substantially equivalent statute or regulation, or from engaging in or continuing any conduct or practicein connection with any such activity, or in connection with thepurchase or sale of any security.
(5) has willfully violated any provision of the Securities Act
of 1933, the Securities Exchange Act of 1934, the Investment
Company Act of 1940, this title, the Commodity Exchange Act,or the rules or regulations under any such statutes or any rule

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As Amended Through P.L. 115-417, Enacted January 03, 2019of the Municipal Securities Rulemaking Board, or is unable tocomply with any such provision.
(6) has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any
provision of the Securities Act of 1933, the Securities Exchange
Act of 1934, the Investment Company Act of 1940, this title,
the Commodity Exchange Act, the rules or regulations under
any of such statutes, or the rules of the Municipal Securities
Rulemaking Board, or has failed reasonably to supervise, witha view to preventing violations of the provisions of such statutes, rules, and regulations, another person who commits sucha violation, if such other person is subject to his supervision.
For the purposes of this paragraph no person shall be deemed
to have failed reasonably to supervise any person, if—(A) there have been established procedures, and a system for applying such procedures, which would reasonably
be expected to prevent and detect, insofar as practicable,
any such violation by such other person, and(B) such person has reasonably discharged the duties
and obligations incumbent upon him by reason of such procedures and system without reasonable cause to believethat such procedures and system were not being complied
with.
(7) is subject to any order of the Commission barring or
suspending the right of the person to be associated with an investment adviser;(8) has been found by a foreign financial regulatory authority to have—(A) made or caused to be made in any application forregistration or report required to be filed with a foreign securities authority, or in any proceeding before a foreign securities authority with respect to registration, any statement that was at the time and in light of the circumstances under which it was made false or misleadingwith respect to any material fact, or has omitted to statein any application or report to a foreign securities authority any material fact that is required to be stated therein;(B) violated any foreign statute or regulation regarding transactions in securities or contracts of sale of a commodity for future delivery traded on or subject to the rulesof a contract market or any board of trade; or(C) aided, abetted, counseled, commanded, induced, or
procured the violation by any other person of any foreign
statute or regulation regarding transactions in securities
or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any
board of trade, or has been found, by the foreign finanicalregulatory authority, to have failed reasonably to supervise, with a view to preventing violations of statutory provisions, and rules and regulations promulgated thereunder, another person who commits such a violation, if
such other person is subject to his supervision; or(9) is subject to any final order of a State securities commission (or any agency or officer performing like functions),

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As Amended Through P.L. 115-417, Enacted January 03, 2019

State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (orany agency or office performing like functions), an appropriate
Federal banking agency (as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813(q))), or the National
Credit Union Administration, that—(A) bars such person from association with an entity
regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit
union activities; or(B) constitutes a final order based on violations of any
laws or regulations that prohibit fraudulent, manipulative,
or deceptive conduct.
(f) The Commission, by order, shall censure or place limitations
on the activities of any person associated, seeking to become associated, or, at the time of the alleged misconduct, associated or seeking to become associated with an investment adviser, or suspend
for a period not exceeding 12 months or bar any such person frombeing associated with an investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, if the Commission
finds, on the record after notice and opportunity for hearing, thatsuch censure, placing of limitations, suspension, or bar is in the
public interest and that such person has committed or omitted any
act or omission enumerated in paragraph (1), (5), (6), (8), or (9) of
subsection (e) or has been convicted of any offense specified inparagraph (2) or (3) of subsection (e) within ten years of the commencement of the proceedings under this subsection, or is enjoinedfrom any action, conduct, or practice specified in paragraph (4) ofsubsection (e). It shall be unlawful for any person as to whom suchan order suspending or barring him from being associated with aninvestment adviser is in effect willfully to become, or to be, associated with an investment adviser without the consent of the Commission, and it shall be unlawful for any investment adviser to permit such a person to become, or remain, a person associated withhim without the consent of the Commission, if such investment adviser knew, or in the exercise of reasonable care, should have
known, of such order.
(g) Any successor to the business of an investment adviser registered under this section shall be deemed likewise registered hereunder, if within thirty days from its succession to such business it
shall file an application for registration under this section, unlessand until the Commission, pursuant to subsection (c) or subsection(e) of this section, shall deny registration to or revoke or suspend
the registration of such successor.
(h) Any person registered under this section may, upon suchterms and conditions as the Commission finds necessary in the
public interest or for the protection of investors, withdraw fromregistration by filing a written notice of withdrawal with the Commission. If the Commission finds that any person registered under
this section, or who has pending an application for registration
filed under this section, is no longer in existence, is not engaged
in business as an investment adviser, or is prohibited from reg-

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istering as an investment adviser under section 203A, the Commission shall by order cancel the registration of such person.
(i) MONEY PENALTIES IN ADMINISTRATIVE PROCEEDINGS.—(1) AUTHORITY OF COMMISSION.—(A) IN GENERAL.—In any proceeding instituted pursuant to subsection (e) or (f) against any person, the Commission may impose a civil penalty if it finds, on therecord after notice and opportunity for hearing, that such
penalty is in the public interest and that such person—(i) has willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934,
the Investment Company Act of 1940, or this title, or
the rules or regulations thereunder;(ii) has willfully aided, abetted, counseled, commanded, induced, or procured such a violation by anyother person;(iii) has willfully made or caused to be made in
any application for registration or report required tobe filed with the Commission under this title, or inany proceeding before the Commission with respect toregistration, any statement which was, at the timeand in the light of the circumstances under which it
was made, false or misleading with respect to any material fact, or has omitted to state in any such application or report any material fact which was required to
be stated therein; or(iv) has failed reasonably to supervise, within themeaning of subsection (e)(6), with a view to preventing
violations of the provisions of this title and the rules
and regulations thereunder, another person who commits such a violation, if such other person is subject
to his supervision; 5(B) CEASE-AND-DESIST PROCEEDINGS.—In any proceeding instituted pursuant to subsection (k) against any
person, the Commission may impose a civil penalty if theCommission finds, on the record, after notice and opportunity for hearing, that such person—(i) is violating or has violated any provision of thistitle, or any rule or regulation issued under this title;or(ii) is or was a cause of the violation of any provision of this title, or any rule or regulation issued
under this title.
(2) MAXIMUM AMOUNT OF PENALTY.—(A) FIRST TIER.—The maximum amount of penalty foreach act or omission described in paragraph (1) shall be$5,000 for a natural person or $50,000 for any other person.
(B) SECOND TIER.—Notwithstanding subparagraph (A),the maximum amount of penalty for each such act or omission shall be $50,000 for a natural person or $250,000 for
any other person if the act or omission described in para-

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As Amended Through P.L. 115-417, Enacted January 03, 2019graph (1) involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
(C) THIRD TIER.—Notwithstanding subparagraphs (A)and (B), the maximum amount of penalty for each such act
or omission shall be $100,000 for a natural person or$500,000 for any other person if—(i) the act or omission described in paragraph (1)involved fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement; and(ii) such act or omission directly or indirectly resulted in substantial losses or created a significant
risk of substantial losses to other persons or resulted
in substantial pecuniary gain to the person who committed the act or omission.
(3) DETERMINATION OF PUBLIC INTEREST.—In considering
under this section whether a penalty is in the public interest,
the Commission may consider—(A) whether the act or omission for which such penalty
is assessed involved fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement;(B) the harm to other persons resulting either directly
or indirectly from such act or omission;(C) the extent to which any person was unjustly enriched, taking into account any restitution made to persons
injured by such behavior;(D) whether such person previously has been found by
the Commission, another appropriate regulatory agency, ora self-regulatory organization to have violated the Federal
securities laws, State securities laws, or the rules of a selfregulatory organization, has been enjoined by a court ofcompetent jurisdiction from violations of such laws orrules, or has been convicted by a court of competent jurisdiction of violations of such laws or of any felony or misdemeanor described in section 203(e)(2) of this title;(E) the need to deter such person and other persons
from committing such acts or omissions; and(F) such other matters as justice may require.
(4) EVIDENCE CONCERNING ABILITY TO PAY.—In any proceeding in which the Commission may impose a penalty under
this section, a respondent may present evidence of the respondent’s ability to pay such penalty. The Commission may, in its
discretion, consider such evidence in determining whether such
penalty is in the public interest. Such evidence may relate to
the extent of such person’s ability to continue in business andthe collectability of a penalty, taking into account any otherclaims of the United States or third parties upon such person’s
assets and the amount of such person’s assets.
(j) AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING
AND DISGORGEMENT.—In any proceeding in which the Commission
may impose a penalty under this section, the Commission may
enter an order requiring accounting and disgorgement, including
reasonable interest. The Commission is authorized to adopt rules,
regulations, and orders concerning payments to investors, rates of

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interest, periods of accrual, and such other matters as it deems appropriate to implement this subsection.
(k) CEASE-AND-DESIST PROCEEDINGS.—(1) AUTHORITY OF THE COMMISSION.—If the Commission
finds, after notice and opportunity for hearing, that any person
is violating, has violated, or is about to violate any provisionof this title, or any rule or regulation thereunder, the Commission may publish its findings and enter an order requiringsuch person, and any other person that is, was, or would be acause of the violation, due to an act or omission the person
knew or should have known would contribute to such violation,
to cease and desist from committing or causing such violation
and any future violation of the same provision, rule, or regulation. Such order may, in addition to requiring a person to ceaseand desist from committing or causing a violation, require such
person to comply, or to take steps to effect compliance, withsuch provision, rule, or regulation, upon such terms and conditions and within such time as the Commission may specify insuch order. Any such order may, as the Commission deems appropriate, require future compliance or steps to effect futurecompliance, either permanently or for such period of time as
the Commission may specify, with such provision, rule, or regulation with respect to any security, any issuer, or any otherperson.
(2) HEARING.—The notice instituting proceedings pursuant
to paragraph (1) shall fix a hearing date not earlier than 30days nor later than 60 days after service of the notice unlessan earlier or a later date is set by the Commission with theconsent of any respondent so served.
(3) TEMPORARY ORDER.—(A) IN GENERAL.—Whenever the Commission determines that the alleged violation or threatened violation
specified in the notice instituting proceedings pursuant toparagraph (1), or the continuation thereof, is likely to result in significant dissipation or conversion of assets, significant harm to investors, or substantial harm to the public interest, including, but not limited to, losses to the Securities Investor Protection Corporation, prior to the completion of the proceedings, the Commission may enter a
temporary order requiring the respondent to cease and desist from the violation or threatened violation and to takesuch action to prevent the violation or threatened violationand to prevent dissipation or conversion of assets, significant harm to investors, or substantial harm to the public
interest as the Commission deems appropriate pending
completion of such proceedings. Such an order shall be entered only after notice and opportunity for a hearing, unless the Commission, notwithstanding section 211(c) of thistitle, determines that notice and hearing prior to entry
would be impracticable or contrary to the public interest.
A temporary order shall become effective upon service
upon the respondent and, unless set aside, limited, or suspended by the Commission or a court of competent juris-

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As Amended Through P.L. 115-417, Enacted January 03, 2019diction, shall remain effective and enforceable pending thecompletion of the proceedings.
(B) APPLICABILITY.—This paragraph shall apply only
to a respondent that acts, or, at the time of the alleged
misconduct acted, as a broker, dealer, investment adviser,investment company, municipal securities dealer, government securities broker, government securities dealer, ortransfer agent, or is, or was at the time of the alleged misconduct, an associated person of, or a person seeking to become associated with, any of the foregoing.
(4) REVIEW OF TEMPORARY ORDERS.—(A) COMMISSION REVIEW.—At any time after the respondent has been served with a temporary cease-and-desist order pursuant to paragraph (3), the respondent may
apply to the Commission to have the order set aside, limited, or suspended. If the respondent has been served witha temporary cease-and-desist order entered without a priorCommission hearing, the respondent may, within 10 days
after the date on which the order was served, request ahearing on such application and the Commission shall holda hearing and render a decision on such application at theearliest possible time.
(B) JUDICIAL REVIEW.—Within—(i) 10 days after the date the respondent wasserved with a temporary cease-and-desist order entered with a prior Commission hearing, or(ii) 10 days after the Commission renders a decision on an application and hearing under subparagraph (A), with respect to any temporary cease-anddesist order entered without a prior Commission hearing,
the respondent may apply to the United States district
court for the district in which the respondent resides or
has its principal office or place of business, or for the District of Columbia, for an order setting aside, limiting, or
suspending the effectiveness or enforcement of the order,
and the court shall have jurisdiction to enter such anorder. A respondent served with a temporary cease-and-desist order entered without a prior Commission hearing
may not apply to the court except after hearing and decision by the Commission on the respondent’s application
under subparagraph (A) of this paragraph.
(C) NO AUTOMATIC STAY OF TEMPORARY ORDER.—Thecommencement of proceedings under subparagraph (B) of
this paragraph shall not, unless specifically ordered by the
court, operate as a stay of the Commission’s order.
(D) EXCLUSIVE REVIEW.—Section 213 of this title shallnot apply to a temporary order entered pursuant to thissection.
(5) AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNTING AND DISGORGEMENT.—In any cease-and-desist proceeding under paragraph (1), the Commission may enter anorder requiring accounting and disgorgement, including reasonable interest. The Commission is authorized to adopt rules,

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regulations, and orders concerning payments to investors, rates
of interest, periods of accrual, and such other matters as it
deems appropriate to implement this subsection.
(l) EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.—(1) IN GENERAL.—No investment adviser that acts as an investment adviser solely to 1 or more venture capital funds
shall be subject to the registration requirements of this title
with respect to the provision of investment advice relating toa venture capital fund. Not later than 1 year after the date ofenactment of this subsection, the Commission shall issue final
rules to define the term ‘‘venture capital fund’’ for purposes ofthis subsection. The Commission shall require such advisers tomaintain such records and provide to the Commission such annual or other reports as the Commission determines necessary
or appropriate in the public interest or for the protection of investors.
(2) ADVISERS OF SBICS.—For purposes of this subsection, aventure capital fund includes an entity described in subparagraph (A), (B), or (C) of subsection (b)(7) (other than an entitythat has elected to be regulated or is regulated as a businessdevelopment company pursuant to section 54 of the Investment
Company Act of 1940).
(3) ADVISERS OF RBICS.—For purposes of this subsection, aventure capital fund includes an entity described in subparagraph (A) or (B) of subsection (b)(8) (other than an entity thathas elected to be regulated as a business development company
pursuant to section 54 of the Investment Company Act of 1940
(15 U.S.C. 80a–53)).
(m) EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUNDADVISERS.—(1) IN GENERAL.—The Commission shall provide an exemption from the registration requirements under this section to
any investment adviser of private funds, if each of such investment adviser acts solely as an adviser to private funds and has
assets under management in the United States of less than$150,000,000.
(2) REPORTING.—The Commission shall require investment
advisers exempted by reason of this subsection to maintainsuch records and provide to the Commission such annual orother reports as the Commission determines necessary or appropriate in the public interest or for the protection of investors.
(3) ADVISERS OF SBICS.—For purposes of this subsection,
the assets under management of a private fund that is an entity described in subparagraph (A), (B), or (C) of subsection (b)(7)(other than an entity that has elected to be regulated or is regulated as a business development company pursuant to section
54 of the Investment Company Act of 1940) shall be excluded
from the limit set forth in paragraph (1).
(4) ADVISERS OF RBICS.—For purposes of this subsection,
the assets under management of a private fund that is an entity described in subparagraph (A) or (B) of subsection (b)(8)(other than an entity that has elected to be regulated or is regulated as a business development company pursuant to section

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As Amended Through P.L. 115-417, Enacted January 03, 2019or required to be regulated as an investment adviser in theState in which it maintains its principal office and place ofbusiness shall register under section 203, unless the investment adviser—(A) has assets under management of not less than
$25,000,000, or such higher amount as the Commission
may, by rule, deem appropriate in accordance with the
purposes of this title; or(B) is an adviser to an investment company registeredunder title I of this Act.
(2) TREATMENT OF MID-SIZED INVESTMENT ADVISERS.—(A) IN GENERAL.—No investment adviser described insubparagraph (B) shall register under section 203, unlessthe investment adviser is an adviser to an investmentcompany registered under the Investment Company Act of1940, or a company which has elected to be a business development company pursuant to section 54 of the Investment Company Act of 1940, and has not withdrawn theelection, except that, if by effect of this paragraph an investment adviser would be required to register with 15 ormore States, then the adviser may register under section
203.
(B) COVERED PERSONS.—An investment adviser described in this subparagraph is an investment adviser
that—(i) is required to be registered as an investment
adviser with the securities commissioner (or any agency or office performing like functions) of the State inwhich it maintains its principal office and place ofbusiness and, if registered, would be subject to examination as an investment adviser by any such commissioner, agency, or office; and(ii) has assets under management between—(I) the amount specified under subparagraph(A) of paragraph (1), as such amount may havebeen adjusted by the Commission pursuant to thatsubparagraph; andSEC. 203A. ø80b–3a¿ STATE AND FEDERAL RESPONSIBILITIES.
(a) ADVISERS SUBJECT TO STATE AUTHORITIES.—(1) IN GENERAL.—No investment adviser that is regulated

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54 of the Investment Company Act of 1940 (15 U.S.C. 80a–53))
shall be excluded from the limit set forth in paragraph (1).
(n) REGISTRATION AND EXAMINATION OF MID-SIZED PRIVATEFUND ADVISERS.—In prescribing regulations to carry out the requirements of this section with respect to investment advisers acting as investment advisers to mid-sized private funds, the Commission shall take into account the size, governance, and investment
strategy of such funds to determine whether they pose systemic
risk, and shall provide for registration and examination procedureswith respect to the investment advisers of such funds which reflect
the level of systemic risk posed by such funds.

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SEC. 307. ø15 U.S.C. 80b–3a note¿ CONTINUED STATE AUTHORITY.
(a) PRESERVATION OF FILING REQUIREMENTS.—Nothing in this title or any amendment madeby this title prohibits the securities commission (or any agency or office performing like functions) of any State from requiring the filing of any documents filed with the Commission pursuant to the securities laws solely for notice purposes, together with a consent to service of process
and any required fee.

6 The word ‘‘or’’ after the semicolon in paragraph (1)(B) probably should not appear.
7 Section 307 of the National Securities Markets Improvement Act of 1996 (P.L. 104–290; 110
Stat. 3438) provides as follows:

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(II) $100,000,000, or such higher amount as
the Commission may, by rule, deem appropriate inaccordance with the purposes of this title.
(3) DEFINITION.—For purposes of this subsection, the term‘‘assets under management’’ means the securities portfolios
with respect to which an investment adviser provides continuous and regular supervisory or management services.
(b) ADVISERS SUBJECT TO COMMISSION AUTHORITY.—(1) IN GENERAL.—No law of any State or political subdivision thereof requiring the registration, licensing, or qualification as an investment adviser or supervised person of an investment adviser shall apply to any person—(A) that is registered under section 203 as an investment adviser, or that is a supervised person of such person, except that a State may license, register, or otherwise
qualify any investment adviser representative who has aplace of business located within that State;(B) that is not registered under section 203 becausethat person is excepted from the definition of an investment adviser under section 202(a)(11); or 6(C) that is not registered under section 203 becausethat person is exempt from registration as provided in subsection (b)(7) of such section, or is a supervised person ofsuch person; or(D) that is not registered under section 203 becausethat person is exempt from registration as provided in subsection (b)(8) of such section, or is a supervised person ofsuch person.
(2) LIMITATION.—Nothing in this subsection shall prohibit
the securities commission (or any agency or office performing
like functions) of any State from investigating and bringing enforcement actions with respect to fraud or deceit against an investment adviser or person associated with an investment adviser.
(c) EXEMPTIONS.—Notwithstanding subsection (a), the Commission, by rule or regulation upon its own motion, or by order upon
application, may permit the registration with the Commission of
any person or class of persons to which the application of subsection (a) would be unfair, a burden on interstate commerce, orotherwise inconsistent with the purposes of this section.
(d) STATE ASSISTANCE.—Upon request of the securities commissioner (or any agency or officer performing like functions) of any
State, the Commission may provide such training, technical assistance, or other reasonable assistance in connection with the regulation of investment advisers by the State. 7

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As Amended Through P.L. 115-417, Enacted January 03, 2019(b) PRESERVATION OF FEES.—Until otherwise provided by law, rule, regulation, or order, orother administrative action of any State, or any political subdivision thereof, adopted after thedate of enactment of this Act, filing, registration, or licensing fees shall, notwithstanding theamendments made by this title, continue to be paid in amounts determined pursuant to the law,rule, regulation, or order, or other administrative action as in effect on the day before such dateof enactment.
(c) AVAILABILITY OF PREEMPTION CONTINGENT ON PAYMENT OF FEES.—(1) IN GENERAL.—During the period beginning on the date of enactment of this Act andending 3 years after that date of enactment, the securities commission (or any agency oroffice performing like functions) of any State may require registration of any investment adviser that fails or refuses to pay the fees required by subsection (b) in or to such State, notwithstanding the limitations on the laws, rules, regulations, or orders, or other administrative actions of any State, or any political subdivision thereof, contained in subsection (a),if the laws of such State require registration of investment advisers.
(2) DELAYS.—For purposes of this subsection, delays in payment of fees or underpaymentsof fees that are promptly remedied in accordance with the applicable laws, rules, regulations, or orders, or other administrative actions of the relevant State shall not constitutea failure or refusal to pay fees.

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SEC. 204. ø80b–4¿ (a) IN GENERAL.—Every investment adviser
who makes use of the mails or of any means or instrumentality ofinterstate commerce in connection with his or its business as an investment adviser (other than one specifically exempted from registration pursuant to section 203(b) of this title), shall make andkeep for prescribed periods such records (as defined in section
3(a)(37) of the Securities Exchange Act of 1934), furnish such copies thereof, and make and disseminate such reports as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. All records (as so defined) of such investment advisers are subject at any time, or fromtime to time, to such reasonable periodic, special, or other examinations by representatives of the Commission as the Commission
deems necessary or appropriate in the public interest or for theprotection of investors.
(b) RECORDS AND REPORTS OF PRIVATE FUNDS.—(1) IN GENERAL.—The Commission may require any investment adviser registered under this title—(A) to maintain such records of, and file with the Commission such reports regarding, private funds advised by
the investment adviser, as necessary and appropriate in
the public interest and for the protection of investors, orfor the assessment of systemic risk by the Financial Stability Oversight Council (in this subsection referred to as
the ‘‘Council’’); and(B) to provide or make available to the Council thosereports or records or the information contained therein.
(2) TREATMENT OF RECORDS.—The records and reports ofany private fund to which an investment adviser registeredunder this title provides investment advice shall be deemed tobe the records and reports of the investment adviser.
(3) REQUIRED INFORMATION.—The records and reports required to be maintained by an investment adviser and subject
to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser,a description of—(A) the amount of assets under management and useof leverage, including off-balance-sheet leverage;

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As Amended Through P.L. 115-417, Enacted January 03, 2019(B) counterparty credit risk exposure;(C) trading and investment positions;(D) valuation policies and practices of the fund;(E) types of assets held;(F) side arrangements or side letters, whereby certain
investors in a fund obtain more favorable rights or entitlements than other investors;(G) trading practices; and(H) such other information as the Commission, in consultation with the Council, determines is necessary andappropriate in the public interest and for the protection of
investors or for the assessment of systemic risk, which
may include the establishment of different reporting requirements for different classes of fund advisers, based on
the type or size of private fund being advised.
(4) MAINTENANCE OF RECORDS.—An investment adviser
registered under this title shall maintain such records of private funds advised by the investment adviser for such period
or periods as the Commission, by rule, may prescribe as necessary and appropriate in the public interest and for the protection of investors, or for the assessment of systemic risk.
(5) FILING OF RECORDS.—The Commission shall issue rules
requiring each investment adviser to a private fund to file reports containing such information as the Commission deems
necessary and appropriate in the public interest and for theprotection of investors or for the assessment of systemic risk.
(6) EXAMINATION OF RECORDS.—(A) PERIODIC AND SPECIAL EXAMINATIONS.—The Commission—(i) shall conduct periodic inspections of the records
of private funds maintained by an investment adviser
registered under this title in accordance with a schedule established by the Commission; and(ii) may conduct at any time and from time totime such additional, special, and other examinations
as the Commission may prescribe as necessary and appropriate in the public interest and for the protectionof investors, or for the assessment of systemic risk.
(B) AVAILABILITY OF RECORDS.—An investment adviser
registered under this title shall make available to theCommission any copies or extracts from such records as
may be prepared without undue effort, expense, or delay,as the Commission or its representatives may reasonably
request.
(7) INFORMATION SHARING.—(A) IN GENERAL.—The Commission shall make available to the Council copies of all reports, documents,
records, and information filed with or provided to the Commission by an investment adviser under this subsection as
the Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund.
(B) CONFIDENTIALITY.—The Council shall maintain theconfidentiality of information received under this paragraph in all such reports, documents, records, and infor-

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mation, in a manner consistent with the level of confidentiality established for the Commission pursuant to paragraph (8). The Council shall be exempt from section 552 of
title 5, United States Code, with respect to any information in any report, document, record, or information madeavailable, to the Council under this subsection.
(8) COMMISSION CONFIDENTIALITY OF REPORTS.—Notwithstanding any other provision of law, the Commission may not
be compelled to disclose any report or information contained
therein required to be filed with the Commission under thissubsection, except that nothing in this subsection authorizes
the Commission—(A) to withhold information from Congress, upon anagreement of confidentiality; or(B) prevent the Commission from complying with—(i) a request for information from any other Federal department or agency or any self-regulatory organization requesting the report or information for purposes within the scope of its jurisdiction; or(ii) an order of a court of the United States in an
action brought by the United States or the Commission.
(9) OTHER RECIPIENTS CONFIDENTIALITY.—Any department,
agency, or self-regulatory organization that receives reports orinformation from the Commission under this subsection shallmaintain the confidentiality of such reports, documents,
records, and information in a manner consistent with the levelof confidentiality established for the Commission under paragraph (8).
(10) PUBLIC INFORMATION EXCEPTION.—(A) IN GENERAL.—The Commission, the Council, andany other department, agency, or self-regulatory organization that receives information, reports, documents, records,
or information from the Commission under this subsection,
shall be exempt from the provisions of section 552 of title
5, United States Code, with respect to any such report,
document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to thesame limitations on public disclosure as any facts
ascertained during an examination, as provided by section
210(b) of this title.
(B) PROPRIETARY INFORMATION.—For purposes of thisparagraph, proprietary information includes sensitive, nonpublic information regarding—(i) the investment or trading strategies of the investment adviser;(ii) analytical or research methodologies;(iii) trading data;(iv) computer hardware or software containing intellectual property; and(v) any additional information that the Commission determines to be proprietary.

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8 So in law. There are two subsection (d)’s. See amendments made by sections 404(1) and929Q(b) of Public Law 111–203 (124 Stat. 1571, 1866).

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INVESTMENT ADVISERS ACT OF 1940(11) ANNUAL REPORT TO CONGRESS.—The Commission shallreport annually to Congress on how the Commission has usedthe data collected pursuant to this subsection to monitor themarkets for the protection of investors and the integrity of themarkets.
(c) FILING DEPOSITORIES.—The Commission may, by rule, require an investment adviser—(1) to file with the Commission any fee, application, report,
or notice required to be filed by this title or the rules issued
under this title through any entity designated by the Commission for that purpose; and(2) to pay the reasonable costs associated with such filingand the establishment and maintenance of the systems required by subsection (c).
(d) ACCESS TO DISCIPLINARY AND OTHER INFORMATION.—(1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES.—(A) IN GENERAL.—The Commission shall require theentity designated by the Commission under subsection(b)(1) to establish and maintain a toll-free telephone listing, or a readily accessible electronic or other process, toreceive and promptly respond to inquiries regarding registration information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information required by law or rule to be reported) involving
investment advisers and persons associated with investment advisers.
(B) APPLICABILITY.—This subsection shall apply to any
investment adviser (and the persons associated with thatadviser), whether the investment adviser is registered with
the Commission under section 203 or regulated solely bya State, as described in section 203A.
(2) RECOVERY OF COSTS.—An entity designated by theCommission under subsection (b)(1) may charge persons making inquiries, other than individual investors, reasonable fees
for responses to inquiries described in paragraph (1).
(3) LIMITATION ON LIABILITY.—An entity designated by theCommission under subsection (b)(1) shall not have any liability
to any person for any actions taken or omitted in good faithunder this subsection.
(d) 8 RECORDS OF PERSONS WITH CUSTODY OR USE.—(1) IN GENERAL.—Records of persons having custody or useof the securities, deposits, or credits of a client, that relate tosuch custody or use, are subject at any time, or from time totime, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection of investors.
(2) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.—
Any person that is subject to regulation and examination by aFederal financial institution regulatory agency (as such term isSec. 204

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SEC. 205. ø80b–5¿ (a) No investment adviser registered or required to be registered with the Commission shall enter into, extend, or renew any investment advisory contract, or in any way
perform any investment advisory contract entered into, extended,or renewed on or after the effective date of this title, if such contract—(1) provides for compensation to the investment adviser on
the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client;(2) fails to provide, in substance, that no assignment ofsuch contract shall be made by the investment adviser without
the consent of the other party by the contract; or(3) fails to provide, in substance, that the investment adviser, if a partnership, will notify the other party to the contract of any change in the membership of such partnershipwithin a reasonable time after such change.
(b) Paragraph (1) of subsection (a) shall not—(1) be construed to prohibit an investment advisory contract which provides for compensation based upon the total
value of a fund averaged over a definite period, or as of definite
dates, or taken as of a definite date;(2) apply to an investment advisory contract with—(A) an investment company registered under title I of
this Act, or(B) any other person (except a trust, governmental
plan, collective trust fund, or separate account referred toin section 3(c)(11) of title I of this Act), provided that thecontract relates to the investment of assets in excess of $1
million,

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defined under section 212(c)(2) of title 18, United States Code)may satisfy any examination request, information request, or
document request described under paragraph (1), by providing
the Commission with a detailed listing, in writing, of the securities, deposits, or credits of the client within the custody or
use of such person.

SEC. 204A. ø80b–4a¿ Every investment adviser subject to section 204 of this title shall establish, maintain, and enforce written
policies and procedures reasonably designed, taking into consideration the nature of such investment adviser’s business, to preventthe misuse in violation of this Act or the Securities Exchange Actof 1934, or the rules or regulations thereunder, of material, nonpublic information by such investment adviser or any person associated with such investment adviser. The Commission, as it deems
necessary or appropriate in the public interest or for the protectionof investors, shall adopt rules or regulations to require specific policies or procedures reasonably designed to prevent misuse in violation of this Act or the Securities Exchange Act of 1934 (or the rules
or regulations thereunder) of material, nonpublic information.

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if the contract provides for compensation based on the asset
value of the company or fund under management averaged
over a specified period and increasing and decreasing proportionately with the investment performance of the company orfund over a specified period in relation to the investment
record of an appropriate index of securities prices or such othermeasure of investment performance as the Commission byrule, regulation, or order may specify;(3) apply with respect to any investment advisory contract
between an investment adviser and a business development
company, as defined in this title, if (A) the compensation provided for in such contract does not exceed 20 per centum of therealized capital gains upon the funds of the business development company over a specified period or as of definite dates,computed net of all realized capital losses and unrealized capital depreciation, and the condition of section 61(a)(4)(B)(iii) oftitle I of this Act is satisfied, and (B) the business development
company does not have outstanding any option, warrant, orright issued pursuant to section 61(a)(4)(B) of title I of this Act
and does not have a profit-sharing plan described in section
57(n) of title I of this Act;(4) apply to an investment advisory contract with a company excepted from the definition of an investment company
under section 3(c)(7) of title I of this Act; or(5) apply to an investment advisory contract with a person
who is not a resident of the United States.
(c) For purposes of paragraph (2) of subsection (b), the pointfrom which increases and decreases in compensation are measured
shall be the fee which is paid or earned when the investment performance of such company or fund is equivalent to that of the index
or other measure of performance, and an index of securities prices
shall be deemed appropriate unless the Commission by order shalldetermine otherwise.
(d) As used in paragraphs (2) and (3) of subsection (a), ‘‘investment advisory contract’’ means any contract or agreement whereby
a person agrees to act as investment adviser to or to manage any
investment or trading account of another person other than an investment company registered under title I of this Act.
(e) The Commission, by rule or regulation, upon its own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or any class or classesof persons or transactions, from subsection (a)(1), if and to the extent that the exemption relates to an investment advisory contract
with any person that the Commission determines does not need theprotections of subsection (a)(1), on the basis of such factors as financial sophistication, net worth, knowledge of and experience infinancial matters, amount of assets under management, relationship with a registered investment adviser, and such other factors
as the Commission determines are consistent with this section.
With respect to any factor used in any rule or regulation by theCommission in making a determination under this subsection, if
the Commission uses a dollar amount test in connection with suchfactor, such as a net asset threshold, the Commission shall, byorder, not later than 1 year after the date of enactment of the Pri-Sec. 205

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Sec. 206A

PROHIBITED TRANSACTIONS BY REGISTERED INVESTMENT ADVISERS

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As Amended Through P.L. 115-417, Enacted January 03, 2019

SEC. 206A. ø80b–6a¿ The Commission, by rules and regulations, upon its own motion, or by order upon application, may conditionally or unconditionally exempt any person or transaction, or
any class or classes of persons, or transactions, from any provisionor provisions of this title or of any rule or regulation thereunder,
if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of
investors and the purposes fairly intended by the policy and provisions of this title.

EXEMPTIONS

SEC. 206. ø80b–6¿ It shall be unlawful for any investment adviser, by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly—(1) to employ any device, scheme, or artifice to defraud any
client or prospective client;(2) to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client orprospective client;(3) acting as principal for his own account, knowingly tosell any security to or purchase any security from a client, or
acting as broker for a person other than such client, knowingly
to effect any sale or purchase of any security for the accountof such client, without disclosing to such client in writing before the completion of such transaction the capacity in which
he is acting and obtaining the consent of the client to suchtransaction. The prohibitions of this paragraph (3) shall not
apply to any transaction with a customer of a broker or dealer
if such broker or dealer is not acting as an investment adviser
in relation to such transaction; or(4) to engage in any act, practice, or course of business
which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules andregulations define, and prescribe means reasonably designed toprevent, such acts, practices, and courses of business as are
fraudulent, deceptive, or manipulative.

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INVESTMENT ADVISERS ACT OF 1940

vate Fund Investment Advisers Registration Act of 2010, and every
5 years thereafter, adjust for the effects of inflation on such test.
Any such adjustment that is not a multiple of $100,000 shall be
rounded to the nearest multiple of $100,000.
(f) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.—The Commission, by rule, may prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any investment adviser to arbitrate any future
dispute between them arising under the Federal securities laws,
the rules and regulations thereunder, or the rules of a self-regulatory organization if it finds that such prohibition, imposition of
conditions, or limitations are in the public interest and for the protection of investors.

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As Amended Through P.L. 115-417, Enacted January 03, 2019

SEC. 209. ø80b–9¿ (a) Whenever it shall appear to the Commission, either upon complaint or otherwise, that the provisions of thistitle or of any rule or regulation prescribed under the authority
thereof, have been or are about to be violated by any person, it may
in its discretion require, and in any event shall permit, such person
to file with it a statement in writing, under oath or otherwise, as
to all the facts and circumstances relevant to such violation, andmay otherwise investigate all such facts and circumstances.
(b) For the purposes of any investigation or any proceedingunder this title, any member of the Commission or any officer
thereof designated by it is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, contracts, agreements, or other records which
are relevant or material to the inquiry. Such attendance of witnesses and the production of any such records may be required
from any place in any State or in any Territory or other place subject to the jurisdiction of the United States at any designated placeof hearing.
(c) In case of contumacy by, or refusal to obey a subpena issued
to, any person, the Commission may invoke the aid of any court of
the United States within the jurisdiction of which such investiga-

ENFORCEMENT OF TITLE

SEC. 208. ø80b–8¿ (a) It shall be unlawful for any person registered under section 203 of this title to represent or imply in any
manner whatsoever that such person has been sponsored, recommended, or approved, or that his abilities or qualifications havein any respect been passed upon by the United States or any agency or any officer thereof.
(b) No provision of subsection (a) shall be construed to prohibita statement that a person is registered under this title or under
the Securities Exchange Act of 1934, if such statement is true infact and if the effect of such registration is not misrepresented.
(c) It shall be unlawful for any person registered under section
203 of this title to represent that he is an investment counsel orto use the name ‘‘investment counsel’’ as descriptive of his business
unless (1) his or its principal business consists of acting as investment adviser, and (2) a substantial part of his or its business consists of rendering investment supervisory services.
(d) It shall be unlawful for any person indirectly, or throughor by any other person, to do any act or thing which it would be
unlawful for such person to do directly under the provisions of thistitle or any rule or regulation thereunder.

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INVESTMENT ADVISERS ACT OF 1940

SEC. 207. ø80b–7¿ It shall be unlawful for any person willfully
to make any untrue statement of a material fact in any registration
application or report filed with the Commission under section 203
or 204, or willfully to omit to state in any such application or report any material fact which is required to be stated therein.

Sec. 207

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As Amended Through P.L. 115-417, Enacted January 03, 2019tion or proceeding is carried on, or where such person resides or
carries on business, in requiring the attendance and testimony of
witnesses and the production of books, papers, correspondence,
memoranda, contracts, agreements, and other records. And suchcourt may issue an order requiring such person to appear before
the Commission or member or officer designated by the Commission, there to produce records, if so ordered or to give testimony
touching the matter under investigation or in question; and any
failure to obey such order of the court may be punished by suchcourt as a contempt thereof. All process in any such case may beserved in the judicial district whereof such person is an inhabitantor wherever he may be found. Any person who without just cause
shall fail or refuse to attend and testify or to answer any lawful
inquiry or to produce books, papers, correspondence, memoranda,
contracts, agreements, or other records, if in his or its power so todo, in obedience to the subpena of the Commission, shall be guilty
of a misdemeanor, and upon conviction shall be subject to a fineof not more than $1,000 or to imprisonment for a term of not morethan one year, or both.
(d) Whenever it shall appear to the Commission that any person has engaged, is engaged, or is about to engage in any act orpractice constituting a violation of any provision of this title, or of
any rule, regulation, or order hereunder, or that any person has
aided, abetted, counseled, commanded, induced, or procured, is aiding, abetting, counseling, commanding, inducing, or procuring, or isabout to aid, abet, counsel, command, induce, or procure such a violation, it may in its discretion bring an action in the proper district
court of the United States, or the proper United States court of any
Territory or other place subject to the jurisdiction of the UnitedStates, to enjoin such acts or practices and to enforce compliancewith this title or any rule, regulation, or order hereunder. Upon ashowing that such person has engaged, is engaged, or is about toengage in any such act or practice, or in aiding, abetting, counseling, commanding, inducing, or procuring any such act or practice, a permanent or temporary injunction or decree or restraining
order shall be granted without bond. The Commission may transmit such evidence as may be available concerning any violation of
the provisions of this title, or of any rule, regulation, or orderthereunder, to the Attorney General, who, in his discretion, may institute the appropriate criminal proceedings under this title.
(e) MONEY PENALTIES IN CIVIL ACTIONS.—(1) AUTHORITY OF COMMISSION.—Whenever it shall appear
to the Commission that any person has violated any provisionof this title, the rules or regulations thereunder, or a ceaseand-desist order entered by the Commission pursuant to section 203(k) of this title, the Commission may bring an action
in a United States district court to seek, and the court shallhave jurisdiction to impose, upon a proper showing, a civil penalty to be paid by the person who committed such violation.
(2) AMOUNT OF PENALTY.—(A) FIRST TIER.—The amount of the penalty shall be
determined by the court in light of the facts and circumstances. For each violation, the amount of the penalty
shall not exceed the greater of (i) $5,000 for a natural per-

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son or $50,000 for any other person, or (ii) the grossamount of pecuniary gain to such defendant as a result of
the violation.
(B) SECOND TIER.—Notwithstanding subparagraph (A),the amount of penalty for each such violation shall not exceed the greater of (i) $50,000 for a natural person or$250,000 for any other person, or (ii) the gross amount of
pecuniary gain to such defendant as a result of the violation, if the violation described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or reckless disregard of a regulatory requirement.
(C) THIRD TIER.—Notwithstanding subparagraphs (A)and (B), the amount of penalty for each such violation
shall not exceed the greater of (i) $100,000 for a natural
person or $500,000 for any other person, or (ii) the grossamount of pecuniary gain to such defendant as a result of
the violation, if—

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As Amended Through P.L. 115-417, Enacted January 03, 2019(I) the violation described in paragraph (1) involved fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement; and(II) such violation directly or indirectly resulted in
substantial losses or created a significant risk of substantial losses to other persons.
(3) PROCEDURES FOR COLLECTION.—(A) PAYMENT OF PENALTY TO TREASURY.—A penalty
imposed under this section shall be payable into the Treasury of the United States, except as otherwise provided in
section 308 of the Sarbanes-Oxley Act of 2002 and section
21F of the Securities Exchange Act of 1934.
(B) COLLECTION OF PENALTIES.—If a person uponwhom such a penalty is imposed shall fail to pay such penalty within the time prescribed in the court’s order, theCommission may refer the matter to the Attorney General
who shall recover such penalty by action in the appropriate United States district court.
(C) REMEDY NOT EXCLUSIVE.—The actions authorized
by this subsection may be brought in addition to any otheraction that the Commission or the Attorney General is entitled to bring.
(D) JURISDICTION AND VENUE.—For purposes of section
214 of this title, actions under this paragraph shall be actions to enforce a liability or a duty created by this title.
(4) SPECIAL PROVISIONS RELATING TO A VIOLATION OF A
CEASE-AND-DESIST ORDER.—In an action to enforce a cease-anddesist order entered by the Commission pursuant to section
203(k), each separate violation of such order shall be a separate offense, except that in the case of a violation through acontinuing failure to comply with the order, each day of the
failure to comply shall be deemed a separate offense.
(f) AIDING AND ABETTING.—For purposes of any action broughtby the Commission under subsection (e), any person that knowingly
or recklessly has aided, abetted, counseled, commanded, induced, or
procured a violation of any provision of this Act, or of any rule, reg-Sec. 209

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Sec. 210A

PUBLICITY

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As Amended Through P.L. 115-417, Enacted January 03, 2019(1) The appropriate Federal banking agency shall provide
the Commission upon request the results of any examination,
reports, records, or other information to which such agency
may have access—(A) with respect to the investment advisory activities
of any—(i) bank holding company or savings and loan
holding company;(ii) bank; or(iii) separately identifiable department or divisionof a bank,

SEC. 210A. ø80b–10a¿ CONSULTATION.
(a) EXAMINATION RESULTS AND OTHER INFORMATION.—

SEC. 210. ø80b–10¿ (a) The information contained in any registration application or report or amendment thereto filed with theCommission pursuant to any provision of this title shall be madeavailable to the public, unless and except insofar as the Commission, by rules and regulations upon its own motion, or by order
upon application, finds that public disclosure is neither necessary
nor appropriate in the public interest or for the protection of investors. Photostatic or other copies of information contained in documents filed with the Commission under this title and made available to the public shall be furnished to any person at such reasonable charge and under such reasonable limitations as the Commission shall prescribe.
(b) Subject to the provisions of subsections (c) and (d) of section
209 of this title and section 24(c) of the Securities Exchange Actof 1934, the Commission, or any member, officer, or employee
thereof, shall not make public the fact that any examination or investigation under this title is being conducted, or the results of or
any facts ascertained during any such examination or investigation; and no member, officer, or employee of the Commission shalldisclose to any person other than a member, officer, or employeeof the Commission any information obtained as a result of any suchexamination or investigation except with the approval of the Commission. The provisions of this subsection shall not apply—(1) in the case of any hearing which is public under theprovisions of section 212; or(2) in the case of a resolution or request from either Houseof Congress.
(c) No provision of this title shall be construed to require, or
to authorize the Commission to require any investment adviser engaged in rendering investment supervisory services to disclose theidentity, investments, or affairs of any client of such investment
adviser, except insofar as such disclosure may be necessary or appropriate in a particular proceeding or investigation having as its
object the enforcement of a provision or provisions of this title orfor purposes of assessment of potential systemic risk.

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ulation, or order hereunder, shall be deemed to be in violation ofsuch provision, rule, regulation, or order to the same extent as the
person that committed such violation.

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As Amended Through P.L. 115-417, Enacted January 03, 2019

SEC. 211. ø80b–11¿ (a) The Commission shall have authority
from time to time to make, issue, amend, and rescind such rules
and regulations and such orders as are necessary or appropriate to
the exercise of the functions and powers conferred upon the Commission elsewhere in this title, including rules and regulations defining technical, trade, and other terms used in this title, exceptthat the Commission may not define the term ‘‘client’’ for purposesof paragraphs (1) and (2) of section 206 to include an investor ina private fund managed by an investment adviser, if such private
fund has entered into an advisory contract with such adviser. For
the purposes of its rules or regulations the Commission may classify persons and matters within its jurisdiction and prescribe different requirements for different classes of persons or matters.

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that is registered under section 203 of this title; and(B) in the case of a bank holding company or savingsand loan holding company or bank that has a subsidiaryor a separately identifiable department or division registered under that section, with respect to the investment
advisory activities of such bank or bank holding company
or savings and loan holding company.
(2) The Commission shall provide to the appropriate Federal banking agency upon request the results of any examination, reports, records, or other information with respect to theinvestment advisory activities of any bank holding company orsavings and loan holding company, bank, or separately identifiable department or division of a bank, which is registeredunder section 203 of this title.
(3) Notwithstanding any other provision of law, the Commission and the appropriate Federal banking agencies shallnot be compelled to disclose any information provided underparagraph (1) or (2). Nothing in this paragraph shall authorize
the Commission or such agencies to withhold information from
Congress, or prevent the Commission or such agencies fromcomplying with a request for information from any other Federal department or agency or any self-regulatory organization
requesting the information for purposes within the scope of its
jurisdiction, or complying with an order of a court of theUnited States in an action brought by the United States, theCommission, or such agencies. For purposes of section 552 of
title 5, United States Code, this paragraph shall be considereda statute described in subsection (b)(3)(B) of such section 552.
(b) EFFECT ON OTHER AUTHORITY.—Nothing in this section
shall limit in any respect the authority of the appropriate Federalbanking agency with respect to such bank holding company or savings and loan holding company (or affiliates or subsidiaries thereof), bank, or subsidiary, department, or division or a bank under
any other provision of law.
(c) DEFINITION.—For purposes of this section, the term ‘‘appropriate Federal banking agency’’ shall have the same meaning asgiven in section 3 of the Federal Deposit Insurance Act.

Sec. 211

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(b) Subject to the provisions of chapter 15 of title 44, UnitedStates Code, and regulations prescribed under the authority thereof, the rules and regulations of the Commission under this title,
and amendments thereof, shall be effective upon publication in themanner which the Commission shall prescribe, or upon such later
date as may be provided in such rules and regulations.
(c) Orders of the Commission under this title shall be issued
only after appropriate notice and opportunity for hearing. Notice tothe parties to a proceeding before the Commission shall be given
by personal service upon each party or by registered mail or certified mail or confirmed telegraphic notice to the party’s last known
business address. Notice to interested persons, if any, other thanparties may be given in the same manner or by publication in theFederal Register.
(d) No provision of this title imposing any liability shall apply
to any act done or omitted in good faith in conformity with any
rule, regulation, or order of the Commission, notwithstanding thatsuch rule, regulation, or order may, after such act or omission, beamended or rescinded or be determined by judicial or other authority to be invalid for any reason.
(e) DISCLOSURE RULES ON PRIVATE FUNDS.—The Commission
and the Commodity Futures Trading Commission shall, after consultation with the Council but not later than 12 months after thedate of enactment of the Private Fund Investment Advisers Registration Act of 2010, jointly promulgate rules to establish the formand content of the reports required to be filed with the Commission
under subsection 204(b) and with the Commodity Futures Trading
Commission by investment advisers that are registered both under
this title and the Commodity Exchange Act (7 U.S.C. 1a et seq.).
(g) 9 STANDARD OF CONDUCT.—(1) IN GENERAL.—The Commission may promulgate rules
to provide that the standard of conduct for all brokers, dealers,and investment advisers, when providing personalized investment advice about securities to retail customers (and suchother customers as the Commission may by rule provide), shallbe to act in the best interest of the customer without regard
to the financial or other interest of the broker, dealer, or investment adviser providing the advice. In accordance with suchrules, any material conflicts of interest shall be disclosed andmay be consented to by the customer. Such rules shall providethat such standard of conduct shall be no less stringent than
the standard applicable to investment advisers under section
206(1) and (2) of this Act when providing personalized investment advice about securities, except the Commission shall not
ascribe a meaning to the term ‘‘customer’’ that would include
an investor in a private fund managed by an investment adviser, where such private fund has entered into an advisory
contract with such adviser. The receipt of compensation basedon commission or fees shall not, in and of itself, be considereda violation of such standard applied to a broker, dealer, or investment adviser.

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SEC. 213. ø80b–13¿ (a) Any person or party aggrieved by anorder issued by the Commission under this title may obtain a review of such order in the court of appeals of the United States
within any circuit wherein such person resides or has his principal
office or place of business, or in the United States Court of Appeals
for the District of Columbia, by filing in such court, within sixty
days after the entry of such order, a written petition praying thatthe order of the Commission be modified or set aside in whole orin part. A copy of such petition shall be forthwith transmitted by
the clerk of the court to any member of the Commission, or any officer thereof designated by the Commission for that purpose, and

COURT REVIEW OF ORDERS

SEC. 212. ø80b–12¿ Hearings may be public and may be held
before the Commission, any member or members thereof, or any officer or officers of the Commission designated by it, and appropriate records thereof shall be kept.

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(2) RETAIL CUSTOMER DEFINED.—For purposes of this subsection, the term ‘‘retail customer’’ means a natural person, or
the legal representative of such natural person, who—(A) receives personalized investment advice about securities from a broker, dealer, or investment adviser; and(B) uses such advice primarily for personal, family, orhousehold purposes.
(h) OTHER MATTERS.—The Commission shall—(1) facilitate the provision of simple and clear disclosures
to investors regarding the terms of their relationships withbrokers, dealers, and investment advisers, including any material conflicts of interest; and(2) examine and, where appropriate, promulgate rules prohibiting or restricting certain sales practices, conflicts of interest, and compensation schemes for brokers, dealers, and investment advisers that the Commission deems contrary to the
public interest and the protection of investors.
(i) HARMONIZATION OF ENFORCEMENT.—The enforcement authority of the Commission with respect to violations of the standardof conduct applicable to an investment adviser shall include—(1) the enforcement authority of the Commission with respect to such violations provided under this Act; and(2) the enforcement authority of the Commission with respect to violations of the standard of conduct applicable to abroker or dealer providing personalized investment advice
about securities to a retail customer under the Securities Exchange Act of 1934, including the authority to impose sanctions
for such violations, andthe Commission shall seek to prosecute and sanction violators of
the standard of conduct applicable to an investment adviser under
this Act to same extent as the Commission prosecutes and sanctions violators of the standard of conduct applicable to a broker ordealer providing personalized investment advice about securities toa retail customer under the Securities Exchange Act of 1934.

Sec. 212

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SEC. 214. ø80b–14¿ (a) IN GENERAL.—The district courts of theUnited States and the United States courts of any Territory orother place subject to the jurisdiction of the United States shallhave jurisdiction of violations of this title or the rules, regulations,or orders thereunder, and, concurrently with State and Territorial
courts, of all suits in equity and actions at law brought to enforce
any liability or duty created by, or to enjoin any violation of thistitle or the rules, regulations, or orders thereunder. Any criminal
proceeding may be brought in the district wherein any act or transaction constituting the violation occurred. Any suit or action to enforce any liability or duty created by, or to enjoin any violation ofthis title or rules, regulations, or orders thereunder, may bebrought in any such district or in the district wherein the defendant is an inhabitant or transacts business, and process in suchcases may be served in any district of which the defendant is aninhabitant or transacts business or wherever the defendant may befound. In any action or proceeding instituted by the Commission
under this title in a United States district court for any judicial
district, a subpoena issued to compel the attendance of a witness
or the production of documents or tangible things (or both) at ahearing or trial may be served at any place within the United

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thereupon the Commission shall file in the court the record uponwhich the order complained of was entered, as provided in section
2112 of title 28, United States Code. Upon the filing of such petition such court shall have jurisdiction, which upon the filing of therecord shall be exclusive, to affirm, modify, or set aside such order,in whole or in part. No objection to the order of the Commission
shall be considered by the court unless such objection shall havebeen urged before the Commission or unless there were reasonablegrounds for failure so to do. The findings of the Commission as tothe facts, if supported by substantial evidence, shall be conclusive.
If application is made to the court for leave to adduce additional
evidence, and it is shown to the satisfaction of the court that such
additional evidence is material and that there were reasonablegrounds for failure to adduce such evidence in the proceeding before the Commission, the court may order such additional evidence
to be taken before the Commission and to be adduced upon the
hearing in such manner and upon such terms and conditions as tothe court may seem proper. The Commission may modify its findings as to the facts by reason of the additional evidence so taken,
and it shall file with the court such modified or new findings,
which, if supported by substantial evidence, shall be conclusive,
and its recommendation, if any, for the modification or setting
aside of the original order. The judgment and decree of the court
affirming, modifying, or setting aside, in whole or in part, any suchorder of the Commission shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification asprovided in section 1254 of title 28, United States Code.
(b) The commencement of proceedings under subsection (a)shall not, unless specifically ordered by the court, operate as a stayof the Commission’s order.

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As Amended Through P.L. 115-417, Enacted January 03, 2019

10 See also 18 U.S.C. 3571. øPrinted in appendix to this volume.¿

SEC. 217. ø80b–17¿ Any person who willfully violates any provision of this title, or any rule, regulation, or order promulgated by
the Commission under authority thereof, shall, upon conviction, be
fined not more than $10,000, imprisoned for not more than five
years, or both.

PENALTIES 10

SEC. 216. ø80b–16¿ The Commission shall submit annually areport to the Congress covering the work of the Commission for thepreceding year and including such information, data, and recommendations for further legislation in connection with the matters covered by this title as it may find advisable.

ANNUAL REPORTS OF COMMISSION

SEC. 215. ø80b–15¿ (a) Any condition, stipulation, or provisionbinding any person to waive compliance with any provision of thistitle or with any rule, regulation, or order thereunder shall be void.
(b) Every contract made in violation of any provision of thistitle and every contract heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any
relationship or practice in violation of any provision of this title, or
any rule, regulation, or order thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, regulation, or order, shall have made or engaged in theperformance of any such contract, and (2) as regards the rights ofany person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts byreason of which the making or performance of such contract wasin violation of any such provision.

11:22 Oct 02, 2019

October 2, 2019

INVESTMENT ADVISERS ACT OF 1940

States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
shall not apply to a subpoena issued under the preceding sentence.
Judgments and decrees so rendered shall be subject to review asprovided in sections 1254, 1291, 1292, and 1294 of title 28, UnitedStates Code. No costs shall be assessed for or against the Commission in any proceeding under this title brought by or against theCommission in any court.
(b) EXTRATERRITORIAL JURISDICTION.—The district courts of theUnited States and the United States courts of any Territory shallhave jurisdiction of an action or proceeding brought or institutedby the Commission or the United States alleging a violation of section 206 involving—(1) conduct within the United States that constitutes significant steps in furtherance of the violation, even if the violation is committed by a foreign adviser and involves only foreign
investors; or(2) conduct occurring outside the United States that has aforeseeable substantial effect within the United States.

Sec. 215

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Sec. 222

SEPARABILITY OF PROVISIONS

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As Amended Through P.L. 115-417, Enacted January 03, 2019

shall affect the jurisdiction of the securities commissioner (or any
agency or officer performing like functions) of any State over any
security or any person insofar as it does not conflict with the provisions of this title or the rules and regulations thereunder.
(b) DUAL COMPLIANCE PURPOSES.—No State may enforce any
law or regulation that would require an investment adviser tomaintain any books or records in addition to those required under
the laws of the State in which it maintains its principal office andplace of business, if the investment adviser—(1) is registered or licensed as such in the State in which
it maintains its principal office and place of business; and(2) is in compliance with the applicable books and records
requirements of the State in which it maintains its principal
office and place of business.
(c) LIMITATION ON CAPITAL AND BOND REQUIREMENTS.—No
State may enforce any law or regulation that would require an investment adviser to maintain a higher minimum net capital or topost any bond in addition to any that is required under the lawsof the State in which it maintains its principal office and place ofbusiness, if the investment adviser—(1) is registered or licensed as such in the State in which
it maintains its principal office and place of business; and(2) is in compliance with the applicable net capital orbonding requirements of the State in which it maintains its
principal office and place of business.

SEC. 222. ø80b–18a¿ STATE REGULATION OF INVESTMENT ADVISERS.
(a) JURISDICTION OF STATE REGULATORS.—Nothing in this title

SEC. 221. ø80b–21¿ This title shall become effective on November 1, 1940.

EFFECTIVE DATESEC. 220. ø80b–20¿ This title may be cited as the ‘‘Investment
Advisers Act of 1940’’.

SHORT TITLE

SEC. 219. ø80b–19¿ If any provision of this title or the application of such provision to any person or circumstances shall be held
invalid, the remainder of the title and the application of such provision to persons or circumstances other than those as to which it isheld invalid shall not be affected thereby.

11:22 Oct 02, 2019

October 2, 2019

INVESTMENT ADVISERS ACT OF 1940

HIRING AND LEASING AUTHORITY OF THE COMMISSION

SEC. 218. ø80b–18¿ The provisions of section 4(b) of the Securities Exchange Act of 1934 shall be applicable with respect to thepower of the Commission—(1) to appoint and fix the compensation of such other employees as may be necessary for carrying out its functions
under this title, and(2) to lease and allocate such real property as may be necessary for carrying out its functions under this title.

37

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As Amended Through P.L. 115-417, Enacted January 03, 2019

Nothing in this title shall relieve any person of any obligationor duty, or affect the availability of any right or remedy available
to the Commodity Futures Trading Commission or any private
party, arising under the Commodity Exchange Act (7 U.S.C. 1 etseq.) governing commodity pools, commodity pool operators, or commodity trading advisors.

SEC. 224. ø15 U.S.C. 80b–18c¿ RULE OF CONSTRUCTION RELATING TO
THE COMMODITIES EXCHANGE ACT.

An investment adviser registered under this title shall takesuch steps to safeguard client assets over which such adviser hascustody, including, without limitation, verification of such assets byan independent public accountant, as the Commission may, by rule,prescribe.

SEC. 223. ø15 U.S.C. 80b–18b¿ CUSTODY OF CLIENT ACCOUNTS.

11:22 Oct 02, 2019

October 2, 2019

INVESTMENT ADVISERS ACT OF 1940(d) NATIONAL DE MINIMIS STANDARD.—No law of any State orpolitical subdivision thereof requiring the registration, licensing, or
qualification as an investment adviser shall require an investment
adviser to register with the securities commissioner of the State (orany agency or officer performing like functions) or to comply withsuch law (other than any provision thereof prohibiting fraudulent
conduct) if the investment adviser—(1) does not have a place of business located within theState; and(2) during the preceding 12-month period, has had fewer
than 6 clients who are residents of that State.

Sec. 223

G:\COMP\SEC\INVESTMENT ADVISERS ACT OF 1940.XML

INTRODUCTIONACTION: Interpretation.

SUMMARY: The Securities and Exchange Commission (the “SEC” or the “Commission”) is99

broker or dealer “whose performance of such advisory services is solely incidental to the conductof his business as a broker or dealer and who receives no special compensation” for thoseservices (the “broker-dealer exclusion”). The broker-dealer exclusion shows, on the one hand,that at the time the Advisers Act was enacted Congress recognized broker-dealers commonly
provided some investment advice to their customers in the course of their business as brokerdealers and that it would be inappropriate to bring broker-dealers within the scope of thespecial compensation.

DATES: Effective July 12, 2019.

FOR FURTHER INFORMATION CONTACT: James McGinnis, Senior Counsel,

Investment Adviser Regulation Office, at (202) 551-6787 or IArules@sec.gov; and Benjamin

Kalish, Attorney-Advisor, or Parisa Haghshenas, Branch Chief, Chief Counsel’s Office at (202)551-6825 or IMOCC@sec.gov, Division of Investment Management, Securities and Exchange

SUPPLEMENTARY INFORMATION: The Commission is publishing an interpretation of

the solely incidental prong of the broker-dealer exclusion in section 202(a)(11)(C) of the2

15 U.S.C. 80b. Unless otherwise noted, when we refer to the Advisers Act, or any paragraph of theAdvisers Act, we are referring to 15 U.S.C. 80b of the United States Code, at which the Advisers Act is
codified.

the definition of investment adviser—and thus from the application of the Advisers Act—aof the broker or dealer’s business and when such incidental advisory services are provided for no1

engage in the business of advising others about securities. Section 202(a)(11)(C) excludes fromdealer that provides advisory services when such services are “solely incidental” to the conduct

Commission, 100 F Street NE, Washington, DC 20549-8549.

defined in section 202(a)(11) of the Advisers Act in part as persons who, for compensation,

Act” or the “Act”), which excludes from the definition of “investment adviser” any broker or

The Advisers Act regulates the activities of certain “investment advisers,” who are

Potential Economic Effects

B.

publishing an interpretation of a section of the Investment Advisers Act of 1940 (the “Advisers

BackgroundA.

AGENCY: Securities and Exchange Commission.

I.

Guidance on Applying the Interpretation of the Solely Incidental Prong

Economic Considerations

Exclusion from the Definition of Investment Adviser
III.

Scope of the Solely Incidental Prong of the Broker-Dealer Exclusion

C.

Historical Context and Legislative History

B.

A.

Interpretation and ApplicationII.

TABLE OF CONTENTS

Introduction

I.

Advisers Act [15 U.S.C. 80b]. 1

Commission Interpretation Regarding the Solely Incidental Prong of the Broker-Dealer[Release No. IA-5249]

17 CFR Part 276

SECURITIES AND EXCHANGE COMMISSION

Conformed to Federal Register version

資料２

100

“solely incidental to the conduct of his business as a broker or dealer” in the context of theexercise of investment discretion, more commenters addressed this prong more generally. 8 For
example, many commenters requested general guidance on or expressed views about themeaning of the solely incidental prong 9 and the permissibility under this prong of various

Advisers Act only under certain circumstances—namely, when those services are solely

incidental to the broker-dealer’s regular business as a broker-dealer (the “solely incidental

prong”) and when the broker-dealer receives no special compensation (the “special

compensation prong”). 3

approach to the Reg. BI Proposal was inconsistent with the solely incidental prong of the broker-

also proposed an interpretation intended to reaffirm and in some cases clarify the standard of

See Regulation Best Interest, Securities Exchange Act Release No. 83062 (April 18, 2018) [83 FR 21574(May 9, 2018)] (“Reg. BI Proposal”), at n.343. The broker-dealer exclusion is conjunctive—that is, thebroker-dealer must both provide investment advice that is solely incidental to the conduct of his business asa broker-dealer and the broker-dealer must receive no special compensation. In the event that a brokerdealer’s investment advice fits within the guidance of this Release with respect to the solely incidental
prong, that broker-dealer must also receive no special compensation for the advisory service to beconsistent with the broker-dealer exclusion.

See id.

Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers; Request forComment on Enhancing Investment Adviser Regulation, Investment Advisers Act Release No. 4889 (April
18, 2018) [83 FR 21203 (May 9, 2018)] (the “Proposed Fiduciary Interpretation”).

See Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail
Communications and Restrictions on the Use of Certain Names or Titles, Investment Advisers Act Release
No. 4888 (April 18, 2018) [83 FR 21416 (May 9, 2018)] (“Relationship Summary Proposal”).
Concurrently with this interpretation, we also are adopting the final versions of the rules and interpretations
proposed in the Relationship Summary Proposal, the Reg. BI Proposal, and the Proposed FiduciaryInterpretation. See Form CRS Relationship Summary; Amendments to Form ADV, Investment Advisers
Act Release No. 5247 (June 5, 2019) (the “Relationship Summary Adoption”); Regulation Best Interest:
The Broker-Dealer Standard of Conduct, Exchange Act Release No. 86031 (June 5, 2019) (“Reg. BI

3

4

5

6

3

Opinion of General Counsel Relating to Section 202(a)(11)(C) of the Investment Advisers Act of 1940,
Investment Advisers Act Release No. 2 (Oct. 28, 1940) (“Advisers Act Release No. 2”).

2

relationships. The Reg. BI Proposal discussed the broker-dealer exclusion and requested

We considered comments submitted in File No. S7-07-18 (Reg. BI Proposal, supra footnote 3); File No.
S7-08-18 (Relationship Summary Proposal, supra footnote 6); and File No. S7-09-18 (Proposed FiduciaryInterpretation, supra footnote 5). Those comments are available on the Commission’s website athttps://www.sec.gov/comments/s7-07-18/s70718.htm, https://www.sec.gov/comments/s7-0818/s70818.htm, and https://www.sec.gov/comments/s7-09-18/s70918.htm, respectively.
See, e.g., Comment Letter of North American Securities Administrators Association, Inc. (Aug. 23, 2018)(“NASAA Letter”); Comment Letter of CFA Institute (Aug. 7, 2018) (“CFA Institute Letter”) (noting the“need to give guidance” on the broker-dealer exclusion and noting that the Commission has legal authority
to provide needed clarification); Comment Letter of the Institute for the Fiduciary Standard (Aug. 6, 2018)(“IFS Letter”) (arguing that when a broker’s investment advice is solely incidental to its business is one ofa number of “questions the SEC should address”); Comment Letter of the Consumer Federation of America(Aug. 7, 2018) (“CFA Letter”) (arguing that the Commission failed to “engage” on “just how far the ‘solely
incidental’ exclusion stretches”); Comment Letter of the Investment Adviser Association (Aug. 6, 2018)(“IAA Letter”) (“[T]he Commission should reconsider when broker-dealers should be able to rely on the
Solely Incidental [prong].”); Comment Letter of Michael Kitces (Aug. 2, 2018) (“Kitces Letter”) (arguingthat the Commission’s prior interpretations of the solely incidental prong are inconsistent with the plain
meaning and legislative history of the term).
See, e.g., CFA Letter; Kitces Letter.

8

9

10

4

See Reg. BI Proposal, supra footnote 3, at nn.342–67 and accompanying text.

7

Adoption”); and Commission Interpretation Regarding Standard of Conduct for Investment Advisers,
Investment Advisers Act Release No. 5248 (June 5, 2019) (“Final Fiduciary Interpretation”).

“reasonably be interpreted to permit,” arguing that to qualify for exclusion from regulation underbroker-dealers to provide investment advice beyond what the solely incidental prong shouldwith clear and succinct information regarding key aspects of their brokerage and advisory6

dealer exclusion. One commenter suggested that the Reg. BI Proposal, if adopted, would allow

conduct for investment advisers, as well as a rulemaking intended to provide retail investors

5

Proposal and the Relationship Summary Proposal. 10 Other commenters suggested that ourstandard of conduct for broker-dealers when providing recommendations. 4 The Commission

broker-dealer activities that relate to the investment advice they provide in light of the Reg. BI

discretion. 7 While some commenters addressed when a broker-dealer’s advisory services are

exclusion show that Congress excluded broker-dealer advisory services from the scope of the

On April 18, 2018, the Commission proposed a rulemaking intended to enhance thecomment on the scope of the exclusion as applied to a broker-dealer’s exercise of investment

Advisers Act because of this aspect of their business. 2 On the other hand, the limitations of the

101

II.

model as an option for retail customers seeking investment advice” 12 was inconsistent with the

See Reg. BI Proposal, supra footnote 3, at text accompanying n.31.

See CFA Letter (stating that certain aspects of the Relationship Summary Proposal and the Reg. BI
Proposal indicated that broker-dealers were in an “advice relationship” in a manner that does not “remotelysound like advice that is ‘solely incidental to’ the conduct of their business as a broker or dealer”); Kitces
Letter (arguing that referring to the broker-dealer model as a “model for advice” is in contravention of thebroker-dealer exclusion because “advice can only be incidental if it occurs by chance, as a consequence ofa product sale, or without intent to give advice”).

See Comment Letter of Securities Arbitration Clinic, St. Vincent DePaul Legal Program, Inc., St. John’s
University School of Law (Aug. 7, 2018) (“St. John’s Clinic Letter”).

Furthermore, interested parties have for years expressed their views to the Commission on what they
believe the broker-dealer exclusion requires, including disagreements with the Commission’s interpretationof the exclusion. See, e.g., Comment Letter of Consumer Federation of America (Sept. 20, 2004) (arguingthat the Commission should “define ‘solely incidental’ in a way that hews closely to what commentersdescribed as Congress’s clear intent to provide only a very narrow exclusion”), available athttps://www.sec.gov/rules/proposed/s72599/s72599-1101.pdf.

We received comments requesting guidance with respect to the solely incidental prong on both activities.
See infra section II.C.

12

13

14

15

16

5

See NASAA Letter.

11

complements each of the rules and forms we are adopting, which, among other things, areSee, e.g., Investment Trusts and Investment Companies: Hearings on S. 3580 Before a Subcomm. of the
Senate Committee on Banking and Currency, 76th Cong., 3d Sess. 736 (1940) (“Hearings on S. 3580”)(testimony of Dwight C. Rose, president of the Investment Counsel Association of America) (“Most . . .
investment dealers . . . and brokers advise on investment problems, either as an auxiliary service withoutcharge, or for specific charges allocated to this specific function.”).

19

6

For an extensive discussion of broker-dealer practice in the years leading up to enactment of the Advisers
Act, from which this summary is drawn, see 2005 Adopting Release, supra footnote 17; Certain BrokerDealers Deemed Not to Be Investment Advisers, Investment Advisers Act Release No. 2340 (Jan. 6, 2005)(“2005 Proposing Release”).

traditional brokerage services was referred to as “brokerage house advice” in a leading study ofadvisory services that a broker or dealer may
y provide, namely: (i) exercising investment

18

and paid a fee. 19 The advice that broker-dealers provided as an auxiliary component ofincidental prong. To illustrate how the interpretation functions, we discuss its application to two

See Reg. BI Adoption; Relationship Summary Adoption; Final Fiduciary Interpretation, supra footnote 6.
We also received a few comments in response to the Reg. BI Proposal and the Relationship Summary
Proposal requesting that the Commission provide guidance on the special compensation prong. See, e.g.,
CFA Letter (arguing, among other points, that special compensation would constitute any compensation
other than commissions for trade execution); Comment Letter of Coalition of Mutual Fund Investors (Aug.
8, 2018) (“Mutual Fund Investors Letter”) (arguing that special compensation should include all assetbased compensation and third-party fees from mutual funds and their advisers). We are not providing
guidance on the special compensation prong in this Release as we do not believe our views on this prong
require additional clarification. The Commission has considered the meaning of the special compensation
prong on previous occasions. See, e.g., Interpretive Rule Under the Advisers Act Affecting Broker-Dealers,
Investment Advisers Act Release No. 2652 (Sept. 24, 2007) (“2007 Proposing Release”); Certain BrokerDealers Deemed Not to Be Investment Advisers, Investment Advisers Act Release No. 2376 (Apr. 12,
2005) (“2005 Adopting Release,” in which, as discussed infra at footnote 38 and accompanying text, theCommission adopted a rule that a court vacated on grounds that did not address our interpretive positions
relating to the solely incidental prong). The comments we received in response to requests for comment to
the Reg. BI Proposal and the Relationship Summary Proposal did not demonstrate that there is significant
disagreement with our interpretation of that prong.

alternatively, as a distinct advisory service for which their advisory clients separately contracted

interpretation to confirm and clarify the Commission’s position with respect to the solely

17

brokerage services for which their brokerage customers paid fixed commissions and,consistent with the solely incidental prong. 15 In light of these comments, we are adopting thisdiscretion over customer accounts and (ii) account monitoring. 16 Our interpretation

investment advice. 18 They did so in two distinct ways: as an auxiliary part of traditional

When the Advisers Act was enacted in 1940, broker-dealers regularly provided

A. Historical Context and Legislative History

that there is disagreement about when the provision of broker-dealer investment advice isinterpretation of the solely incidental prong “vague.” 14 The comments we received demonstratesolely incidental prong. 13 Another commenter called the Commission’s previously articulated

services offered by investment advisers and broker-dealers. 17

commenters thought that the Commission’s expressed support for maintaining the “broker-dealer
INTERPRETATION AND APPLICATION

intended individually and collectively to enhance investor understanding of the relationships andthe Advisers Act, broker-dealers should only “be able to provide very limited advice….” 11 Two102

See, e.g., REPORT OF PUBLIC EXAMINING BD. ON CUSTOMER PROTECTION TO N.Y. STOCK EXCHANGE (Aug.
31, 1939), at 3:21

SECURITY MARKETS, supra footnote 20, at 634; WALL STREET, supra footnote 20, at 254.

SECURITY MARKETS, supra footnote 20, at 640–43; WALL STREET, supra footnote 20, at 277–85.

SECURITY MARKETS, supra footnote 20, at 641.

Id. at 643 (defining “chart reading” as “the study of the charted course of prices and volume of trading overa long period of time in order to discover typical conformations recurring in the past with sufficientfrequency to be utilized in the present as a basis of judgment as to impending price changes”).

See Advisers Act Release No. 2, supra footnote 2; see also SECURITY MARKETS, supra footnote 20, at 646,
653 (referring to “investment supervisory departments” and “special investment management departments”
of broker-dealers). In general, contemporaneous literature used the term “investment counsel” or“investment counselor” to refer to those who provided investment advice for a fee and whose advisory

23

24

25

26

27

7

SECURITY MARKETS, supra footnote 20, at 633; WALL STREET, supra footnote 20, at 254 (“Thisinformation includes current and comparative data for a number of years on earning and earnings records,
capitalization, financial position, dividend record, comparative balance sheets and income statements . . .
production and operating statistics, territory and markets served, officers and directors of the company andmuch other information of value to the investor in appraising the value of a security.”).

22

The customer entrusts the broker with information regarding his financial affairs and dealings
which he expects to be kept in strict confidence. Frequently he looks to the broker to perform
a whole series of functions relating to the investment of his funds and the care of his
securities. Although he could secure similar services at his bank, he asks his broker, as amatter of choice and convenience, to hold credit balances of cash pending instructions; toretain securities in safekeeping and to collect dividends and interest; to advise him respecting
investments; and to lend him money on suitable collateral.

See Twentieth Century Fund, THE SECURITY MARKETS (1935) (“SECURITY MARKETS”) at 633–46(discussing “brokerage house advice”); see also Charles F. Hodges, WALL STREET (1930) (“WALL
STREET”) at 253–85; SEC, REPORT ON INVESTMENT COUNSEL, INVESTMENT MANAGEMENT, INVESTMENT
SUPERVISORY, AND INVESTMENT ADVISORY SERVICES (1939) (H.R. Doc. No. 477) (“INVESTMENTCOUNSEL REPORT”) at n.1.

INVESTMENT COUNSEL REPORT, supra footnote 20, at 27.

29

8

INVESTMENT COUNSEL REPORT, supra footnote 20, at 1. The study was conducted pursuant to section 30of the Public Utility Holding Company Act of 1935 [15 U.S.C. 79z-4]; see Hearings on S. 3580, suprafootnote 19, at 995–96.

28

relationship with clients had a supervisory or managerial character. See id. at 646 (defining “investment
counselor” as “an individual, institution, organization, or department of an institution or organization which
undertakes for a fee to advise or to supervise the investment of funds by, and on occasion to manage theinvestment accounts of, clients”). Under the Advisers Act, “investment counsel” is a defined subset of the“investment advisers” to whom the Act applies. See section 208(c) of the Act.

definition, Congress necessarily rejected arguments presented during its hearings that legitimate

issues or promulgates analyses or reports concerning securities....” In adopting this broadin, purchasing, or selling securities, or who, for compensation and as part of a regular business,through publications or writings, as to the value of securities or as to the advisability of investing

person who, for compensation, engages in the business of advising others, either directly or“investment adviser”—those subject to the requirements of the Act—broadly to include “anyCongress responded by passing the Advisers Act. Section 202(a)(11) of the Act definedin the business of providing investment advice for compensation.

hearings on what ultimately became the Advisers Act in favor of regulating the persons engaged

Investment Counsel Report, representatives of the Commission testified at the congressionalorganization and operation of investment counsel institutions.””29 Based on the findings of thefirms whose sole business was providing “investment counsel” services. 27

20

investment counselors and ‘tipster’ organizations; and (b) those problems involving thedepartments” within broker-dealer firms that advised customers for a fee in the same manner as

the Commission’s study had identified two broad classes of problems relating to investment
advisers that warranted legislation: “(a) the problem of distinguishing between bona fide

The second way in which broker-dealers dispensed advice was to charge a distinct

fee for advisory services, which typically were provided through special “investment advisory

reading.”report to Congress (the “Investment Counsel Report”), the Commission informed Congress thatsituations; 24 information about income tax schedules and tax consequences; 25 and “chart

26

investment advisers, including broker-dealers with investment advisory departments. 28 In abusiness and financial conditions; market letters and special analyses of companies’

Between 1935 and 1939, the Commission conducted a congressionally mandated study ofinvestment trusts and investment companies and in connection with this study surveyed23

22

about various corporations, municipalities, and governments; broad analyses of general

the time. 20 “Brokerage house advice” was extensive and varied, 21 and included information

103

business as a broker or dealer and who receives no special compensation therefor”—i.e., thebroker-dealer exclusion.

Investment Counsel Association of America. 31 Instead, in responding to such views,

congressional committee members repeatedly observed that those whose business was limited to

Id. at 738–39, 745–49, 751–53 (Senators Wagner and Hughes). David Schenker, chief counsel for theCommission’s study, offered the following observations in response to investment counselors’ arguments
against the registration and regulation required by the Act:

32

33

Hearings on S. 3580, supra footnote 19, at 716–18, 736–38, 740-41, 744–45, 760, 763.

31

9

The exclusion for certain professionals in Advisers Act section 202(a)(11) is very similar to certain statelaw provisions governing investment counselors at the time, which excepted “brokers, attorneys, banks,savings and loan associations, trust companies, and certified public accountants.” See STATUTORYREGULATION OF INVESTMENT ADVISERS (prepared by the Research Department of the Illinois Legislative

Id. at 995–96. Eventually, members of the investment counsel industry agreed with the proposed
legislation. See id. at 1124; Investment Trusts and Investment Companies: Hearings on H.R. 10065 Before
a Subcomm. of the House Committee on Interstate and Foreign Commerce, 76th Cong., 3d Sess. (1940)(“Hearings on H.R. 10065”); see also S. REP. NO. 76-1775, 76th Cong., 3d Sess. 21 (1940); H.R. REP. NO.
76-2639, 76th Cong., 3d Sess. 27 (1940).

So the situation is that if you take their analysis, the only ones who would not be subject toregulation by the S.E.C. would be the people who are not subject to regulation by anybody atall. These investment counselors who appeared here are no different from the over-thecounter brokers and dealers or the members of the New York Stock Exchange.

Then there is another curious thing, Senator, that those people who are subject to supervisionby some authoritative body of some kind, such as securities dealers or investment bankers
have to register with us as brokers and dealers. People, who are brokers and members ofstock exchanges and are supervised by the stock exchanges. Curiously enough, the people in
the investment-counsel business who are supervised are not eligible for membership in theinvestment counsel association; because the association says that if you are in the brokerageor banking business you cannot be a member of the association.

Hearings on S. 3580, supra footnote 19, at 745–48; see also 2005 Adopting Release, supra footnote 17, at
n.62.

Broker-dealers were among these excluded30

advice incidental to their primaryy business.

2005 Adopting Release, supra footnote 17; 2005 Proposing Release, supra footnote 18.
See Advisers Act Release No. 2, supra footnote 2; see also 2005 Adopting Release, supra footnote 17.

35
36

10

See, e.g., Advisers Act Release No. 2, supra footnote 2; Applicability of the Investment Advisers Act toCertain Brokers and Dealers; Interpretation of the Term ‘Special Compensation’, Investment Advisers Act
Release No. 640 (Oct. 5, 1978); Applicability of the Investment Advisers Act to Financial Planners,
Pension Consultants, and Other Persons Who Provide Investment Advisory Services as a Component of
Other Financial Services, Investment Advisers Act Release No. 1092 (Oct. 8, 1987).

34

Council) reprinted in Hearings on S. 3580, supra footnote 19, at 1007. That report stated that “theinvestment advice furnished by these excepted groups would seem to be merely incidental to some otherfunction being performed by them.” Id.

Commission rejected the view that only minor, insignificant, or infrequent advice qualifies foradvice was not a determinant of whether the solely incidental prong was satisfied; thebusiness.” 36 The 2005 interpretation stated that the importance or frequency of the investment

excluding broker-dealers whose investment advice is given “solely as an incident of their regularconsistent with the Commission’s contemporaneous construction of the Advisers Act as

are reasonably related to the brokerage services provided to an account. 35 The interpretation was

the conduct of a broker-dealer’s business when the services are offered in connection with andbroad definition of “investment adviser” to the extent that such persons rendered investment

33

for example, the Commission stated that investment advisory services are “solely incidental to”

broker-dealer exclusion. 34 In adopting a rule regarding fee-based brokerage accounts in 2005,

The Commission and its staff have on several occasions discussed the scope of theConversely, the Advisers Act specifically excluded persons, among others, from the

were.

32

and questioned why they should not be subject to regulation even though other professionals

B. Scope of the Solely Incidental Prong of the Broker-Dealer Exclusiona broker-dealer who provides investment advice that is “solely incidental to the conduct of his

had passed laws regulating investment counselors and by private organizations, such as theproviding investment advice for compensation were subject to little if any regulatory oversight,

persons, as section 202(a)(11)(C) of the Act excludes from the definition of “investment adviser”

investment counselors 30 should be free from any oversight except, perhaps, by the few states that

104

product as the ‘primary’ goal of the transaction or the ‘primary’ business of the broker-dealer.” 45

prong. 38 In September 2007, we proposed to reinstate these interpretive positions. 39

See 482 F.3d 481 (D.C. Cir. 2007).

2007 Proposing Release, supra footnote 17.

631 F.3d 1153 (10th Cir. 2011).

Id. at 1163–64.

Id. at 1164.

38

39

40

41

42

11

See 2005 Adopting Release, supra footnote 17, at nn.139–42 and accompanying text.

37

advice that is not connected to the sale of securities—or whose primary business consists ofprimary business of selling securities.” 422 Thus, the court explained, “broker-dealers who giveincidental to its conduct as a broker-dealer if the advice is given “only in connection with theof the Advisers Act. 41 The court concluded that a broker-dealer’s investment advice is solely

To the extent that this interpretation is inconsistent with the Commission’s prior interpretations with respect
to the solely incidental prong, this interpretation supersedes those interpretations.
See Advisers Act section 202(a)(11) (definition of “investment adviser”).
Cf. 2005 Adopting Release, supra footnote 17 (“In general, investment advice is ‘solely incidental to’ theconduct of a broker-dealer’s business within the meaning of section 202(a)(11)(C) and to ‘brokerage
services’ provided to accounts… when the advisory services rendered are in connection with andreasonably related to the brokerage services provided.”). We have modified the wording of our

46

47
48

12

Id. at 1163.
Id. at 1166. In Thomas, the brokerage firm’s representative had conducted an analysis of the plaintiffs’
financial situation and advised them to purchase a particular financial product based in part on that analysis.
The plaintiffs alleged that the firm’s policy “required [representatives] to provide investment advice topotential customers as a means to sell more proprietary products” and that this policy was “so pervasivethat [representatives] allegedly gave financial advice to every customer to whom they sold a product.” Id.
at 1157. The Court rejected the plaintiffs’ contention that these facts rendered the advice so central to thetransaction that it could not be considered “solely incidental” to it. Because the representative’s advice“was closely related to the sale of the [product] and selling the [product] was the primary object of thetransaction,” the Court concluded, the advice was “solely incidental” to the representative’s conduct as a
broker. Id. at 1167.

45

Id.

44

43

securities transactions. 48 If a broker-dealer’s primary business is giving advice as to the valueinterpretations to be “persuasive” in light of its own analysis of the text of the solely incidental

prong of the broker-dealer exclusion as well as the legislative history and historical backgroundin connection with and is reasonably related to the broker-dealer’s primary business of effecting

transacting in securities 47 is consistent with the solely incidental prong if the advice is provided

solely incidental prong that we advanced in 2005 and 2007. The court found theseAs part of its analysis of the exclusion, the court looked to the interpretation of theprovision of advice as to the value and characteristics of securities or as to the advisability ofthat a broker had violated the Advisers Act by failing to disclose incentives to sell proprietaryproducts.

following interpretation. 46 We interpret the statutory language to mean that a broker-dealer’s

Circuit addressed the scope of the broker-dealer exclusion in the context of a private suit alleging

40of the prong, the Thomas decision, and the comments we have received, we are providing the2011, in Thomas v. Metropolitan Life Insurance Company, the Court of Appeals for the TenthBased on the text and history of the solely incidental prong, our previous interpretations

broker-dealer’s advice is relevant only insofar as the advice cannot supersede the sale of the

but not on grounds that addressedd our interpretive positions relating to the solely incidental

Since that time, a federal appellate court has addressed the solely incidental prong. In

broker-dealer’s primary business. 44 In the court’s view, “[t]he quantum or importance of the

Financial Planning Association v. SEC vacated the rule regarding fee-based brokerage accounts,

hinge upon “the quantum or importance” of a broker-dealer’s advice but on its relationship to thecourt also agreed with the Commission’s interpretations that the solely incidental prong does notservices in 1940 was often substantial and important to customers. 37

On March 30, 2007, the Court of Appeals for the District of Columbia Circuit ingiving advice—do not meet the [solely incidental] prong” of the broker-dealer exclusion. 43 The

the broker-dealer exclusion, noting that the advice broker-dealers gave as part of their brokerage

105purchase or sale of securities on behalf of customers on an ongoing basis. 52 At the same time,
the Commission has taken the position that some limited exercise of discretionary authority bybroker-dealers could be considered solely incidental to their business. 53

to customers, underscores that broker-dealer investment advice can be consequential even when

it is offered in connection with and reasonably related to the primary business of effecting

securities transactions.

13

Nothing in this interpretation alters the Commission’s 2006 interpretation of section 28(e) of the ExchangeAct, which, in the context of a client commission arrangement that otherwise satisfies section 28(e),permits a broker-dealer to be paid out of a pool of commissions for its research even if that broker-dealer
did not effect a securities transaction. See Commission Guidance Regarding Client Commission Practices
Under Section 28(e) of the Securities Exchange Act of 1934, Securities Exchange Act Release No. 54165(July 18, 2006), 71 FR 41978 (July 24, 2006).

interpretation to make clear that the broker-dealer’s primary business must also be effecting securities
transactions.

securities transactions; rather, the broker-dealer is making investment decisions relating to therelationship summary, which provides information about broker-dealer recommendation services

49

providing advice to customers that is in connection with and reasonably related to effecting

Final Extension of Temporary Exemption from the Investment Advisers Act for Certain Brokers andDealers, Investment Advisers Act Release No. 626 (Apr. 27, 1978) (“Advisers Act Release No. 626”).
See 2005 Proposing Release, supra footnote 18.
See Reg. BI Proposal, supra footnote 3, at nn.355–62 and accompanying text. Cf. NASD rule 2510
(allowing discretion only if a customer “has given prior written authorization to a stated individual orindividuals… in accordance with [FINRA] rule 3010”).

51

52
53

14

See Reg. BI Proposal, supra footnote 3, at nn.343–62 and accompanying text.

50

investment discretion over customer accounts and the extent to which the exercise of investment

We requested comment in the Reg. BI Proposal on a broker-dealer’s exercise ofCommission has explained that when a broker-dealer exercises investment discretion, it is not

the solely incidental prong. Indeed, our simultaneous adoption of (i) Regulation Best Interest,

relationships to which the protections of the Advisers Act are important.” 51 In particular, theincidental prong. Advice need not be trivial, inconsequential, or infrequent to be consistent withwhich raises the standard of conduct that applies to broker-dealer recommendations, and (ii) thestated that discretionary brokerage relationships “have many of the characteristics of the

could be considered solely incidental to the business of a broker-dealer. 50 The Commission has

exercise of investment discretion over customer accounts and the extent to which such practices

The Commission has for many years considered issues related to a broker-dealer’s

1. Investment Discretion

is not determinative as to whether or not the provision of advice is consistent with the solely

The quantum or importance of investment advice that a broker-dealer provides to a client

between the broker-dealer and the customer.

surrounding the broker-dealer’s business, the specific services offered, and the relationshipdealer satisfy
f the solely incidental prong is assessed based on the facts and circumstances

C. Guidance on Applying the Interpretation of the Solely Incidental Prong

customer accounts and (ii) account monitoring.

incidental to its business as a broker-dealer. 49 Whether advisory services provided by a broker-

guidance on the application of the interpretation to (i) exercising investment discretion overbusiness of effecting securities transactions, the broker-dealer’s advisory services are not solely

To illustrate the application of this interpretation in practice, we provide the following

services are not offered in connection with or are not reasonably related to the broker-dealer’sand characteristics of securities or the advisability of transacting in securities, or if the advisory

106

Commenters expressed varying views, however, on the extent

investment discretion granted by a customer on a temporary or limited basis, as discussed below.
A broker-dealer with unlimited discretion to effect securities transactions possesses ongoing
authority over the customer’s account indicating a relationship that is primarily advisory in“Exchange Act”), noting that section 3(a)(35) focuses on “the level of authority, decision-

making ability, influence – and ultimately, control – an intermediary has over another’s money”

and arguing that those with section 3(a)(35) investment discretion have a heightened likelihood

See, e.g., Comment Letter of Financial Planning Coalition (Aug. 7, 2018) (“FPC Letter”) (“[A] brokerdealer’s provision of unfettered discretionary investment advice should never be considered ‘solely
incidental’ to its business as a broker-dealer.” (emphasis removed)); CFA Letter; IFS Letter.

See, e.g., Comment Letter of Invesco Advisers, Inc. (Aug. 7, 2018) (“Discretionary management over an
account, whether or not temporary, is not within the scope of the ‘solely incidental’ exclusion.”); IAA
Letter; CFA Institute Letter.

Under Exchange Act section 3(a)(35), a person exercises “investment discretion” with respect to an accountif, directly or indirectly, such person (A) is authorized to determine what securities or other property shallbe purchased or sold by or for the account, (B) makes decisions as to what securities or other property shallbe purchased or sold by or for the account even though some other person may have responsibility for suchinvestment decisions, or (C) otherwise exercises such influence with respect to the purchase and sale ofsecurities or other property by or for the account as the Commission, by rule, determines, in the public
interest or for the protection of investors, should be subject to the operation of the provisions of this title
and the rules and regulations thereunder. 15 U.S.C. 78c(a)(35).

See FPC Letter (noting also that several federal and state courts have used factors similar to those in section
3(a)(35) to impose a fiduciary standard). Another commenter also suggested using Exchange Act section
3(a)(35) “investment discretion” as a basis for establishing whether discretion is not solely incidental for
purposes of the broker-dealer exclusion, with an exception for investment discretion “that a customer grants
on a temporary or limited basis.” See Comment Letter of Pickard Djinis and Pisarri (Aug. 14, 2018)(“Pickard Letter”).

55

56

57

58

15

See Relationship Summary Proposal, supra footnote 6, at nn.363–67 and accompanying text; see also id. at
nn.343–62 and accompanying text for a description of the Commission’s historical approaches.

54of mismanagement and abuse of another’s money.

We view unlimited investment discretion as a person having the ability or authority to buy and sell
securities on behalf of a customer without consulting the customer—i.e., having responsibility for acustomer’s trading decisions.
The Commission has in the past stated that the quintessentially supervisory or managerial character ofinvestment discretion warrants the protection of the Advisers Act. See Amendment and Extension of
Temporary Exemption from the Investment Advisers Act for Certain Brokers and Dealers, Investment
Advisers Act Release No. 471 (Aug. 20, 1975); see also 2005 Proposing Release, supra footnote 18; 2005
Adopting Release, supra footnote 17.

60

61

16

See Comment Letter of the Securities Industry and Financial Markets Association (Aug. 7, 2018) (“SIFMA
Letter”).

59

or other manner and lacks the comprehensive and continuous character of investment discretion

advisory in nature. Generally, these are situations where the discretion is limited in time, scope,

temporary or limited discretion in a way that is not indicative of a relationship that is primarily

We recognize, however, that there are situations where a broker-dealer may exercise

provision of advice in such context is not incidental to effecting securities transactions.

nature; such a level of discretion by a broker-dealerr is so comprehensive and continuous that the3(a)(35) of the Exchange Act with respect to any of its accounts, except for certain instances of“investment discretion” in section 3(a)(35) of the Securities Exchange Act of 1934 (theAnother commenter suggested that, whileprong for broker-dealers to exercise “investment discretion” as that term is defined in section

the Commission should interpret the solely incidental prong through the lens of the definition of58

with the meaning of section 202(a)(11)(C). 61 It would be inconsistent with the solely incidental

investment discretion should be governed by the Advisers Act. 56 One commenter suggested that57

unlimited discretion 60 would not be solely incidental to the business of a broker-dealer consistent

Applying our interpretation of the solely incidental prong, a broker-dealer’s exercise of

the investment discretion warranting the protections of the Advisers Act. 59

the business of a broker-dealer. Several commenters suggested that the exercise of any

to which the exercise of temporary or limited discretion could be considered solely incidental toincidental” investment advice.

where temporary or limited discretion does not have the supervisory or managerial character ofCommenters agreed that the exercise of unlimited discretion should not be considered “solely

55

discretion generally should subject a broker-dealer to the Advisers Act, there are certain cases

discretion should be considered solely incidental to the business of a broker-dealer. 54

107

discretion lasting a few months may be indicative of a business or customer relationship that is
primarily advisory in nature.

of time; (iii) as to cash management, such as to exchange a position in a money market fund foranother money market fund or cash equivalent;; (iv) to purchase or sell securities to satisfy

may be similar obligations to a broker-dealer or a third party whereby a broker-dealer may be
authorized to make a purchase or sale, such as a sale to satisfy a collateral call.

specified credit rating and maturity; and (vii) to purchase or sell a security or type of security

limited by specific parameters established by the customer. We view these examples of62

17

Certain changes to money market fund regulation and operations have been implemented since our priorinterpretations. See Money Market Fund Reform; Amendments to Form PF, Investment Company Act
Release No. 31166 (Jul. 23, 2014) (removing an exemption that permitted institutional non-government
money market funds to maintain a stable net asset value, while maintaining such exemption for certain
other money market funds, and applying certain fees and gates reforms to institutional non-government
money market funds and retail money market funds but not to government money market funds, among
other changes). In light of these changes, differently categorized money market funds may have different
investment characteristics. Accordingly, we anticipate that FINRA will be reviewing the application of therules that apply to the exercise of broker-dealer discretion in this context. The Commission staff also will
evaluate broker-dealer exercise of discretionary cash management to consider whether additional measures
may be necessary.

63

18

See 2005 Adopting Release, supra footnote 17, at nn.178–81 and accompanying text; 2007 Proposing
Release, supra footnote 17, at n.13 and accompanying text.

2. Account Monitoring

between bonds or other securities in this particular context.

realize a tax loss on the original position (new wording italicized). We see no distinction

prong for broker-dealers to sell specific bonds or other securities in order to permit a customer toThird, we would view it as consistent with our interpretation of the solely incidental

customer obligations that the customer has specified (new wording italicized). In our view, there

permit a customer to realize a tax loss on the original position; (vi) to purchase a bond with atemporary or limited discretion as typically consistent with the broker-dealer exclusion because

prong for broker-dealers to purchase or sell securities to satisfy margin requirements, or otherspecific bonds or other securities and purchase similar bonds or other securities in order tomargin requirements, or other customer obligations that the customer has specified; (v) to sell

Second, we would view it as consistent with our interpretation of the solely incidental

unavailable for a limited period of time. Depending on the facts and circumstances, a period ofpurchase or sell a security or type of security when a customer is unavailable for a limited period

62

the time a broker-dealer may purchase or sell a security or type of security when a customer isdefinite amount or quantity of a specified security; (ii) on an isolated or infrequent basis, toFirst, we are not including authority for a period “not to exceed a few months” relating to

make three refinements.

and therefore outside the scope of the solely incidental prong—include discretion:: (i) as to theprice at which or the time to execute an order given by a customer for the purchase or sale of atemporary or limited discretion that may be consistent with the solely incidental prong. 63 We

that, standing alone, would not support the conclusion that a relationship is primarily advisory—

consistent with the solely incidental prong. Taking into consideration specific examples that

We have previously described a similar list of situations that we would consider

securities transactions and do not suggest that the broker-dealer’s primary business is providing
investment advice.

circumstances would be relevant to determining whether temporary or limited discretion iscommenters have suggested in the past, instances of temporary or limited investment discretion

they are in connection with and reasonably related to a broker-dealer’s business of effectingthat would suggest that the relationship is primarily advisory. The totality of the facts and108

customer—and, if applicable, contacts that customer to provide a recommendation based on thatvoluntary review—the broker-dealer’s actions are in connection with and reasonably related tothe broker-dealer’s primary business of effecting securities transactions.. Absent an agreement

broker-dealer and thus the broker-dealer exclusion should not be available to broker-dealers who

provide such services. 64 Another commenter suggested that broker-dealers providing

personalized investment advice about securities on an ongoing basis should not be able to rely on

See Mutual Fund Investors Letter (“[The SEC] should… subject broker-dealers to the Advisers Act when
they are providing personalized investment advice about securities on an ongoing basis… The term ‘solely
incidental’ should be interpreted narrowly and only include personalized investment advice that is onetime, temporary, or limited in scope.”).

See IAA Letter; Pickard Letter.

65

66

19

See FPC Letter (“[B]roker-dealers that enter into agreements with retail customers to provide ongoing
monitoring for purposes of recommending changes in investments should be considered investment
advisers and subject to fiduciary obligations under the Advisers Act. Entering into an agreement to provide
ongoing monitoring… goes beyond advice that is solely incidental to the conduct of business as a brokerdealer….”); IAA Letter (same quotation as the FPC Letter); IAA Letter (“[A] broker-dealer that agrees toprovide a retail customer ongoing monitoring for purposes of recommending changes in investments would
not be providing services that are solely incidental to its business as a broker-dealer under the 2007
interpretation.”); Fisher Letter (“Brokers can give ongoing investment advice… yet still not be required toregister as an investment adviser…. [T]he boundaries [between brokers and investment advisers] havepractically been erased.”).

64

would not be consistent with the solely incidental prong. A broker-dealer that agrees to

We disagree with commenters who suggested that any monitoring of customer accounts

supervisory or management services”) should subject a broker-dealer to the Advisers Act.
66

ADV (i.e., securities portfolios for which the broker-dealer provides “continuous and regular

overseen assets to meet the definition of “regulatory assets under management” under Form

69

See id. Monitoring agreed to by the broker-dealer would result in a recommendation to purchase, sell, or
hold a security each time the agreed-to monitoring occurs and would be covered by Regulation BestInterest. See id. (“For example, if a broker-dealer agrees to monitor the retail customer’s account on aquarterly basis, the quarterly review and each resulting recommendation to purchase, sell, or hold, will be arecommendation subject to Regulation Best Interest.”).

68

20

See Reg. BI Adoption, supra footnote 6, at section II.B.2.b. Any recommendation made to the retailcustomer as a result of such voluntary review would be subject to Regulation Best Interest. See id.

In agreeing to provide any monitoring services, broker-dealers should also consider that a broker-dealer
that separately contracts or charges a separate fee for advisory services is providing investment advice thatis inconsistent with the broker-dealer exclusion. See, e.g., 2005 Adopting Release, supra footnote 17.
Broker-dealers should also consider that, even where such monitoring is consistent with the solely
incidental prong, the broker-dealer must also receive no special compensation for the activity to be eligible
for the broker-dealer exclusion. Broker-dealers receive special compensation where there is a clearly
definable charge for investment advice. See Advisers Act Release No. 626, supra footnote 51; see also
Advisers Act Release No. 2, supra footnote 2; 2007 Proposing Release, supra footnote 17 (describing thisinterpretation as the Commission’s “longstanding view”).

The guidance in this section applies when a broker-dealer agrees to monitor a customer’s account. See Reg.
BI Adoption, supra footnote 6, at section II.B.2 for a discussion of what constitutes such an agreement.

67

monitoring is in connection with and reasonably related to the broker-dealer’s primary business

policies and procedures that, if followed, would help demonstrate that any agreed-uponsolely incidental to a broker-dealer’s brokerage business. Broker-dealers may consider adopting

We decline to delineate every circumstance where agreed-upon monitoring is and is not

Interest), we do not consider this voluntary review to be “account monitoring.”” 69

with the customer (which would be required to be disclosed pursuant to Regulation Best

customer’s account for the purposes of determining whether to provide a recommendation to theadvisory service that is solely incidental to the primary securities transaction business of aCommenters also suggested that providing services that cause

voluntarily and without any agreement with the customer, reviews the holdings in a retailmonitoring for the purpose of recommending changes to a customer’s investments is not an

the broker-dealer exclusion.

reasonably related to effecting securities transactions. 668 IIn contrast, when a broker-dealer,

exclusion. Some commenters suggested that a broker-dealer’s agreement to provide ongoing65

hold recommendations may still be considered to provide advice in connection with andmonitorr 67 a retail customer’s account on a periodic basis for purposes of providing buy, sell, ormonitor the status and performance of a customer’s account while relying on the broker-dealer

We received several comments regarding the extent to which a broker-dealer may

109

The two examples of advisory services we discuss in this Release—investment discretion and monitoring—cannot be viewed and interpreted in isolation. For example, it would not be consistent with the solely
incidental prong for a broker-dealer to exercise unlimited investment discretion over a customer accounteven if its monitoring activities do comport with the solely incidental prong. Thus, any policies andprocedures that a broker-dealer adopts to ensure that the broker-dealer’s activities are in connection withand reasonably related to the broker-dealer’s primary business of effecting securities transactions similarly
should not grant the broker-dealer the ability or authority to buy and sell securities on behalf of a customer
as part of periodic account monitoring, except in circumstances of temporary or limited discretion thatwould be consistent with the solely incidental prong, as discussed above.

In the Final Fiduciary Interpretation, we note that investment advisers may consider whether written
policies and procedures relating to monitoring would be appropriate under Advisers Act rule 206(4)-7. See
Final Fiduciary Interpretation, supra footnote 6, at section II.B.3.

71

72

21

Additionally, the Reg. BI Adoption confirms that a dual registrant is an investment adviser solely withrespect to those accounts for which a dual registrant provides investment advice or receives compensationthat subjects it to the Advisers Act. See Reg. BI Adoption, supra footnote 6, at section II.B.3.d.
Determining the capacity in which a dual registrant is making a recommendation is a facts andcircumstances test. See id.

customers of those broker-dealers, and the market for financial advice more broadly. 73 As of

As noted in the Reg. BI Adoption, and consistent with the relationship summary adopted in the
Relationship Summary Adoption, the scope and frequency of a broker-dealer’s monitoring is a material fact
relating to the type and scope of services provided to a retail customer and thus is required to be disclosed
under Regulation Best Interest. See id. at section II.B.2; cf. Relationship Summary Adoption, suprafootnote 6. A broker-dealer disclosing to a customer that the broker-dealer will provide monitoring
constitutes an agreement to monitor. See supra footnote 67.

70

Assets are estimated by Total Assets (allowable and non-allowable) from Part II of the FOCUS filings(Form X-17A-5 Part II, available at https://www.sec.gov/files/formx-17a-5_2.pdf) and correspond tobalance sheet total assets for the broker-dealer. The Commission does not have an estimate of the total
amount of customer assets for broker-dealers. We estimate broker-dealer size from the total balance sheet
assets as described above.
For purposes of this analysis, a dual registrant is any firm that is dually registered with the Commission as
an investment adviser and a broker-dealer. Because this number does not include the number of broker-

74

75

22

See Relationship Summary Adoption, supra footnote 6, at section IV.B (discussing the market for financial
advice generally).

73

Commission as investment advisers. 775 D
Dual registrant firms hold over 90 million (63%) of thethe Commission as of December 2018, 363 broker-dealers were dually registered with thetotal broker-dealer assets as reported on Form X-17a-5. 74 Of the broker-dealers registered withcustomer accounts. In total, these broker-dealers have over $4.3 trillion in total assets, which are

December 2018, there were approximately 3,764 registered broker-dealers with over 140 million

dealer exclusion would affect broker-dealers and their associated persons as well as the

The Commission’s interpretation regarding the solely incidental prong of the broker-

A. Backgrounddiscuss these effects below.

of the solely incidental prong, the interpretation could have potential economic effects. We

incidental prong of the broker-dealer exclusion and its application to certain brokerage activities

The Commission will consider further comment on its interpretation of the solely

brokerage accounts.

72

policies and procedures that distinguish the level and type of monitoring in advisory and

Additionally, dually registered firms may similarly consider adopting

recognizes that to the extent a broker-dealer’s practices are not consistent with this interpretation

to the broker-dealer’s primary business of effecting securities transactions, such as providing

continuous monitoring.

does not itself create any new legal obligations for broker-dealers. Nonetheless, the Commission

results in the provision of advisory services that are not in connection with or reasonably related

771

understanding of the solely incidental prong of the broker-dealer exclusion. The interpretation

not permit a broker-dealer to agree to monitor a customer account in a manner that in effect

The Commission’s interpretation above is intended to advise the public of itssell, or hold recommendation to the customer.70 However, such policies and procedures should

ECONOMIC CONSIDERATIONS

III.

comments received, the Commission may, but need not, supplement this interpretation.

and procedures that a registered representative may agree to monitor a customer’s account at

specific time frames (e.g., quarterly) for the purpose of determining whether to provide a buy,

to evaluate whether additional guidance might be appropriate in the future. Based on anyof effecting securities transactions.. For example, broker-dealers may include in their policies

110

Commission’s interpretation, incur costs to evaluate the Commission’s interpretation and assess

we requested data and other information related to the nature and magnitude of discretionary

the solely incidental prong to conduct more advisory activities than this interpretation permits

dealer exclusion.

As with other

See Reg. BI Proposal, supra footnote 3.

See Comment Letter of UBS (noting that broker-dealers have existing arrangements where they exercise
temporary or limited discretion, such as discretion as to time and price, and that those types of discretion“do not present the sort of risks about which the SEC is concerned with respect to the exercise of unfettereddiscretion”) (emphasis added); SIFMA Letter (noting that there are instances in which temporary or limited
discretion, such as discretion as to prices at which securities can be purchased, does not have thesupervisory or managerial character of the investment discretion warranting the protections of the Advisers
Act).

77

78

23

Some broker-dealers may be affiliated with investment advisers without being dually registered. From
Question 10 on Form BD, 2,098 broker-dealers report that directly or indirectly, they either control, arecontrolled by, or under common control with an entity that is engaged in the securities or investment
advisory business. Comparatively, 2,691 (19.57%) SEC-registered investment advisers report an affiliatethat is a broker-dealer in Section 7A of Schedule D of Form ADV, including 1,916 SEC-registeredinvestment advisers that report an affiliate that is a registered broker-dealer. Approximately 74% of total
assets under management of investment advisers are managed by these 2,691 investment advisers.

76

dealers who are also registered as state investment advisers, the number undercounts the full number ofbroker-dealers that operate in both capacities.

circumstances in which the Commission speaks to the legal obligations of regulated entities, wedealer exercises more than temporary or limited investment discretion.

78

consistently with the solely incidental prong with respect to any accounts over which the broker-

For example, to the extent that broker-dealers respond to the interpretation by limiting the levels of
discretion that they provide for their customers, execution quality (including the execution price) may beaffected due to the delays encountered when the broker-dealer must contact a customer to proceed with atransaction.

80

24

The above application of our interpretation of the solely incidental prong to the exercise of investment
discretion is generally consistent with the position taken in the 2005 Adopting Release and preliminarily
taken in the 2007 Proposing Release. We believe that many broker-dealers changed their practices withrespect to investment discretion in light of those releases, and thus those practices likely are consistent with
our interpretation of the solely incidental prong.

79

investors. 80

those services, or a diminished number of broker-dealers offering commission-based services tomay, in turn, result in decreased competition in the market for certain services, increased fees for

broker-dealers are dually registered firms and their customers are also advisory clients. This

dealers from further developing certain services for their customers, except to the extent thosecertain customers, a reduction in certain business activities, and could preclude those broker-

may choose to no longer provide such services to customers. This could result in a loss ofadjust their practices to make them consistent. In particular, broker-dealers that have interpretedThis interpretation generally confirms the scope of the solely incidental prong of the broker-

Generally, we believe that few, if any, broker-dealers take the view that they act

dealers to recognize that their practices are inconsistent with the solely incidental prong and to

This interpretation may produce economic effects to the extent that it causes any broker-

economic effects. 79

their practices to be consistent with the solely incidental prong of the broker-dealer exclusion.

regulatory obligations, including costs related to understanding their practices and structuring

Broker-dealers currently incur ongoing costs related to compliance with their legal andincidental prong to be different from what is set forth in this interpretation, there could be somescope of permissible monitoring or other permissible advisory activities under the solely

analysis of potential economic effects stemming from this interpretation.

B. Potential Economic Effects

its applicability to them. Further, to the extent certain broker-dealers currently understand theservices offered by broker-dealers, but did not receive any data or information to inform our77

acknowledge that affected firms, including those whose practices are consistent with theoverall 140 million customer accounts held by broker dealers. 76 As part of the Reg. BI Proposal,

111systems, procedures, and policies.

interpretation. To the extent that this interpretation would lead to a decline in the supply ofservices of different types of financial service providers, decreasing the demand for services ofbroker-dealers and increasing the demand for the services of investment advisers. 81

their account and would find similar advice from investment advisers to be too costly or

unattainable (e.g., due to account minimum requirements). For example, certain broker-dealers

prong of the broker-dealer exclusion. Such broker-dealers may respond to this interpretation byincreasing the amount of limited discretionary services or monitoring services that they agree toprovide to their customers. Investors that have established relationships with such broker-dealers
may benefit from more efficient access to these services and may demand these services frombroker-dealers rather than becoming clients of investment advisers. While additional provisionof these services by broker-dealers also raises the risk of regulatory arbitrage because similar

dealers determine that their services are not consistent with this interpretation, they may choose

to register as investment advisers with the Commission, or one or more states, as applicable.

Such broker-dealers would bear costs in choosing to register as investment advisers to continue

providing those services, and their clients may face higher fees as a result. Alternatively, broker-

dealers that have investment adviser affiliates may seek to place existing customers in advisoryaccounts instead of brokerage accounts.

25

incidental exclusion they may face lower costs associated with migration of brokerage accounts

compliance policies and procedures to account for activities that are inconsistent with the solely

dealers with affiliated advisers are able to utilize their existing regulatory infrastructure andinterpretation will choose their responses based on their circumstances. For example, if broker81

26

To the extent this interpretation results in altered compliance costs for standalone broker-dealers, nonaffected standalone broker-dealers (i.e., those standalone broker-dealers that already are in compliance withthe solely incidental prong as we have interpreted it), dual registrants, investment advisers, and otherfinancial intermediaries that are not required to register as investment advisers (such as banks, trust
companies, insurance companies, commodity trading advisers, and municipal advisors) may to a varying
degree gain business at these affected broker-dealers’ expense.

activities would be regulated under different regimes, we believe this risk will be mitigated by

activities to recognize that they may perform such activities consistent with the solely incidentalchoose instead to stop offering such monitoring services. Further, to the extent that any broker-

Broker-dealers that determine they must change business practices as a result of thiscauses any broker-dealers that to date have avoided performing limited discretion and otherthat they may agree to provide their customers is consistent with this interpretation and may

This interpretation may also produce some overall economic effects to the extent that it

advisory accounts of affiliates, this interpretation could result in a shift in the demand for the

who might otherwise benefit from broker-dealers providing investment advice with respect to

may incur costs to adopt or revise policies and procedures to ensure that the account monitoring

register as investment advisers, or encourage migration of customer’s brokerage accounts toparticular customers), it could reduce the efficiency of portfolio construction for those investors

To the extent that broker-dealers choose to discontinue providing certain services,

become registered investment advisers, as they are more likely to need to undertake newcertain services offered by broker-dealers (or a decline in broker-dealers offering services toregistration and compliance to be greater for any standalone broker-dealers that choose tochoose not to register as investment advisers and adjust their business practices in light of thisand activities to investment advisory accounts. By contrast, we expect the costs of regulatoryof this interpretation, their customers may receive fewer advisory services if these broker-dealers

To the extent any broker-dealers have been providing advisory services beyond the scope

112

Vanessa A. Countryman,
Acting Secretary.

recommendations.

List of Subjects in 17 CFR Part 276

Part 276 is amended by adding Release No. IA–5249 and the release date of June*

Page Number]

By the Commission.

Investment Adviser

from the Definition ofBroker-Dealer Exclusion

Number] FR [Insert FR[Insert FR Volume*

Fed. Reg. Vol. and Page

Incidental Prong of theJune 5, 2019

* *

Date

Regarding the Solely

Commission Interpretation IA-5249

27

*

*

*

Release No.

Subject

5, 2019, to the end of the list of interpretive releases to read as follows:

1.

THEREUNDERADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONSPART 276–INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT

Code of Federal Regulations as set forth below:

For the reasons set out above, the Commission is amending title 17, chapter II of theAmendments to the Code of Federal Regulations

Securities.

Dated: June 5, 2019the adoption of rules that enhance the standard of conduct that applies to broker-dealer

28

113

1

15 U.S.C. 80b. Unless otherwise noted, when we refer to the Advisers Act, or any paragraph of theAdvisers Act, we are referring to 15 U.S.C. 80b of the United States Code, at which the Advisers Act is
codified, and when we refer to rules under the Advisers Act, or any paragraph of these rules, we arereferring to title 17, part 275 of the Code of Federal Regulations [17 CFR 275], in which these rules are
published.

the standard of conduct for investment advisers under the Advisers Act [15 U.S.C. 80b].1

SUPPLEMENTARY INFORMATION: The Commission is publishing an interpretation of

Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-8549.

IArules@sec.gov, Investment Adviser Regulation Office, Division of Investment Management,

Matthew Cook, Senior Counsel; or Jennifer Songer, Branch Chief, at (202) 551-6787 or

FOR FURTHER INFORMATION CONTACT: Olawalé Oriola, Senior Counsel;

DATES: Effective July 12, 2019.

Investment Advisers Act of 1940 (the “Advisers Act” or the “Act”).

publishing an interpretation of the standard of conduct for investment advisers under the

SUMMARY: The Securities and Exchange Commission (the “SEC” or the “Commission”) is

Under federal law, an investment adviser is a fiduciary. 2 The fiduciary duty an

INTRODUCTION

Potential Economic Effects

B.

See Regulation Best Interest, Exchange Act Release No. 34-86031 (June 5, 2019) (“Reg. BI Adoption”).
This final interpretation regarding the standard of conduct for investment advisers under the Advisers Act(“Final Interpretation”) interprets section 206 of the Advisers Act, which is applicable to both SEC- and3

2

SEC v. CapitalpGains Research Bureau, Inc.,, 375 U.S. 180,, 194 (1963)() (“SEC(
v. CapitalpGains”);); see also
infra
f footnotes 34–44 and accompanying
p y g text;; Investment Adviser Codes of Ethics,, Investment Advisers
Act Release No. 2256 (July
Programsof Investment Companies
and Investment( y 2,, 2004);); Compliancepgp); Electronic Filingg by
y Investment
Advisers,, Investment Advisers Act Release No. 2204 ((Dec. 17,, 2003);
p( p 5,,
Advisers;; Proposed
Amendments to Form ADV,, Investment Advisers Act Release No. 1862 (Apr.
) Investment advisers also have antifraud liability with respect to prospective clients under section
2000).
206 of the Advisers Act.

2

strategy involving securities. 3 Both investment advisers and broker-dealers play an important

to a retail customer when it makes a recommendation of any securities transaction or investment

the Commission’s investor protection efforts is the standard of conduct that a broker-dealer owes

a duty of loyalty, is important to the Commission’s investor protection efforts. Also important toinvestment adviser owes to its client under the Advisers Act, which comprises a duty of care anddI.

BackgroundA.

ECONOMIC CONSIDERATIONS

Duty of Loyalty

AGENCY: Securities and Exchange Commission.
C.

Duty to Provide Advice and Monitoring over the Course of theRelationship

3.

ACTION: Interpretation.

Duty to Seek Best Execution

2.

Commission Interpretation Regarding Standard of Conduct for Investment Advisers

Duty to Provide Advice that is in the Best Interest of the Client

Duty of CareB.
1.

Application of Duty Determined by Scope of Relationship

A.

III.

Overview of Comments

INVESTMENT ADVISERS’ FIDUCIARY DUTYA.

INTRODUCTION

RIN: 3235-AM36

II.

I.

TABLE OF CONTENTS[Release No. IA-5248; File No. S7-07-18]

17 CFR Part 276

SECURITIES AND EXCHANGE COMMISSION

Conformed to Federal Register version

資料３

114

under the Advisers Act. 11 Some of these commenters suggested modifications to or withdrawal
Further, the Commission recognizes that many advisers provide impersonal investment advice. See, e.g.,
Advisers Act rule 203A-3 (defining “impersonal investment advice” in the context of defining “investment
adviser representative” as “investment advisory services provided by means of written material or oral
statements that do not purport to meet the objectives or needs of specific individuals or accounts”). This
Final Interpretation does not address the extent to which the Advisers Act applies to different types ofimpersonal investment advice.
In the Proposed Interpretation, the Commission also requested comment on: licensing and continuing
education requirements for personnel of SEC-registered investment advisers; delivery of accountstatements to clients with investment advisory accounts; and financial responsibility requirements for SECregistered investment advisers, including fidelity bonds. We are continuing to evaluate the comments
received in response.
Comment letters submitted in File No. S7-09-18 are available on the Commission’s website athttps://www.sec.gov/comments/s7-09-18/s70918.htm. We also considered those comments submitted inFile No. S7-08-18 (Comments on Relationship Summary Proposal) and File No. S7-07-18 (Comments on
Reg. BI Proposal). Those comments are available on the Commission’s website athttps://www.sec.gov/comments/s7-08-18/s70818.htm and https://www.sec.gov/comments/s7-0718/s70718.htm.
See, e.g., Comment Letter of North American Securities Administrators Association (Aug. 23, 2018)(“NASAA Letter”) (stating that the Proposed Interpretation is a “useful resource”); Comment Letter of
Invesco (Aug. 7, 2018) (“Invesco Letter”) (agreeing that “there are benefits to having a clear statement
regarding the fiduciary duty that applies to an investment adviser”).
See, e.g., Comment Letter of Pickard Djinis and Pisarri LLP (Aug. 7, 2018) (“Pickard Letter”) (noting theCommission’s “efforts to synthesize case law, legislative history, academic literature, prior Commission
releases and other sources to produce a comprehensive explanation of the fiduciary standard of conduct”);
Comment Letter of Dechert LLP (Aug. 7, 2018) (“Dechert Letter”) (“It is crucial that any universal
interpretation of an adviser’s fiduciary duty be based on sound and time-tested principles. Given the
difficulty of defining and encompassing all of an adviser’s responsibilities to its clients, while also
accommodating the diversity of advisory arrangements, interpretive issues will arise in the future.”);Comment Letter of the Hedge Funds Subcommittee of the Federal Regulation of Securities Committee of
the Business Law Section of the American Bar Association (Aug. 24, 2018) (“ABA Letter”) (“We note at

7

8

9

10

11

connection with the publication of these proposals, the Commission published for comment a

separate proposed interpretation regarding the standard of conduct for investment advisers underForm CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail
Communications and Restrictions on the use of Certain Names or Titles, Investment Advisers Act Release
No. 4888 (Apr. 18, 2018) (“Relationship Summary Proposal”).

Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers; Request forComment on Enhancing Investment Adviser Regulation, Investment Advisers Act Release No. 4889 (Apr.
18, 2018).

5

6

3

Regulation Best Interest, Exchange Act Release No. 83062 (Apr. 18, 2018) (“Reg. BI Proposal”).

4

state-registered investment advisers, as well as other investment advisers that are exempt from registrationor subject to a prohibition on registration under the Advisers Act. This Final Interpretation is intended tohighlight the principles relevant to an adviser’s fiduciary duty. It is not, however, intended to be theexclusive resource for understanding these principles. Separately, in various circumstances, case law,statutes (such as the Employee Retirement Income Security Act of 1974 (“ERISA”)), and state law impose
obligations on investment advisers. In some cases, these standards may differ from the standard enforcedby the Commission.

and in some cases clarify—certain aspects of the fiduciary duty that an investment adviser owes

continue to believe, that it is appropriate and beneficial to address in one release and reaffirm—4covering the broad scope of the fiduciary duty that an investment adviser owes to its clients

succinct information regarding the key aspects of their brokerage and advisory relationships. 5 In

the Advisers Act (“Proposed Interpretation”). 6 We stated in the Proposed Interpretation, and weInterpretation was useful, 10 some noted the challenges inherent in a Commission interpretation

and bar associations. 9 Although many commenters generally agreed that the Proposed

required standard of conduct for broker-dealers 4 and provide retail investors with clear and

On April 18, 2018, the Commission proposed rules and forms intended to enhance theinvestment advisers, trade or professional organizations, law firms, consumer advocacy groups,

choices regarding the types of relationships they can have, the services they can receive, and how

they can pay for those services.

We received over 150 comment letters on our Proposed Interpretation from individuals,

Overview of CommentsA.

we are publishing this Final Interpretation with some clarifications to address comments. 8

dealers have different types of relationships with investors, offer different services, and havedifferent compensation models. This variety is important because it presents investors withto its clients under section 206 of the Advisers Act.7 After considering the comments received,role in our capital markets and our economy more broadly. Investment advisers and broker-

115

See, e.g., Comment Letter of Cambridge Investment Research Inc. (Aug. 7, 2018) (“Cambridge Letter”)(stating that “greater clarity on all aspects of an investment adviser’s fiduciary duty will improve the ability
to craft such policies and procedures, as well as support the elimination of confusion for retail clients andinvestment professionals”); Comment Letter of Institutional Limited Partners Association (Aug. 6, 2018)(“ILPA Letter 1”) (“Interpretation will provide more certainty regarding the fiduciary duties owed byprivate fund advisers to their clients.”); Comment Letter of New York City Bar Association (Jun. 26, 2018)(“NY City Bar Letter”) (stating that the uniform interpretation of an investment adviser’s fiduciary duty isnecessary).

Some commenters suggested that we codify the Proposed Interpretation. See, e.g., Comment Letter of Roy
Tanga (Apr. 25, 2018); Comment Letter of Financial Engines (Aug. 6, 2018) (“Financial Engines Letter”);
ILPA Letter 1; Comment Letter of AARP (Aug. 7, 2018) (“AARP Letter”); Comment Letter of Gordon
Donohue (Aug. 6, 2018); Comment Letter of Financial Planning Coalition (Aug. 7, 2018) (“FPC Letter”).

13

14

5

See, e.g., Comment Letter of L.A. Schnase (Jul. 30, 2018) (urging the Commission not to issue the
Proposed Interpretation in final form, or at least not without substantial rewriting or reshaping); Comment
Letter of Money Management Institute (Aug. 7, 2018) (“MMI Letter”) (urging the Commission to “revise
the interpretation so that it reflects the common law principles in which an investment adviser’s fiduciary
duty is grounded”); Dechert Letter (recommending that we withdraw the Proposed Interpretation andinstead rely on existing authority and sources of law, as well as existing Commission practices forproviding interpretive guidance, in order to define the source and scope of an investment adviser’s
fiduciary duty).

12

the outset that it is difficult to capture the nature of an investment adviser’s fiduciary duty in a broadstatement that has universal applicability.”).

The Commission has previously recognized the broad scope of section 206 of the Advisers Act in a varietyof contexts. See, e.g., Investment Advisers Act Release 2106, supra footnote 15; Timbervest, LLC, et al.,Advisers Act Release No. 4197 (Sept. 17, 2015) (Commission Opinion) (“ [O]nce an investment advisory
relationship is formed, the Advisers Act does not permit an adviser to exploit that fiduciary relationship bydefrauding his client in any investment transaction connected to the advisory relationship.”); see also SEC
v. Lauer, 2008 WL 4372896, at 24 (S.D. Fla. Sept. 24, 2008) (“Unlike the antifraud provisions of the
Securities Act and the Exchange Act, Section 206 of the Advisers Act does not require that the activity be‘in the offer or sale of any’ security or ‘in connection with the purchase or sale of any security.’”); Thomas
P. Lemke & Gerald T. Lins, Regulation of Investment Advisers (2013 ed.), at § 2:30 (“[T]he SEC has …
applied [sections 206(1) and 206(2)] where fraud arose from an investment advisory relationship, eventhough the wrongdoing did not specifically involve securities.”).
See SEC v. Capital Gains, supra footnote 2; see also In the Matter of Arleen W. Hughes, Exchange Act
Release No. 4048 (Feb. 18, 1948) (“Arleen Hughes”) (Commission Opinion) (discussing the relationship of

17

18

6

See SEC v. Capital Gains, supra footnote 2 (discussing the history of the Advisers Act, and how equitableprinciples influenced the common law of fraud and changed the suits brought against a fiduciary, “which
Congress recognized the investment adviser to be”).

16

advice which was not disinterested.” 118 An adviser’s fiduciary duty is imposed under theview, adopting rule text is not necessary to achieve our goal in this Final Interpretation ofTransamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 17 (1979) (“Transamerica Mortgage v.
Lewis”) (“§ 206 establishes federal fiduciary standards to govern the conduct of investment advisers.”)(quotation marks omitted); Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 471, n.11 (1977) (indiscussing SEC v. Capital Gains, stating that the Supreme Court’s reference to fraud in the “equitable”
sense of the term was “premised on its recognition that Congress intended the Investment Advisers Act toestablish federal fiduciary standards for investment advisers”); SEC v. Capital Gains, supra footnote 2;
Amendments to Form ADV, Investment Advisers Act Release No. 3060 (July 28, 2010) (“Investment
Advisers Act Release 3060”) (“Under the Advisers Act, an adviser is a fiduciary whose duty is to serve thebest interests of its clients, which includes an obligation not to subrogate clients’ interests to its own,”
citing Proxy Voting by Investment Advisers, Investment Advisers Act Release No. 2106 (Jan. 31, 2003)(“Investment Advisers Act Release 2106”)).

interest which might incline an investment adviser—consciously
adviser—r consciously or unconsciously—to
unconsciously—
y to render

allowing them flexibility to meet that standard
d in tthe
he context of their specific services. In our

15

relationship” as well as a Congressional intent to “eliminate, or at least to expose, all conflicts ofcontinue as it expresses broadly the standard
d to which investment advisers are held while

reaffirming and in some cases clarifying certain aspects of the fiduciary duty.

reflects a Congressional recognition “of the delicate fiduciary nature of an investment advisory

forth in specific statute or rule text.. We believe that this principles-based approach should

is broad and applies to the entire adviser-client relationship. 17 The fiduciary duty to which
advisers are subject is not specifically defined in the Advisers Act or in Commission rules, but

The relationship between

an investment adviser and its client has long been based on fiduciary principles not generally set

Some commenters requested that we adopt rule text instead.

relationships with their clients under the Advisers Act. 116 The investment adviser’s fiduciary duty
14

clarification on its application. 13

The Advisers Act establishes a federal fiduciary duty for investment advisers. 115 ThisINVESTMENT ADVISERS’ FIDUCIARY DUTY

fiduciary duty is based on equitable common law principles and is fundamental to advisers’

II.

Interpretation, they had differing views on aspects of the fiduciary duty and in some cases sought

fiduciary duty comprises a duty of care and a duty of loyalty, as described in the Proposedof the Proposed Interpretation.12 Although most commenters agreed that an investment adviser’s

116

Id.; Transamerica Mortgage v. Lewis, supra footnote 15 (“[T]he Act’s legislative history leaves no doubtthat Congress intended to impose enforceable fiduciary obligations.”). Some commenters questioned thestandard to which the Advisers Act holds investment advisers. See, e.g., Comment Letter of Stark & Stark,
PC (undated) (“The duty of care at common law and under the Advisers Act only requires that advisers not
be negligent in performing their duties.”) (internal citation omitted); Comment Letter of Institutional
Limited Partners Association (Nov. 21, 2018) (“ILPA Letter 2”) (“The Advisers Act standard is a lower
simple ‘negligence’ standard.”). Claims arising under Advisers Act section 206(2) are not scienter-basedand can be adequately pled with only a showing of negligence. Robare Group, Ltd., et al. v. SEC, 922 F.3d
468, 472(D.C. Cir. 2019) (“Robare v. SEC”); SEC v. Steadman, 967 F.2d 636, 643, n.5 (D.C. Cir. 1992)(citing SEC v. Capital Gains, supra footnote 2) (“[A] violation of § 206(2) of the Investment Advisers Act
may rest on a finding of simple negligence.”); SEC v. DiBella, 587 F.3d 553, 567 (2d Cir. 2009) (“thegovernment need not show intent to make out a section 206(2) violation”); SEC v. Gruss, 859 F. Supp. 2d653, 669 (S.D.N.Y. 2012) (“Claims arising under Section 206(2) are not scienter-based and can beadequately pled with only a showing of negligence.”). However, claims arising under Advisers Act section
206(1) require scienter. See, e.g., Robare v. SEC; SEC v. Moran, 922 F. Supp. 867, 896 (S.D.N.Y. 1996);
Carroll v. Bear, Stearns & Co., 416 F. Supp. 998, 1001 (S.D.N.Y. 1976).

See, e.g., Investment Advisers Act Release 2106, supra footnote 15. These duties were generally
recognized by commenters. See, e.g., Comment Letter of Consumer Federation of America (Aug. 7, 2018)(“CFA Letter”); Comment Letter of the Investment Adviser Association (Aug. 6, 2018) (“IAA Letter”);
Comment Letter of Investments & Wealth Institute (Aug. 6, 2018); Comment Letter of Raymond James(Aug. 7, 2018); FPC Comment Letter. But see Dechert Letter (questioning the sufficiency of support for a
duty of care).

20

21

7

See SEC v. Capital Gains, supra footnote 2 (noting that the “declaration of policy” in the original bill,which became the Advisers Act, declared that “the national public interest and the interest of investors areadversely affected … when the business of investment advisers is so conducted as to defraud or mislead
investors, or to enable such advisers to relieve themselves of their fiduciary obligations to their clients. It ishereby declared that the policy and purposes of this title, in accordance with which the provisions of thistitle shall be interpreted, are to mitigate and, so far as is presently practicable to eliminate the abuses
enumerated in this section”) (citing S. 3580, 76th Cong., 3d Sess., § 202 and Investment Trusts andInvestment Companies, Report of the Securities and Exchange Commission, Pursuant to Section 30 of the
Public Utility Holding Company Act of 1935, on Investment Counsel, Investment Management, Investment
Supervisory, and Investment Advisory Services, H.R. Doc. No. 477, 76th Cong. 2d Sess., 1, at 28)(emphasis added).

19

trust and confidence between the client and a dual registrant and stating that the registrant was a fiduciaryand subject to liability under the antifraud provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1934).

Investment Advisers Act Release 3060, supra footnote 15 (adopting amendments to Form ADV and statingthat “under the Advisers Act, an adviser is a fiduciary whose duty is to serve the best interests of its clients,
which includes an obligation not to subrogate clients’ interests to its own,” citing Investment Advisers Act
Release 2106, supra footnote 15). See SEC v. Tambone, 550 F.3d 106, 146 (1st Cir. 2008) (“SEC v.
Tambone”) (“Section 206 imposes a fiduciary duty on investment advisers to act at all times in the bestinterest of the fund…”); SEC v. Moran, 944 F. Supp. 286, 297 (S.D.N.Y 1996) (“SEC v. Moran”)(“Investment advisers are entrusted with the responsibility and duty to act in the best interest of theirclients.”). Although most commenters agreed that an adviser has an obligation to act in its client’s bestinterest, some questioned whether the Proposed Interpretation appropriately considered the best interest
obligation as part of the duty of care, or whether it instead should be considered part of the duty of loyalty.
See, e.g., MMI Letter; Comment Letter of Investment Company Institute (Aug. 7, 2018) (“ICI Letter”).
See infra footnotes 67-70 and accompanying text for a more detailed discussion of informed consent andhow it is generally considered on an objective basis and may be inferred.

23

24

8

Arthur B. Laby, The Fiduciary Obligations as the Adoption of Ends, 56 Buffalo Law Review 99 (2008);
see also Restatement (Third) of Agency, §2.02 Scope of Actual Authority (2006) (describing a fiduciary’s
authority in terms of the fiduciary’s reasonable understanding of the principal’s manifestations andobjectives).

22

An adviser’s fiduciary duty is imposed under the Advisers Act in recognition of the

A. Application of Duty Determined by Scope of Relationshipadviser’s obligation to act in the best interest of its client.

provide informed consent to the conflict. 24 We believe this is another part of an investment

consciously or unconsciously—
y to render advice which is not disinterested such that a client can
unconsciously—toand fair disclosure of all conflicts of interest which might incline an investment adviser—rclient’s objectives. Under its duty of loyalty, an investment adviser must eliminate or make fullinvestment adviser to provide investment advice in the best interest of its client, based on thethe duty of loyalty. As discussed in more detail below, in our view, the duty of care requires anbest interest of its client is an overarching principle that encompasses both the duty of care andand a duty of loyalty. 21 This fiduciary duty requires an adviser “to adopt the principal’s goals,

loyalty obligations has been characterized as requiring the investment adviser to act in the “bestcannot place its own interests ahead of the interests of its client. This combination of care andinterest” of its client at all times. 223 In our view, an investment adviser’s obligation to act in the

It is made enforceable by the antifraud provisions of the

An investment adviser’s fiduciary duty under the Advisers Act comprises a duty of care

Advisers Act.

220

enactment of the Advisers Act.

client and not subordinate its client’s interest to its own. In other words, the investment adviser

client and the desire “so far as is presently practicable to eliminate the abuses” that led to the119

objectives, or ends.” 22 This means the adviser must, at all times, serve the best interest of its

Advisers Act in recognition of the nature of the relationship between an investment adviser and a

117of the adviser’s services and limitations on its authority with substantial specificity (e.g., amandate to manage a fixed income portfolio subject to specified parameters, including
concentration limits and credit quality and maturity ranges). 28

time fee, to ongoing portfolio management for which a client may pay a periodic fee based on

the value of assets in the portfolio. Investment advisers also serve a large variety of clients, fromretail clients with limited assets and investment knowledge and experience to institutional clientsthat reflects the agreed-upon scope of the relationship. 29 A contract provision purporting toregardless of the services they provide or the types of clients they serve.

Several commenters asked that we clarify that an adviser and its client can tailor the scope of therelationship to which the fiduciary duty applies through contract. See, e.g., MMI Letter; Financial Engines
Letter; ABA Letter.

This Final Interpretation also applies to automated advisers, which are often colloquially referred to as“robo-advisers.” Automated advisers, like all SEC-registered investment advisers, are subject to all of therequirements of the Advisers Act, including the requirement that they provide advice consistent with thefiduciary duty they owe to their clients. See Division of Investment Management, Robo Advisers, IM
Guidance Update No. 2017-02 (Feb. 2017), available at https://www.sec.gov/investment/im-guidance2017-02.pdf (describing Commission staff’s guidance as to three distinct areas under the Advisers Act that
automated advisers should consider, due to the nature of their business model, in seeking to comply with
their obligations under the Advisers Act).

26

27

9

See, e.g., Hearings on S. 3580 before Subcommittee of the Senate Committee on Banking and Currency,
76th Cong., 3d Sess. (leading investment advisers emphasized their relationship of “trust and confidence”
with their clients); SEC v. Capital Gains, supra footnote 2 (citing same).

25

Advisers Act, that fiduciary duty must be viewed in the context of the agreed-upon scope of the

Because an adviser’s federal fiduciary obligations are enforceable through section 206 of the Advisers Act,we would view a waiver of enforcement of section 206 as implicating section 215(a) of the Advisers Act,
which provides that “any condition, stipulation or provision binding any person to waive compliance withany provision of this title. . . shall be void.” See also Restatement (Third) of Agency, § 8.06 Principal’sConsent (2006) (“[T]he law applicable to relationships of agency as defined in § 1.01 imposes mandatory
limits on the circumstances under which an agent may be empowered to take disloyal action. These limits
serve protective and cautionary purposes. Thus, an agreement that contains general or broad language
purporting to release an agent in advance from the agent’s general fiduciary obligation to the principal is
not likely to be enforceable. This is because a broadly sweeping release of an agent’s fiduciary duty may
not reflect an adequately informed judgment on the part of the principal; if effective, the release would
expose the principal to the risk that the agent will exploit the agent’s position in ways not foreseeable by
the principal at the time the principal agreed to the release. In contrast, when a principal consents tospecific transactions or to specified types of conduct by the agent, the principal has a focused opportunity
to assess risks that are more readily identifiable.”).

29

10See, e.g., infra text following footnote 35.

28

not act as a fiduciary, (ii) a blanket waiver of all conflicts of interest, or (iii) a waiver of any

waive the adviser’s federal fiduciary duty generally, such as (i) a statement that the adviser will

words, an adviser’s federal fiduciary duty may not be waived, though it will apply in a manner

sufficient flexibility to serve as an effective standard of conduct for investment advisers,

Although all investment advisers owe each of their clients a fiduciary duty under theof the relationship, the relationship in all cases remains that of a fiduciary to the client. In other

our experience, the principles-based fiduciary duty imposed by the Advisers Act has provided

While the application of the investment adviser’s fiduciary duty will vary with the scope

adviser to a registered investment company or private fund where the contract defines the scope

provide a wide range of services, from a single financial plan for which a client may pay a one-with very large portfolios and substantial knowledge, experience, and analytical resources. 27 In

limited restrictions on allocation) will be significantly different from the obligations of an

monitoring and periodically adjusting a portfolio of equity and fixed income investments with

With regard to the scope of the adviser-client relationship, we recognize that investment advisers

relationship by agreement, provided that there is full and fair disclosure and informed consent.

comprehensive, discretionary advice in an ongoing relationship with a retail client (e.g.,
26

relationship between the adviser and its client, and the adviser and its client may shape thatfrom the adviser’s fiduciary duty depend upon what functions the adviser, as agent, has agreed toassume for the client, its principal. For example, the obligations of an adviser providing

The adviser’s fiduciary duty is principles-based and applies to the entire

relationship between the adviser and the client. In particular, the specific obligations that flow

relationship between the adviser and its client. The fiduciary duty follows the contours of theconfidence.

25

nature of the relationship between an adviser and its client—a relationship of trust and118

Some commenters mentioned a 2007 No-Action Letter in which staff indicated that whether a clause in anadvisory agreement that purports to limit an adviser’s liability under that agreement (a so-called “hedge
clause”) would violate sections 206(1) and 206(2) of the Advisers Act depends on all of the surrounding
facts and circumstances. Heitman Capital Management, LLC, SEC Staff No-Action Letter (Feb. 12, 2007)(“Heitman Letter”). A few commenters indicated that the Heitman Letter expanded the ability ofinvestment advisers to private funds, and potentially other sophisticated clients, to disclaim their fiduciary
duties under state law in an advisory agreement. See, e.g., ILPA Letter 1; ILPA Letter 2. The commenters’descriptions of the Heitman Letter suggest that it may have been applied incorrectly. The Heitman Letter
does not address the scope or substance of an adviser’s federal fiduciary duty; rather, it addresses the extent
to which hedge clauses may be misleading in violation of the Advisers Act’s antifraud provisions. Anothercommenter agreed with this reading of the Heitman Letter. See Comment Letter of American Investment
Council (Feb. 25, 2019). In response to these comments, we express below the Commission’s views about
an adviser’s obligations under sections 206(1) and 206(2) of the Advisers Act with respect to the use ofhedge clauses. Accordingly, because we are expressing our views in this Final Interpretation, the Heitman
Letter is withdrawn.

3111This Final Interpretation makes clear that an adviser’s federal fiduciary duty may not be waived, though its
application may be shaped by agreement. This Final Interpretation does not take a position on the scope or
substance of any fiduciary duty that applies to an adviser under applicable state law. See supra footnote 3.
The question of whether a hedge clause violates the Advisers Act’s antifraud provisions depends on all of
the surrounding facts and circumstances, including the particular circumstances of the client (e.g.,sophistication). In our view, however, there are few (if any) circumstances in which a hedge clause in anagreement with a retail client would be consistent with those antifraud provisions, where the hedge clausepurports to relieve the adviser from liability for conduct as to which the client has a non-waivable cause ofaction against the adviser provided by state or federal law. Such a hedge clause generally is likely to
mislead those retail clients into not exercising their legal rights, in violation of the antifraud provisions,even where the agreement otherwise specifies that the client may continue to retain its non-waivable rights.
Whether a hedge clause in an agreement with an institutional client would violate the Advisers Act’s
antifraud provisions will be determined based on the particular facts and circumstances. To the extent thata hedge clause creates a conflict of interest between an adviser and its client, the adviser must address theconflict as required by its duty of loyalty.

See sections 206 and 215(a). Commenters generally agreed that a client cannot waive an investment
adviser’s fiduciary duty through agreement. See Dechert Letter; Comment Letter of Ropes & Gray LLP(Aug. 7, 2018) (“Ropes & Gray Letter”), at n.20; see also supra footnote 29. In the Proposed
Interpretation, we stated that “the investment adviser cannot disclose or negotiate away, and the investor
cannot waive, the federal fiduciary duty.” One commenter disputed this broad statement, believing that it
called into question “the ability of an investment adviser and client to define the scope of the adviser’s
services and duties.” ABA Letter; see also Financial Engines Letter. We have modified this statement toclarify that a general waiver of the fiduciary duty would violate that duty and to provide examples of such ageneral waiver.

30

regardless of the sophistication of the client.

31

specific obligation under the Advisers Act, would be inconsistent with the Advisers Act, 30

See, e.g., Suitability of Investment Advice Provided by Investment Advisers; Custodial Account Statements
for Certain Advisory Clients, Investment Advisers Act Release No. 1406 (Mar. 16, 1994) (“Investment
Advisers Act Release 1406”) (stating that advisers have a duty of care and discussing advisers’ suitability
obligations); Interpretive Release Concerning the Scope of Section 28(e) of the Securities Exchange Act of1934 and Related Matters, Exchange Act Release No. 23170 (Apr. 28, 1986) (“Exchange Act Release
23170”) (“an adviser, as a fiduciary, owes its clients a duty of obtaining the best execution on securities
transactions”). We highlight certain contexts, but not all, in which the Commission has addressed the dutyof care. See, e.g., Investment Advisers Act Release 2106, supra footnote 15.
In 1994, the Commission proposed a rule that would have made express the fiduciary obligation of
investment advisers to make only suitable recommendations to a client. Investment Advisers Act Release
1406, supra footnote 33. Although never adopted, the rule was designed, among other things, to reflect theCommission’s interpretation of an adviser’s existing suitability obligation under the Advisers Act. In
addition, we do not cite Investment Advisers Act Release 1406 as the source of authority for the view we
express here, which at least one comment letter suggested, but cite it merely to show that the Commission
has long held this view. See Comment Letter of the Managed Funds Association and the Alternative
Investment Management Association (Aug. 7, 2018) (indicating that the Commission’s failure to adopt the
proposed suitability rule means “investment advisers are not subject to an express ‘suitability’ standard

33

34

12

See Investment Advisers Act Release 2106, supra footnote 15 (stating that under the Advisers Act, “anadviser is a fiduciary that owes each of its clients duties of care and loyalty with respect to all services
undertaken on the client’s behalf, including proxy voting,” which is the subject of the release, and citing
SEC v. Capital Gains supra footnote 2, to support this point). This Final Interpretation does not address the
specifics of how an investment adviser might satisfy its fiduciary duty when voting proxies. See also
Restatement (Third) of Agency, § 8.08 (discussing the duty of care that an agent owes its principal as amatter of common law); Tamar Frankel & Arthur B. Laby, The Regulation of Money Managers (updated2017) (“Advice can be divided into three stages. The first determines the needs of the particular client.
The second determines the portfolio strategy that would lead to meeting the client’s needs. The third
relates to the choice of securities that the portfolio would contain. The duty of care relates to each of thestages and depends on the depth or extent of the advisers’ obligation towards their clients.”).

32of the client, including a duty to provide advice that is suitable for the client. 34 In order to

The duty of care includes a duty to provide investment advice that is in the best interest

1. Duty to Provide Advice that is in the Best Interest of the Clientand monitoring over the course of the relationship.

responsibility to select broker-dealers to execute client trades, and (iii) the duty to provide advice

client, (ii) the duty to seek best execution of a client’s transactions where the adviser has theincludes, among other things: (i) the duty to provide advice that is in the best interest of thehas discussed the duty of care and its components in a number of contexts. 33 The duty of care

As fiduciaries, investment advisers owe their clients a duty of care. 32 The Commission

B. Duty of Care

119financial plan where the investment adviser also provides advice on an ongoing basis, a change

and the nature and complexity of the anticipated investment advice.

35

13

Several commenters stated that the duty to make a reasonable inquiry into a client’s investment profile may
not apply in the institutional client context. See, e.g., Comment Letter of BlackRock, Inc. (Aug. 7, 2018);
Comment Letter of Teachers Insurance and Annuity Association of America (Aug. 7, 2018); Comment
Letter of Allianz Global Investors U.S. LLC (Aug. 7, 2018) (“Allianz Letter”); Comment Letter of John
Hancock Life Insurance Company (U.S.A.) (Aug. 3, 2018). Accordingly, we are describing the duty as aduty to have a reasonable understanding of the client’s objectives. While not every client will have an
investment profile, every client will have objectives. For example, an institutional client’s objectives may
be ascertained through its investment mandate.

under existing regulation”). We believe that this obligation to make only suitable recommendations to aclient is part of an adviser’s fiduciary duty to act in the best interest of its client. Accordingly, an adviser
must provide investment advice that is suitable for its client in providing advice that is in the best interest of
its client. See SEC v. Tambone, supra footnote 23 (“Section 206 imposes a fiduciary duty on investment
advisers to act at all times in the best interest of the fund….”); SEC v. Moran, supra footnote 23(“Investment advisers are entrusted with the responsibility and duty to act in the best interest of theirclients.”).

investment mandates from those clients. For example, an investment adviser engaged to advise

formulate a comprehensive financial plan for a retail client would generally need to obtain a

Such updating would not be needed with one-time investment advice. In the Proposed Interpretation, we
stated that an adviser “must” update a client’s investment profile in order to adjust the advice to reflect any
changed circumstances. We believe that any obligation to update a client’s investment profile, like thenature and extent of the reasonable inquiry into a retail client’s objectives, turns on what is reasonable
under the circumstances. Accordingly, we have revised the wording of this statement in this Final
Interpretation.

37

14

Investment Advisers Act Release 1406, supra footnote 33. After making a reasonable inquiry into theclient’s investment profile, it generally would be reasonable for an adviser to rely on information provided
by the client (or the client’s agent) regarding the client’s financial circumstances, and an adviser should not
be held to have given advice not in its client’s best interest if it is later shown that the client had misled theadviser concerning the information on which the advice was based.

36

understanding of the client’s objectives within that bond portfolio, but not the client’s objectives

on an institutional client’s investment grade bond portfolio would need to gain a reasonableof the reasonable inquiry into the client’s objectives generally is shaped by the specific

By contrast, in providing investment advice to institutional clients, the nature and extent

status could trigger an obligation to make a new inquiry.

collectively as the retail client’s “investment profile”). For example, an adviser undertaking tofinancial sophistication, investment experience, and financial goals (which we refer toshould, at a minimum, make a reasonable inquiry into the client’s financial situation, level ofin the relevant tax law or knowledge that the client has retired or experienced a change in marital

investment profile on which the adviser currently bases its advice. For instance, in the case of aand circumstances, including the nature of the client, the scope of the adviser-client relationship,

In order to develop a reasonable understanding of a retail client’s objectives, an adviser

the adviser is aware of events that have occurred that could render inaccurate or incomplete the

How an adviser develops a reasonable understanding will vary based on the specific facts

which the adviser must update the client’s investment profile in order to consider changes to any

care.

advice the adviser provides would itself turn on the facts and circumstances, including whether

objectives and adjust the advice to reflect any changed circumstances. 37 The frequency withon a reasonable understanding of the client’s objectives is a critical component of the duty of

Reasonable Inquiry into Client’s Objectives

client’s investment profile in order to maintain a reasonable understanding of the client’s

investment mandate. 35 The duty to provide advice that is in the best interest of the client based

In addition, it will generally be necessary for an adviser to a retail client to update theassets and debts, marital status, tax status, insurance policies, and financial goals. 36

The basis for such a reasonable understanding generally would include, for retail clients, anunderstanding of the investment profile, or for institutional clients, an understanding of therange of personal and financial information about the client such as current income, investments,

provide such advice, an adviser must have a reasonable understanding of the client’s objectives.

120

such derivatives or in securities on margin, or to invest in other complex instruments or otherproducts that may have limited liquidity.

of the fund’s investment guidelines and objectives. For advisers acting on specific investment

mandates for institutional clients, particularly funds, we believe that the obligation to update the38

15

Item 8 of Part 2A of Form ADV requires an investment adviser to describe its methods of analysis andinvestment strategies and disclose that investing in securities involves risk of loss which clients should be
prepared to bear. This item also requires that an adviser explain the material risks involved for eachsignificant investment strategy or method of analysis it uses and particular type of security it recommends,
with more detail if those risks are significant or unusual. Accordingly, investment advisers are required to
identify and explain certain risks involved in their investment strategies and the types of securities they
recommend. An investment adviser needs to consider those same risks in determining the clients to which
the adviser recommends those investments.

same security without the use of margin may be in the client’s best interest. However, forSee, e.g., Concept Release on the U.S. Proxy System, Investment Advisers Act Release No. 3052 (July 14,2010) (indicating that a fiduciary “has a duty of care requiring it to make a reasonable investigation todetermine that it is not basing its recommendations on materially inaccurate or incomplete information”).
See, e.g., In the Matter of Larry C. Grossman, Investment Advisers Act Release No. 4543 (Sept. 30, 2016)(Commission Opinion) (“In re Grossman”) (in connection with imposing liability on a principal of a

40

41

16

See Exchange-Traded Funds, Securities Act Release No. 10515 (June 28, 2018); SEC staff and FINRA,
Investor Alert, Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-HoldInvestors (Aug. 1, 2009); SEC Office of Investor Education and Advocacy, Investor Bulletin: ExchangeTraded Funds (ETFs) (Aug. 2012); see also FINRA Regulatory Notice 09-31, Non-Traditional ETFs –FINRA Reminds Firms of Sales Practice Obligations Relating to Leveraged and Inverse Exchange-Traded
Funds (June 2009).

recommending them to clients. 41

directionally speculative derivatives on their own may not. For that same client, investing in a39

where an investment adviser did not independently or reasonably investigate securities before

to hedge interest rate risk or other risks in the client’s portfolio, whereas investing in certain

particular security on margin may not be in the client’s best interest, even if investing in that

advice on materially inaccurate or incomplete information. 40 We have taken enforcement actionthat an adviser conduct a reasonable investigation into the investment sufficient not to base its

A reasonable belief that investment advice is in the best interest of a client also requires

initially, they would require daily monitoring by the adviser. 39

trading objective and, to the extent that such products are in the best interest of a retail client

objective, investing in certain derivatives may be in the client’s best interest when they are used

For example, when an adviser is advising a retail client with a conservative investment

objectives.

evaluated in the context of the portfolio that the adviser manages for the client and the client’s

Whether the advice is in a client’s best interest must be

may not be in the best interest of a retail client absent an identified, short-term, client-specificclients who can and are willing to tolerate the risks of those investments and for whom thepotential benefits may justify the risks.

traded products that are designed primarily as short-term trading tools for sophisticated investors

would involve considering, for example, whether investments are recommended only to those38

and objectives. As another example, complex products such as inverse or leveraged exchange-

apply heightened scrutiny to whether such investments fall within the retail client’s risk tolerance

An investment adviser must have a reasonable belief that the advice it provides is in thebest interest of the client based on the client’s objectives. The formation of a reasonable belief

or other thinly-traded securities—are in a retail client’s best interest, the adviser should generally

Reasonable belief that advice is in the best interest of the client

Similarly, when an adviser is assessing whether high risk products—such as penny stocks

client that has an appropriate risk tolerance, it may be in the best interest of the client to invest inregistered investment company or a private fund would need to have a reasonable understanding

client’s objectives would not be applicable except as may be set forth in the advisory agreement.

example, when advising a financially sophisticated client, such as a fund or other sophisticatedwithin its entire investment portfolio. Similarly, an investment adviser whose client is a121through a certain type of account (e.g., a commission-based brokerage account or a fee-based
advisory account) and advice about whether to roll over assets from one account (e.g., aretirement account) into a new or existing account that the adviser or an affiliate of the adviser

investment strategy involving a security or securities is in the best interest of the client. Whenconsidering similar investment products or strategies, the fiduciary duty does not necessarily

require an adviser to recommend the lowest cost investment product or strategy.

17

registered investment adviser for recommending offshore private investment funds to clients), stayed inpart, Investment Advisers Act No. 4563 (Nov. 1, 2016), response to remand, Investment Advisers Act
Release No. 4871 (Mar. 29, 2018) (reinstating the Sept. 30, 2016 opinion and order, except with respect tothe disgorgement and prejudgment interest in light of the Supreme Court’s decision in Kokesh v. SEC, 137
S. Ct. 1635 (2017)).

fund that invests in publicly-traded companies if the private equity fund was in the client’s best

private equity fund with relatively higher fees and significantly less liquidity as compared with aadvise a client with a high risk tolerance and significant investment experience to invest in aof that client’s objectives. For example, it might be consistent with an adviser’s fiduciary duty tothat outweigh cost and make the investment or strategy in the best interest of the client, in light

if the adviser reasonably concludes that there are other factors about the investment or strategy

the client’s objective. Rather, the adviser could recommend a higher-cost investment or strategy

We consider advice about “rollovers” to include advice about account type, in addition to any advice
regarding the investments or investment strategy with respect to the assets to be rolled over, as the advice
necessarily includes the advice about the account type into which assets are to be rolled over. As noted
below, as a general matter, an adviser’s duty to monitor extends to all personalized advice it provides to theclient, including, for example, in an ongoing relationship, an evaluation of whether a client’s account or
program type (for example, a wrap account) continues to be in the client’s best interest. See infra text
accompanying footnote 52.
Accordingly, in providing advice to a client or customer about account type, a financial professional who isdually licensed (i.e., an associated person of a broker-dealer and a supervised person of an investment
adviser (regardless of whether the professional works for a dual registrant, affiliated firms, or unaffiliatedfirms)) should consider all types of accounts offered (i.e., both brokerage accounts and advisory accounts)
when determining whether the advice is in the client’s best interest. A financial professional who is only asupervised person of an investment adviser (regardless of whether that advisory firm is a dual registrant oraffiliated with a broker-dealer) may only recommend an advisory account the adviser offers when theaccount is in the client’s best interest. If a financial professional who is only a supervised person of an

43

44

18

In addition, with respect to prospective clients, investment advisers have antifraud liability under section
206 of the Advisers Act, which, among other things, applies to transactions, practices, or courses ofbusiness which operate as a fraud or deceit upon prospective clients, including those regarding investment
strategy, engaging a sub-adviser, and account type. We believe that, in order to avoid liability under thisantifraud provision, an investment adviser should have sufficient information about the prospective clientand its objectives to form a reasonable basis for advice before providing any advice about these matters. At
the point in time at which the prospective client becomes a client of the investment adviser (e.g., at accountopening), the fiduciary duty applies. Accordingly, while advice to prospective clients about these mattersmust comply with the antifraud provisions under section 206 of the Advisers Act, the adviser must alsosatisfy its fiduciary duty with respect to any such advice (e.g., regarding account type) when a prospective
client becomes a client.

42

offers are not in the client’s best interest. 44

least remunerative (to the investment adviser) investment product or strategy without any further

analysis of other factors in the context of the portfolio that the adviser manages for the client andaccounts offered by the adviser and acknowledge to a client when the account types the adviser

client’s best interest by simply advising its client to invest in the lowest cost (to the client) or

manages. 43 In providing advice about account type, an adviser should consider all types ofaccount type. 42 Advice about account type includes advice about whether to open or invest

conditions, time horizon, and cost of exit—to consider when determining whether a security or

Moreover, an adviser would not satisfy its fiduciary duty to provide advice that is in theprovides to clients, including advice about investment strategy, engaging a sub-adviser, andAn adviser’s fiduciary duty applies to all investment advice the investment adviser

client’s overall portfolio.

interest because it provided exposure to an asset class that was appropriate in the context of theand potential benefits, volatility, likely performance in a variety of market and economic

investment objectives, characteristics (including any special or unusual features), liquidity, risks

generally be one of many important factors—such as an investment product’s or strategy’s

The cost (including fees and compensation) associated with investment advice would

122

Exchange Act Release 23170, supra footnote 33.

Id.

46

47

19

See Commission Guidance Regarding Client Commission Practices Under Section 28(e) of the Securities
Exchange Act of 1934, Exchange Act Release No. 54165 (July 18, 2006) (stating that investment advisers
have “best execution obligations”); Investment Advisers Act Release 3060, supra footnote 15 (discussing
an adviser’s best execution obligations in the context of directed brokerage arrangements and disclosure ofsoft dollar practices); see also Advisers Act rule 206(3)-2(c) (referring to adviser’s duty of best executionof client transactions).

45

investment adviser chooses to advise a client to consider a non-advisory account (or to speak with otherpersonnel at a dual registrant or affiliate about a non-advisory account), that advice should be in the bestinterest of the client. This same framework applies in the case of a prospective client, but any advice orrecommendation given to a prospective client would be subject to the antifraud provisions of the federal
securities laws. See supra footnote 42 and Reg. BI Adoption, supra footnote 3.

cost, “but whether the transaction represents the best qualitative execution.” 47 Further, an

the adviser. 46 In other words, the “determinative factor” is not the lowest possible commission

well as execution capability, commission rate, financial responsibility, and responsiveness” toservices in placing brokerage including, among other things, the value of research provided as

When seeking best execution, an adviser should consider “the full range and quality of a broker’s

the time of the transaction. Maximizing value encompasses more than just minimizing cost.

with the goal of maximizing value for the client under the particular circumstances occurring at

fulfills this duty by seeking to obtain the execution of securities transactions on behalf of a client

cost or proceeds in each transaction are the most favorable under the circumstances. An adviser

must seek to obtain the execution of transactions for each of its clients such that the client’s total

trades (typically in the case of discretionary accounts). 45 In meeting this obligation, an adviser

transactions where the adviser has the responsibility to select broker-dealers to execute client

An investment adviser’s duty of care includes a duty to seek best execution of a client’s

2. Duty to Seek Best Execution

3. Duty to Provide Advice and Monitoring over the Course of theRelationshipCf. SEC v. Capital Gains, supra footnote 2 (describing advisers’ “basic function” as “furnishing to clientson a personal basis competent, unbiased, and continuous advice regarding the sound management of theirinvestments” (quoting Investment Trusts and Investment Companies, Report of the Securities andExchange Commission, Pursuant to Section 30 of the Public Utility Holding Company Act of 1935, on
Investment Counsel, Investment Management, Investment Supervisory, and Investment Advisory Services,
H.R. Doc. No. 477, 76th Cong. 2d Sess., 1, at 28)). Cf. Barbara Black, Brokers and Advisers-What’s in a
Name?, 32 Fordham Journal of Corporate and Financial Law XI (2005) (“[W]here the investment adviser’s
duties include management of the account, [the adviser] is under an obligation to monitor the performanceof the account and to make appropriate changes in the portfolio.”); Arthur B. Laby, Fiduciary Obligationsof Broker-Dealers and Investment Advisers, 55 Villanova Law Review 701 (2010) (“Laby Villanova
Article”) (stating that the scope of an adviser’s activity can be altered by contract and that an adviser’s
fiduciary duty would be commensurate with the scope of the relationship) (internal citations omitted).
However, an adviser and client may scope the frequency of the adviser’s monitoring (e.g., agreement tomonitor quarterly or monthly and as appropriate in between based on market events), provided that there is
full and fair disclosure and informed consent. We consider the frequency of monitoring, as well as anyother material facts relating to the agreed frequency, such as whether there will also be interim monitoring
when there are market events relevant to the client’s portfolio, to be a material fact relating to the advisory
relationship about which an adviser must make full and fair disclosure and obtain informed consent as
required by its fiduciary duty.

49

50

20

Id. The Advisers Act does not prohibit advisers from using an affiliated broker to execute client trades.
However, the adviser’s use of such an affiliate involves a conflict of interest that must be fully and fairly
disclosed and the client must provide informed consent to the conflict. See also Interpretation of Section
206(3) of the Investment Advisers Act of 1940, Investment Advisers Act Release No. 1732 (Jul. 17, 1998)(discussing application of section 206(3) of the Advisers Act to certain principal and agency transactions).
Two commenters requested that we prescribe specific obligations related to best execution. Comment
Letter of the Healthy Markets Association (Aug. 7, 2018); Comment Letter of ICE Data Services (Aug. 7,2018). However, prescribing specific requirements of how an adviser might satisfy its best execution
obligations is outside of the scope of this Final Interpretation.

48

the adviser and the client have a relationship of limited duration, such as for the provision of aConversely, absent an express agreement regarding the adviser’s monitoring obligation, whenand monitoring will be relatively extensive as is consistent with the nature of the relationship. 50

client and is compensated with a periodic asset-based fee, the adviser’s duty to provide advice

the agreed relationship. 49 For example, when the adviser has an ongoing relationship with amonitoring at a frequency that is in the best interest of the client, taking into account the scope of

An investment adviser’s duty of care also encompasses the duty to provide advice andfor clients. 48

investment adviser should “periodically and systematically” evaluate the execution it is receiving

123

brokerage capacity. Thus, such firms and individuals generally should provide full and fairdisclosure about the circumstances in which they intend to act in their brokerage capacity and theclient, including, for example, in an ongoing relationship, an evaluation of whether a client’s

account or program type (for example, a wrap account) continues to be in the client’s best

Investment advisers also may consider whether written policies and procedures relating to monitoring
would be appropriate under Advisers Act rule 206(4)-7, which requires any investment adviser registeredor required to be registered under the Advisers Act to adopt and implement written policies and procedures
reasonably designed to prevent violation of the Advisers Act and the rules thereunder by the adviser and its
supervised persons.

Investment Advisers Act Release 3060, supra footnote 15 (adopting amendments to Form ADV and statingthat “[u]nder the Advisers Act, an adviser is a fiduciary whose duty is to serve the best interests of its
clients, which includes an obligation not to subrogate clients’ interests to its own,” citing Investment
Advisers Act Release 2106, supra footnote 15). The duty of loyalty applies not just to advice regarding
potential investments, but to all advice the investment adviser provides to an existing client, including
advice about investment strategy, engaging a sub-adviser, and account type. See supra text accompanying
footnotes 42-43.

For example, an adviser cannot favor its own interests over those of a client, whether by favoring its own
accounts or by favoring certain client accounts that pay higher fee rates to the adviser over other client
accounts. The Commission has brought numerous enforcement actions against advisers that allocatedtrades to their own accounts and allocated less favorable or unprofitable trades to their clients’ accounts.
See, e.g., SEC v. Strategic Capital Management, LLC and Michael J. Breton, Litigation Release No. 23867(June 23, 2017) (partial settlement) (adviser placed trades through a master brokerage account and thenallocated profitable trades to adviser’s account while placing unprofitable trades into the client accounts in

52

53

54

21

See also Laby Villanova Article, supra footnote 49, at 728 (2010) (“If an adviser has agreed to provide
continuous supervisory services, the scope of the adviser’s fiduciary duty entails a continuous, ongoing
duty to supervise the client’s account, regardless of whether any trading occurs. This feature of theadviser’s duty, even in a non-discretionary account, contrasts sharply with the duty of a broker
administering a non-discretionary account, where no duty to monitor is required.”) (internal citations
omitted).

See also Reg. BI Adoption, supra footnote 3, at 99.

56

22

See SEC v. Capital Gains, supra footnote 2 (“Failure to disclose material facts must be deemed fraud or
deceit within its intended meaning.”); Investment Advisers Act Release 3060, supra footnote 15 (“as afiduciary, an adviser has an ongoing obligation to inform its clients of any material information that could
affect the advisory relationship”); see also General Instruction 3 to Part 2 of Form ADV (“Under federal
and state law, you are a fiduciary and must make full disclosure to your clients of all material facts relating
to the advisory relationship.”).

55

violation of fiduciary duty and contrary to disclosures). In the Proposed Interpretation, we stated that the
duty of loyalty requires an adviser to “put its client’s interest first.” One commenter suggested that therequirement of an adviser to put its client’s interest “first” is very different from a requirement not to“subordinate” or “subrogate” clients’ interests, and is inconsistent with how the duty of loyalty had been
applied in the past. See Comment Letter of the Asset Management Group of the Securities Industry and
Financial Markets Association (Aug. 7, 2018) (“SIFMA AMG Letter”). Accordingly, we have revised thedescription of the duty of loyalty in this Final Interpretation to be more consistent with how we havepreviously described the duty. See Investment Advisers Act Release 3060, supra footnote 15 (“Under theAdvisers Act, an adviser is a fiduciary whose duty is to serve the best interests of its clients, which includes
an obligation not to subrogate clients’ interests to its own.”) (citing Investment Advisers Act Release 2106,
supra footnote 15). In practice, referring to putting a client’s interest first is a plain English formulationcommonly used by investment advisers to explain their duty of loyalty in a way that may be more
understandable to retail clients.

dealer or affiliated investment adviser.

its advice will be limited to a menu of certain products offered through its affiliated broker-

a dual registrant acting in its advisory capacity should disclose any circumstances under whichinterests. 54 To meet its duty of loyalty, an adviser must make full and fair disclosure to its clients

51

advisory capacity and how it would provide notification of any changes in capacity. 56 Similarly,

beginning of a relationship that clearly sets forth when the dual registrant would act in an

accomplished through a variety of means, including, among others, written disclosure at theown. 53 In other words, an investment adviser must not place its own interest ahead of its client’s

The duty of loyalty requires that an adviser not subordinate its clients’ interests to its

C. Duty of Loyalty

dealers and investment advisers and who serve the same client in both an advisory and ageneral matter, an adviser’s duty to monitor extends to all personalized advice it provides to thecircumstances in which they intend to act in their advisory capacity. This disclosure may beThis will be particularly relevant for firms or individuals that are dually registered as broker-

monitor will be indicated by the duration and nature of the agreed advisory arrangement. 51 As ainterest.

relationship include the capacity in which the firm is acting with respect to the advice provided.

other words, in the absence of any agreed limitation or expansion, the scope of the duty to

52of all material facts relating to the advisory relationship. 55 Material facts relating to the advisory

one-time financial plan for a one-time fee, the adviser is unlikely to have a duty to monitor. In

124

We believe that while full andAs noted above, an investment adviser’s obligation to act in the best interest of its client is an overarching
principle that encompasses both the duty of care and the duty of loyalty. See SEC v. Tambone, suprafootnote 23 (stating that Advisers Act section 206 “imposes a fiduciary duty on investment advisers to act
at all times in the best interest of the fund . . . and includes an obligation to provide ‘full and fair disclosureof all material facts’”) (emphasis added) (citing SEC v. Capital Gains, supra footnote 2). We describe

58

23

In the Proposed Interpretation, we stated that an adviser must seek to avoid conflicts of interest with its
clients. Proposed Interpretation, supra footnote 6. Some commenters requested clarity on what it means to“seek to avoid” conflicts of interest. See, e.g., Comment Letter of Schulte Roth & Zabel LLP (Aug. 8,2018); ABA Letter (stating that this wording could be read to require an adviser to first seek to avoid aconflict, before addressing a conflict through disclosure, rather than being able to provide full and fairdisclosure of a conflict, and only seek avoidance if the conflict cannot be addressed through disclosure).
The Commission first used this phrasing when adopting amendments to the Form ADV Part 2 instructions.
See Investment Advisers Act Release 3060, supra footnote 15 and General Instruction 3 to Part 2 of Form
ADV (“As a fiduciary, you also must seek to avoid conflicts of interest with your clients, and, at aminimum, make full disclosure of all material conflicts of interest between you and your clients that could
affect the advisory relationship.”). The release adopting this instruction clarifies the Commission’s intent
that it capture the fiduciary duty described in SEC v. Capital Gains and Arleen Hughes. See Investment
Advisers Act Release 3060, supra footnote 15, at n.4 and accompanying text (citing SEC v. Capital Gains,
supra footnote 2, and Arleen Hughes, supra footnote 18, as the basis of this language). Both of these cases
emphasized that the adviser, as a fiduciary, should seek to avoid conflicts, but at a minimum must make fulland fair disclosure of the conflict and obtain the client’s informed consent. See SEC v. Capital Gains,
supra footnote 2 (“The Advisers Act thus reflects . . . a congressional intent to eliminate, or at least to
expose, all conflicts of interest which might incline an investment adviser—consciously or
unconsciously—to render advice which was not disinterested.”); Arleen Hughes, supra footnote 18 (“Since
loyalty to his trust is the first duty which a fiduciary owes to his principal, it is the general rule that afiduciary must not put himself into a position where his own interests may come in conflict with those of
his principal” but if a fiduciary “chooses to assume a role in which she is motivated by conflicting interests,. . . she may do so if, but only if, she obtains her client’s consent after disclosure . . .”). We believe theCommission’s reference to “seek to avoid” conflicts in the Form ADV Part 2 instructions is consistent with
the Final Interpretation’s statement that an adviser “must eliminate or at least expose all conflicts of interest
which might incline an investment adviser—consciously or unconsciously—to render advice which was
not disinterested” as well as the substantively identical statements in SEC v. Capital Gains, supra footnote
2, and Arleen Hughes, supra footnote 18. While an adviser may satisfy its duty of loyalty by making fulland fair disclosure of conflicts of interest and obtaining the client’s informed consent, an adviser isprohibited from overreaching or taking unfair advantage of a client’s trust.
59

24

Arleen Hughes, supra footnote 18, at 4 and 8 (stating, “[s]ince loyalty to his trust is the first duty which a
fiduciary owes to his principal, it is the general rule that a fiduciary must not put himself into a position
where his own interests may come in conflict with those of his principal. To prevent any conflict and thepossible subordination of this duty to act solely for the benefit of his principal, a fiduciary at common law
is forbidden to deal as an adverse party with his principal. An exception is made, however, where theprincipal gives his informed consent to such dealings,” and adding that, “[r]egistrant has an affirmative
obligation to disclose all material facts to her clients in a manner which is clear enough so that a client isfully apprised of the facts and is in a position to give his informed consent.”); see also Hughes v. Securities
and Exchange Commission, 174 F.2d 969 (1949) (affirming the SEC decision in Arleen Hughes); General
Instruction 3 to Part 2 of Form ADV (stating that an adviser’s disclosure obligation “requires that [theadviser] provide the client with sufficiently specific facts so that the client is able to understand theconflicts of interest [the adviser has] and the business practices in which [the adviser] engage[s], and cangive informed consent to such conflicts or practices or reject them”); Investment Advisers Act Release3060, supra footnote 15; Restatement (Third) of Agency §8.06 (“Conduct by an agent that would otherwise
constitute a breach of duty as stated in §§ 8.01, 8.02, 8.03, 8.04, and 8.05 [referencing the fiduciary duty]
does not constitute a breach of duty if the principal consents to the conduct, provided that (a) in obtaining
the principal’s consent, the agent (i) acts in good faith, (ii) discloses all material facts that the agent knows,
has reason to know, or should know would reasonably affect the principal’s judgment unless the principal
has manifested that such facts are already known by the principal or that the principal does not wish toknow them, and (iii) otherwise deals fairly with the principal; and (b) the principal’s consent concerns
either a specific act or transaction, or acts or transactions of a specified type that could reasonably be
expected to occur in the ordinary course of the agency relationship.”). See infra footnotes 67-70 andaccompanying text for a more detailed discussion of informed consent and how it is generally consideredon an objective basis and may be inferred.

above in this Final Interpretation how the application of an investment adviser’s fiduciary duty to its client
will vary with the scope of the advisory relationship. See supra section II.A.

and when they arise, or to disclose that the adviser has “conflicts” without further description.

has “other clients” without describing how the adviser will manage conflicts between clients if

whether to provide consent. 59 For example, it would be inadequate to disclose that the adviser

themselves satisfy the adviser’s duty to act in the client’s best interest. 58 To illustrate what57

is able to understand the material fact or conflict of interest and make an informed decision

In order for disclosure to be full and fair, it should be sufficiently specific so that a clientof investment opportunities among eligible clients.

have a conflict, and (ii) considerations for disclosure regarding conflicts related to the allocation

appropriate level of specificity, including the appropriateness of stating that an adviser “may”

constitutes full and fair disclosure, we are providing the following guidance on (i) thethemselves from violating the adviser’s fiduciary duty, such disclosure and consent do not

and a client’s informed consent prevent the presence of those material facts or conflicts

fair disclosure of all material facts relating to the advisory relationship or of conflicts of interest

unconsciously—to render advice which was not disinterested.

57

all conflicts of interest which might incline an investment adviser—consciously or

In addition, an adviser must eliminate or at least expose through full and fair disclosure

125

it.

clients, advice, or transactions without additional disclosure specifying the types or classes ofconflicts associated with its allocation policies, including how the adviser will allocate
investment opportunities, such that a client can provide informed consent. 64 When allocating
investment opportunities, an adviser is permitted to consider the nature and objectives of theinformed consent. On the other hand, the word “may” could be appropriately used to disclose toa client a potential conflict that does not currently exist but might reasonably present itself in the

future. 61

We have added this example of a circumstance where “may” could be appropriately used in response to therequest of some commenters. See, e.g., Pickard Letter; ICI Letter; Ropes & Gray Letter; IAA Letter.

61

25

We have brought enforcement actions in such cases. See, e.g., In the Matter of The Robare Group, Ltd., etal., Investment Advisers Act Release No. 4566 (Nov. 7, 2016) (Commission Opinion) (finding, among
other things, that adviser’s disclosure that it may receive a certain type of compensation was inadequate
because it did not reveal that the adviser actually had an arrangement pursuant to which it received fees that
presented a potential conflict of interest); aff’d in part and rev’d in part on other grounds Robare v. SEC,
supra footnote 20; In re Grossman, supra footnote 41 (indicating that “the use of the prospective ‘may’ in[the relevant Form ADV disclosures] is misleading because it suggested the mere possibility that [thebroker] would make a referral and/or be paid ‘referral fees’ at a later point, when in fact a commissionsharing arrangement was already in place and generating income”). Cf. Dolphin & Bradbury, Inc. v. SEC,
512 F.3d 634, 640 (D.C. Cir. 2008) (“The Commission noted the critical distinction between disclosing therisk that a future event might occur and disclosing actual knowledge the event will occur.”) (emphasis inoriginal). For Form ADV Part 2 purposes, advisers are instructed that when they have a conflict or engage
in a practice with respect to some (but not all) types or classes of clients, advice, or transactions, to indicate
as such rather than disclosing that they “may” have the conflict or engage in the practice. General
Instruction 2 to Part 2 of Form ADV.

60

client because institutional clients generally have a greater capacity and more resources thanterminology) can differ, in some cases significantly, from full and fair disclosure for a retailfor an institutional client (including the specificity, level of detail, and explanation ofof the client, the scope of the services, and the material fact or conflict. Full and fair disclosure

See Restatement (Third) of Agency, § 8.01 General Fiduciary Principle (2006) (“Unless the principal
consents, the general fiduciary principle, as elaborated by the more specific duties of loyalty stated in§§ 8.02 to 8.05, also requires that an agent refrain from using the agent’s position or the principal’s
property to benefit the agent or a third party.”).
The Commission has brought numerous enforcement actions alleging that advisers unfairly allocated client
trades to preferred clients without making full and fair disclosure. See Staff of the U.S. Securities andExchange Commission, Study on Investment Advisers and Broker-Dealers As Required by Section 913 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Jan. 2011), available athttps://www.sec.gov/news/studies/2011/913studyfinal.pdf, at 23–24 (citing enforcement actions). This
Final Interpretation sets forth the Commission’s views regarding what constitutes full and fair disclosure.
See, e.g., supra text accompanying footnote 59; see also Barry Barbash and Jai Massari, The Investment
Advisers Act of 1940; Regulation by Accretion, 39 Rutgers Law Journal 627 (2008) (stating that under
section 206 of the Advisers Act and traditional notions of fiduciary and agency law, an adviser must notgive preferential treatment to some clients or systematically exclude eligible clients from participating inspecific opportunities without providing the clients with appropriate disclosure regarding the treatment).
An adviser and a client may even agree that certain investment opportunities or categories of investment
opportunities will not be allocated or offered to a client.

63

64

65

26

Arleen Hughes, supra footnote 18 (the “method and extent of disclosure depends upon the particular client
involved,” and an unsophisticated client may require “a more extensive explanation than the informed
investor”).

62

or any particular method of allocation, but, as with other conflicts and material facts, theclient and the scope of the relationship. 65 An adviser need not have pro rata allocation policies,

clients. 63 If so, the adviser must eliminate or at least expose through full and fair disclosure theregardless of likelihood and obfuscates actual conflicts to the point that a client cannot provide

Whether the disclosure is full and fair will depend upon, among other things, the nature

conflicts of interest either between its own interests and those of a client or among different“may” would be inappropriate if it simply precedes a list of all possible or potential conflicts

When allocating investment opportunities among eligible clients, an adviser may faceenough for the client to make an informed decision to consent to the conflict of interest or rejectclients, advice, or transactions with respect to which the conflict exists. In addition, the use of

Nevertheless, regardless of the nature of the client, the disclosure must be clear and detailed

inappropriate when the conflict exists with respect to some (but not all) types or classes ofretail clients to analyze and understand complex conflicts and their ramifications. 62

adequate when the conflict actually exists. 60 For example, we would consider the use of “may”

Similarly, disclosure that an adviser “may” have a particular conflict, without more, is not

126

See, e.g., Comment Letter of LPL Financial LLC (Aug. 7, 2018); Ropes & Gray Letter.

We do not interpret an adviser’s fiduciary duty to require that full and fair disclosure or informed consent
be achieved in a written advisory contract or otherwise in writing. For example, an adviser could provide aclient full and fair disclosure of all material facts relating to the advisory relationship as well as full and fairdisclosure of all conflicts of interest which might incline the adviser, consciously or unconsciously, torender advice that was not disinterested, through a combination of Form ADV and other disclosure and theclient could implicitly consent by entering into or continuing the investment advisory relationship with theadviser.

See Arleen Hughes, supra footnote 18 (“Registrant cannot satisfy this duty by executing an agreement withher clients which the record shows some clients do not understand and which, in any event, does notcontain the essential facts which she must communicate.”). In the Proposed Interpretation, we stated thatinferring or accepting client consent to a conflict would not be consistent with the fiduciary duty where “thematerial facts concerning the conflict could not be fully and fairly disclosed.” Some commenters expressed

67

68

69

27

In the Proposed Interpretation, we stated that “in allocating investment opportunities among eligible clients,
an adviser must treat all clients fairly.” Some commenters interpreted this statement to mean that it would
be impermissible for an adviser to allocate a particular investment to one eligible client instead of a second
eligible client, even when the second client had received full and fair disclosure and provided informed
consent to such an investment being allocated to the first client. See, e.g., Ropes & Gray Letter; SIFMAAMG Letter. We have removed that sentence from this Final Interpretation and replaced it with this
discussion that clarifies our views regarding allocation of investment opportunities.

69

66

should have been aware, that the client did not understand the nature and import of the conflict.

fiduciary duty to infer or accept client consent where the adviser was aware, or reasonably

Investment Advisers Act Release 3060, supra footnote 15; General Instruction 3 to Part 2 of Form ADV(“Under federal and state law, you are a fiduciary and must make full disclosure to your clients of allmaterial facts relating to the advisory relationship. As a fiduciary, you also must seek to avoid conflicts of71

28

As discussed above, institutional clients generally have a greater capacity and more resources than retailclients to analyze and understand complex conflicts and their ramifications. See supra text accompanying
footnote 62.

70agreement with this statement. See, e.g., CFA Letter (agreeing that “advisers should be precluded frominferring or accepting client consent to a conflict” where the material facts concerning the conflict could
not be fully and fairly disclosed). Other commenters expressed doubt that such disclosure could be
impossible. See, e.g., Allianz Letter (“[W]e have not encountered a situation in which we could not fully
and fairly disclose the material facts, including the nature, extent, magnitude and potential effects of theconflict.”). In response to commenters, we have replaced the general statement about an inability to fully
and fairly disclose material facts about the conflict with more specific examples of how advisers can makesuch full and fair disclosure. See supra text accompanying footnotes 59-66.

requirements, including disclosure of certain conflicts. 71 Investment advisers are required totheir clients a “brochure,” under Part 2A of Form ADV, which sets out minimum disclosure

evaluating and selecting investment advisers. Accordingly, we require advisers to deliver toto render advice which was not disinterested, can help clients and prospective clients inconflicts of interest which might incline an investment adviser—consciously or unconsciously—

Full and fair disclosure of all material facts relating to the advisory relationship, and all

conflict such that full and fair disclosure and informed consent are possible.

interest. A client’s informed consent can be either explicit or, depending on the facts andWe believe, however, that it would not be consistent with an adviser’s

should either eliminate the conflict or adequately mitigate (i.e., modify practices to reduce) the

put a client in a position to be able to understand and provide informed consent to the conflict of

circumstances, implicit.

a conflict of interest to a client such that the client can provide informed consent, the adviser

client’s consent to the conflict of interest was informed. Rather, disclosure should be designed to68

understandable. In all of these cases where an investment adviser cannot fully and fairly disclose

an affirmative determination that a particular client understood the disclosure and that the

could affect the advice it receives. For retail clients in particular, it may be difficult to provide
disclosure regarding complex or extensive conflicts that is sufficiently specific, but also

The fact that disclosure must

disclosure may not be specific enough for a client to understand whether and how the conflict

potential effect of the conflict sufficient for a client to consent to or reject it. 70 In other cases,

disclosure to clients that adequately conveys the material facts or the nature, magnitude, andIn some cases, conflicts may be of a nature and extent that it would be difficult to provide

be full and fair such that a client can provide informed consent does not require advisers to make“informed” to describe a client’s consent to a disclosed conflict.

67

duty, a few commenters objected to what they saw as subjectivity in the use of the term

While most commenters agreed that informed consent is a component of the fiduciaryof its clients.

66

adviser’s allocation practices must not prevent it from providing advice that is in the best interest

127

advisers registered with the Commission with over $84 trillion in assets under management as

advisory agreement, a relationship summary, which would include, among other things, a plain

English summary of certain of the firm’s conflicts of interest, and would encourage retailreporting advisers. 75 As of December 31, 2018, there are approximately 41 million client

As noted above, this Final Interpretation is intended to reaffirm, and in some cases

this Final Interpretation are generally consistent with investment advisers’ current understanding

effects. We discuss these potential effects below.

Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail
Communications and Restrictions on the use of Certain Names or Titles, Investment Advisers Act Release
No. 5247 (June 5, 2019) (“Relationship Summary Adoption”).

73

29

Investment Advisers Act rule 204-3. See Investment Advisers Act Release 3060, supra footnote 15(adopting amendments to Form ADV and stating that, “A client may use this disclosure to select his or her
own adviser and evaluate the adviser’s business practices and conflicts on an ongoing basis. As a result,the disclosure clients and prospective clients receive is critical to their ability to make an informed decision
about whether to engage an adviser and, having engaged the adviser, to manage that relationship.”). To theextent that the information required for inclusion in the brochure does not satisfy an adviser’s disclosure
obligation, the adviser “may have to disclose to clients information not specifically required by Part 2 ofForm ADV or in more detail than the brochure items might otherwise require” and this disclosure may bemade “in [the] brochure or by some other means.” General Instruction 3 to Part 2 of Form ADV.

72

Data on investment advisers is based on staff analysis of Form ADV, particularly Item 5.F.(2)(c) of Part 1A
for Regulatory Assets under Management. Because this Final Interpretation interprets an adviser’s
fiduciary duty under section 206 of the Advisers Act, this interpretation would be applicable to both SECand state-registered investment advisers, as well as other investment advisers that are exempt fromregistration or subject to a prohibition on registration under the Advisers Act.
Item 5.F.(2)(f) of Part 1A of Form ADV.
See supra section II.B.i. For example, some commenters asked that we clarify from the Proposed
Interpretation that an adviser and its client can tailor the scope of the relationship to which the fiduciary
duty applies, through contract. See, e.g., MMI Letter; Financial Engines Letter; ABA Letter. See suprafootnotes 67–69 and accompanying text, including clarifications addressing these commenters’ concerns.
More generally, some commenters requested clarifications from the Proposed Interpretation, and we areissuing this Final Interpretation to address those issues raised by commenters, as discussed in more detailabove.

75

76
77

30

See Relationship Summary Proposal, supra footnote 5, at section IV.A (discussing the market for financial
advice generally).

74of their fiduciary duty under the Advisers Act. 77 However, we recognize that as the scope of the

conduct. We believe, based on the Commission’s experience, that the interpretations set forth in

Final Interpretation provided above, the Final Interpretation could have potential economic

interest with your clients, and, at a minimum, make full disclosure of all material conflicts of interest
between you and your clients that could affect the advisory relationship. This obligation requires that you
provide the client with sufficiently specific facts so that the client is able to understand the conflicts ofinterest you have and the business practices in which you engage, and can give informed consent to suchconflicts or practices or reject them.”). See also Robare v. SEC, supra footnote 20 (“[R]egardless of what
Form ADV requires, [investment advisers have] a fiduciary duty to fully and fairly reveal conflicts ofinterest to their clients.”).

their legal and regulatory obligations, including costs related to understanding the standard ofThese investment advisers currently incur ongoing costs related to their compliance with

the Commission recognizes that to the extent an adviser’s practices are not consistent with the

Final Interpretation does not itself create any new legal obligations for advisers. Nonetheless,accounts advised by SEC-registered investment advisers. 76

assets under management and 3,911 investment advisers who submit Form ADV as exempt

ECONOMIC CONSIDERATIONS

clarify, certain aspects of an investment adviser’s fiduciary duty under the Advisers Act. The

III.

well as 17,268 investment advisers registered with states with approximately $334 billion in

financial advice more broadly. 74 As of December 31, 2018, there were 13,299 investment

advisers to deliver to retail investors, at or before the time the adviser enters into an investment

investors to inquire about those conflicts.

their associated persons as well as the clients of those investment advisers, and the market forenter into the advisory relationship. 72 In a concurrent release, we are requiring all investment

73

under the Advisers Act set forth in this Final Interpretation would affect investment advisers andprospective client can use the information contained in the brochure to decide whether or not to

A. Background
The Commission’s interpretation of the standard of conduct for investment advisers

deliver the brochure to a prospective client at or before entering into a contract so that the128clarifying how the fiduciary duty can apply to institutional clients. We continue to believe,
based on our experience with investment advisers to different types of clients, that advisers
understand their fiduciary duty to be generally consistent with the standards of this Final
Interpretation.

and other current circumstances where they interpret their fiduciary duty to require something

more, than this Final Interpretation. We lack data to identify which investment advisers

currently understand their fiduciary duty to require something different from the standard of

conduct articulated in this Final Interpretation. Based on our experience over decades ofThis commenter indicated its concerns about the ability of

31

See supra section II.A.

The typical relationship between an investment adviser and a client is a principal-agent

constitutes full and fair disclosure and informed consent, acknowledging a number of comments

Id.

Clients of investment advisersof the fiduciary duty to institutional clients, and clarifies the Commission’s interpretation of what

80

economic effects, which we discuss below.

compared to the Proposed Interpretation, includes significantly more examples of the application

79

duty to be different from those discussed in this Final Interpretation, there could be somecontext of the agreed-upon scope of the adviser-client relationship.80 This Final Interpretation, as

81

32

In particular, this Final Interpretation expressly notes our belief that a client generally may provide its
informed consent implicitly “by entering into or continuing the investment advisory relationship with theadviser” after disclosure of a conflict of interest. See supra footnote 68.

relationship, where the principal (the client) hires an agent (the investment adviser) to perform

investment advisers currently understand the practices necessary to comply with their fiduciary

duty, the specific application of the investment adviser’s fiduciary duty must be viewed in the

See Comment Letter of National Venture Capital Association (Aug. 7, 2018) (“NVCA Letter”).

Commission’s interpretation and assess its applicability to them. Further, to the extent certain

expressly acknowledges that while all investment advisers owe each of their clients a fiduciary

78

whose practices are consistent with the Commission’s interpretation, incur costs to evaluate thelegal obligations of regulated entities, we acknowledge that affected firms, including thoseInterpretation. However, as with other circumstances in which the Commission speaks to theadvisers. Therefore, we expect there to be no significant economic effects from this Final

Act described in this Final Interpretation generally reaffirms the current practices of investment

industry, the Commission’s interpretation of the fiduciary duty under section 206 of the Advisers

Based on our experience as the long-standing regulator of the investment adviser

Our discussion above in this Final Interpretation includes clarifications to address comments, andconsent from funds could significantly increase compliance costs for venture capital funds.
79

a fund manager to infer consent from a client that is a fund, and that issues regarding inferring

individual investor, and not a fund.

78

adviser fulfills its fiduciary duty appeared to be based in the context of having as a client an

One commenter suggested that the Proposed Interpretation’s discussion of how an

generally believe that it is not a significant portion of the market.

B. Potential Economic Effects

concerns with respect to increased compliance costs for venture capital funds, in part bycircumstances where investment advisers interpret their fiduciary duty to require something less,interacting with the investment management industry as its primary regulator, however, weon this topic. 81 We believe that these clarifications will help address some of this commenter’s

adviser-client relationship varies and in many cases can be broad, there may be certain current

129currently impose on investors. In addition, we believe that there may be potential benefits forclients of those investment advisers, if any, to the extent this Final Interpretation is effective atstrengthening investment advisers’ understanding of their obligations to their clients. Further, tothe extent that this Final Interpretation enhances the understanding of any investment advisers of
their duty of care, it may potentially raise the quality of investment advice and also lead toincreased compliance with the duty to monitor, for example whether advice about an account or

reduction of agency costs to the client. 85 For example, an adviser that, as part of its duty ofloyalty, fully and fairly discloses 86 a conflict of interest and receives informed consent from its

client with respect to the conflict may reduce agency costs by increasing the client’s awarenessof the conflict and improving the client’s ability to monitor the adviser with respect to thisconflict. Alternatively, the client may choose to not consent given the information the adviser

See, e.g., James A. Brickley, Clifford W. Smith, Jr. & Jerold L. Zimmerman, Managerial Economics andOrganizational Architecture (2004), at 265 (“An agency relationship consists of an agreement under which
one party, the principal, engages another party, the agent, to perform some service on the principal’sbehalf.”); see also Michael C. Jensen & William H. Meckling, Theory of the Firm: Managerial Behavior,
Agency Costs and Ownership Structure, 3 Journal of Financial Economics 305-360 (1976) (“Jensen andMeckling”).

See, e.g., Jensen and Meckling, supra footnote 82.

See, e.g., Frank H. Easterbrook & Daniel R. Fischel, Contract and Fiduciary Duty, 36 Journal of Law &Economics 425-46 (1993).

To the extent that this Final Interpretation clarifies the fiduciary duty for investment advisers, onecommenter suggested it may then clarify what clients expect of their investment advisers. See Cambridge
Letter (stating that “greater clarity on all aspects of an investment adviser’s fiduciary duty will improve theability to craft such policies and procedures, as well as support the elimination of confusion for retailclients and investment professionals”).

As discussed above, whether such a disclosure is full and fair will depend upon, among other things, thenature of the client, the scope of the services, and the conflict. See supra section II.C.

82

83

84

85

86

33

interpretation, 87 and consequently we are not able to estimate the agency costs such advisers

this Final Interpretation, we expect a potential reduction in agency problems and, consequently, a87

34

One commenter did not agree that the discussion of fiduciary obligations in the Proposed Interpretation
applied to advisers to funds as well as advisers to retail investors. See NVCA Letter. As discussed above,
this Final Interpretation has clarified the discussion to address this commenter’s concerns andacknowledges that the application of the fiduciary duty of an adviser to a retail client would be different
from the specific application of the fiduciary duty of an adviser to a registered investment company or
private fund.

properly identify circumstances in which conflicts may be of a nature and extent that it would be

In addition, to the extent that this Final Interpretation causes some investment advisers toadvice fits with a client’s objectives.

program type remains in the client’s best interest, thereby increasing the likelihood that thethat currently interpret their fiduciary duty to require something different from the Commission’s

is difficult to assess given that we are unable to ascertain the total number of investment advisers

financial professional. The extent to which agency costs would be reduced by such a disclosurethat the client will not provide informed consent or will look for an alternative adviser or otheradvisers, if any, who currently interpret their fiduciary duty to require something different fromTo the extent this Final Interpretation causes a change in behavior of those investment

deterring investment advisers from taking actions that expose them to legal liability.

84

advisers owe their clients, can mitigate these agency problems and reduce agency costs byadequately mitigating (i.e., modifying practices to reduce) that conflict rather than taking the risk

current conflict may cause the adviser to take other actions, for example eliminating orinvestment advisers may take actions that increase their well-being at the expense of investors,

A fiduciary duty, such as the duty investment

adviser or other financial professional. In addition, the obligation to fully and fairly disclose a

relationship is subject to agency problems, including those resulting from conflicts: that is,thereby imposing agency costs on investors.

significant, and instead try to renegotiate the contract with the adviser or look for an alternative

investment advisers are likely to have different preferences and goals, the investment adviser

83

discloses about a conflict of interest if the perceived risk associated with the conflict is toosome service (investment advisory services) on the principal’s behalf. 82 Because investors and130certain aspects of the fiduciary duty that an investment adviser owes to its clients under theAdvisers Act, this Final Interpretation could reduce investment advisers’ costs associated withcomprehensively assessing their compliance obligations. We acknowledge that, as with othercircumstances in which the Commission speaks to the legal obligations of regulated entities,
affected firms, including those whose practices are consistent with the Commission’s
interpretation, incur costs to evaluate the Commission’s interpretation and assess its applicability
to them. Moreover, as discussed above, there may be certain investment advisers who currently
understand their fiduciary duty to require something different from the fiduciary duty describedin this Final Interpretation. Those investment advisers would experience an increase in theircompliance costs as they change their systems, processes, disclosures, and behavior, and train
their supervised persons, to align with this Final Interpretation. However, this increase in costs
would be mitigated by potential benefits in efficiency for investment advisers that are able tounderstand aspects of their fiduciary duty by reference to a single Commission release that
reaffirms—and in some cases clarifies—certain aspects of the fiduciary duty. 88 In addition, andas discussed above, in the case of an investment adviser that believed it owed its clients a lower
88

that full and fair disclosure and informed consent are possible. This Final Interpretation may

also cause some investment advisers to conclude in some circumstances that they cannot fully

and fairly disclose a conflict of interest to a client such that the client can provide informed

consent. We would expect that these advisers would either eliminate the conflict or adequately

mitigate (i.e., modify practices to reduce) the conflict such that full and fair disclosure andinformed consent would be possible. Thus, to the extent this Final Interpretation would cause

investment advisers to better understand their obligations and therefore to modify their businesspractices in ways that (i) reduce the likelihood that conflicts and other agency costs will cause anadviser to place its interests ahead of the interests of the client or (ii) help those advisers toprovide full and fair disclosure, it would be expected to ameliorate the agency conflict between

investment advisers and their clients. In turn, this may improve the quality of advice that theclients receive and therefore produce higher overall returns for clients and increase the efficiencyof portfolio allocation. However, as discussed above, we would generally expect these effects tobe minimal because we believe that the interpretations we are setting forth in this Final

Interpretation are generally consistent with investment advisers’ current understanding of theirfiduciary duty under the Advisers Act. Finally, this Final Interpretation would also benefit

35

uncertainty for advisers, and facilitate their compliance. Further, by addressing in one release36

As noted above, supra footnote 3, this Final Interpretation is intended to highlight the principles relevant toan adviser’s fiduciary duty. It is not, however, intended to be the exclusive resource for understanding
these principles.

understanding of the fiduciary duty they owe their clients under the Advisers Act, reduce

adequately mitigating (i.e., modifying practices to reduce) the conflict may be appropriate such

In general, we expect this Final Interpretation to affirm investment advisers’

the conflict could affect the advice they receive, this Final Interpretation may lead thoseinvestment advisers to take additional steps to improve their disclosures or to determine whether

Investment advisers and the market for investment advice

investment advisers’ compliance with their regulatory obligations.

magnitude, and potential effect of the conflict sufficient for clients to consent to it or reject it, orin which the disclosure may not be specific enough for clients to understand whether and how

clients of investment advisers to the extent it assists the Commission in its oversight ofdifficult to provide disclosure to clients that adequately conveys the material facts or nature,

131

However, the investment advisers who already are complying with the understanding of theirfiduciary duty reflected in this Final Interpretation, and who may therefore currently have acomparative cost disadvantage, could find it more profitable to compete for the clients of thoseinvestment advisers who would face higher compliance costs as a result of this Final
Interpretation, which would mitigate negative effects on the supply of investment advisory
services. Further, as noted above, there has been a recent growth trend in the supply ofinvestment advisory services, which is likely to mitigate any potential negative supply effects
from this Final Interpretation. 90

on the market for investment advice. For example, any improved compliance may not only

reduce agency costs in current investment advisory relationships and increase the value of thoserelationships to current clients, it may also increase trust in the market for investment advice

among all investors, which may result in more investors seeking advice from investment

advisers. This may, in turn, benefit investors by improving the efficiency of their portfolio

allocation. To the extent it is costly or difficult, at least in the short term, to expand the supply ofinvestment advisory services to meet an increase in demand, any such new demand forinvestment advisory services could put some upward price pressure on fees. At the same time,fair disclosure or the mitigation of such conflicts, could lead to an effect on the market and costs
to advisers, if such a requirement would cause advisers who had not shared that interpretation torepresentatives by current investment advisers—such that competition would increase over time.

Indeed, the recent growth in the investment adviser segment of the market, both in terms of89

37

See Relationship Summary Proposal, supra footnote 5, at section IV.A.1.d.

they currently interpret it, it could potentially affect competition. Specifically, this Finala result of this Final Interpretation, that their fiduciary duty is stricter than the fiduciary duty as

Additionally, we acknowledge that to the extent certain investment advisers recognize, as

supply of investment advisory services are currently relatively low.

38

Beyond having an effect on competition in the market for investment adviser services, it is possible that
this Final Interpretation could affect competition between investment advisers and other providers offinancial advice, such as broker-dealers, banks, and insurance companies. This may be the case if certain
investors base their choice between an investment adviser and another provider of financial advice, at leastin part, on their perception of the standards of conduct each owes to their customers. To the extent that thisFinal Interpretation increases investors’ trust in investment advisers’ overall compliance with their standardof conduct, certain of these investors may become more willing to hire an investment adviser rather than
one of their non-investment adviser competitors. As a result, investment advisers as a group may become
more competitive compared to that of other types of providers of financial advice. On the other hand, if
this Final Interpretation raises costs for investment advisers, they could become less competitive with otherfinancial advice providers.

change their business models or product offerings or the ways in which they interact with
90

number of firms and number of representatives, may suggest that the costs of expanding the89

that certain circumstances may require the elimination of material conflicts, rather than full andservices, then we expect it would encourage entry by new investment advisers—or hiring of new

One commenter discussed that, in its view, any statement in the Proposed Interpretation

could reduce the supply of investment advisory services and raise fees for these client segments.

their behavior to align with this Final Interpretation, there could also be some economic effects

however, if any such new demand increases the overall profitability of investment advisory

generate lower revenues, such as clients with relatively low levels of financial assets, which

require something different from the fiduciary duty described in this Final Interpretation change

increase in compliance costs, in turn, may discourage competition for client segments that

additional compliance costs for investment advisers seeking to meet their fiduciary duty. Thisof conduct and related change in policies and procedures.

Moreover, to the extent any investment advisers that understood their fiduciary duty toInterpretation of certain aspects of the standard of conduct for investment advisers may result instandard of conduct, there will be client benefits from the ensuing adaptation of a higher standard

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authority with substantial specificity. 94

addressing that conflict; when appropriate advisers may also address the conflict by providing

increase following the reassessment. 95 As a result, the number of investment advisers willing toadvise a client to make these investments may be reduced. A decline in the supply of investment

federal fiduciary duty in the context of the specific scope of services that they provide to theirclients, as discussed in this Final Interpretation.

becoming less profitable for investment advisers, investment advisers may be discouraged fromsupplying advice regarding such products. However, investors may benefit from (1) no longer
receiving inadequate disclosure or monitoring for such products, (2) potentially receiving advice
regarding other, less complex or expensive products that may be more efficient for the investor,and (3) only receiving recommendations for highly complex or high cost products for which an

chilling innovation. As explained above, this Final Interpretation, as compared to the Proposed

Interpretation, discusses in more detail the ability of investment advisers and different types ofclients to shape the scope of the relationship to which the fiduciary duty applies. 93 In particular,

this Final Interpretation acknowledges that while advisers owe each of their clients a fiduciary

duty, the specific obligations of, for example, an adviser providing comprehensive, discretionary

See supra section II.C.

See supra footnotes 78-81 and accompanying text.

92

93

39

See Dechert Letter.

91

40

For example, such products could include highly complex, high cost products with risk and return
characteristics that are hard for retail investors to fully understand, or where the investment adviser and its
representatives receive complicated payments from affiliates that create conflicts of interest that are
difficult for retail investors to fully understand.

include variable or contingent payments or payments to multiple parties) results in these products

sophisticated clients, increasing compliance burdens for advisers to sophisticated clients, orSee supra section II.A.

for highly complex products (e.g., those with a complex payout structure, such as those thatsophisticated clients could risk changing the marketplace or limiting investment opportunities for95

such advice. At the same time, if providing full and fair disclosure and appropriate monitoring

failing to accommodate the application of the concepts in the Proposed Interpretation to94

investment adviser advice regarding these types of investments and are no longer able to receive

to institutional clients as well as those to retail clients. The same commenter indicated that

advice in an ongoing relationship with a retail client will be significantly different from thereduce the efficiency of portfolio allocation for those investors who might otherwise benefit from

Commission’s discussion of the fiduciary duty in the Proposed Interpretation applied to advisers

adviser advice regarding these types of investments could affect efficiency for investors; it could

profitability of advice relating to particular investments for which compliance costs would

addressing conflicts of interest may be decreased by the flexibility advisers have to meet their

The commenter also drew particular attention to the question of whether thetheir compliance with their duty of loyalty, it could lead to a reduction in the expected

we believe that any potential costs or market effects resulting from investment advisers

Finally, to the extent this Final Interpretation causes some investment advisers to reassess

private fund, where the contract defines the scope of the adviser’s services and limitations on itsof interest. As discussed in more detail above, elimination of a conflict is one method offull and fair disclosure such that a client can provide informed consent to the conflict. 92 Further,obligations of an adviser to an institutional client, such as a registered investment company orclients. 91 We disagree that this Final Interpretation includes a requirement to eliminate conflicts

133

1.

Date

41

Page Number]

Conduct for Investment

Advisers

Number] FR [Insert FR[Insert FR Volume

Fed. Reg. Vol. and Page

Regarding Standard ofJune 5, 2019

* * * * * * *Release No.

Commission Interpretation IA-5248

Subject

2019, to the end of the list of interpretive releases to read as follows”

Part 276 is amended by adding Release No. IA–5428 and the release date of June 5,

THEREUNDERADVISERS ACT OF 1940 AND GENERAL RULES AND REGULATIONSPART 276–INTERPRETATIVE RELEASES RELATING TO THE INVESTMENT

Code of Federal Regulations as set forth below:

For the reasons set out above, the Commission is amending Title 17, chapter II of theAmendments to the Code of Federal Regulations

Securities.

List of Subjects in 17 CFR Part 276

monitoring.

investment adviser can provide full and fair disclosure regarding its conflicts and appropriate

Acting Secretary.

Vanessa A. Countryman,

Dated: June 5, 2019.

By the Commission.

42

November 30, 2007.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic comments:

RIN 3235-AJ96

Temporary Rule Regarding Principal Trades with Certain Advisory Clients

AGENCY: Securities and Exchange Commission.

134

All submissions should refer to File Number S7-23-07. This file number should be
included on the subject line if e-mail is used. To help us process and review yourcomments more efficiently, please use only one method. The Commission will post allcomments on the Commission’s Internet Web site (http://www.sec.gov/rules/final.shtml).
Comments are also available for public inspection and copying in the Commission’s
Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official businessdays between the hours of 10:00 am and 3:00 pm. All comments received will be posted

the Advisers Act or to commission-based brokerage accounts. We are adopting the

temporary rule to enable investors to make an informed choice between those accounts

and to continue to have access to certain securities held in the principal accounts ofcertain advisory firms while remaining protected from certain conflicts of interest. The

temporary rule will expire and no longer be effective on December 31, 2009.

Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090.

Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities anddecide whether they will convert their accounts to fee-based accounts that are subject toxPaper comments:

instructions for submitting comments.

Court’s decision, which takes effect on October 1, fee-based brokerage customers must

advisory accounts and were thus not subject to the Advisers Act. As a result of theunder the Advisers Act, which provided that fee-based brokerage accounts were notinterim final basis as part of its response to a recent court decision invalidating a rulecertain of their advisory clients. The Commission is adopting the temporary rule on an

Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the206(3) of the Advisers Act when they act in a principal capacity in transactions withx

on the subject line; orare registered with the Commission as broker-dealers to meet the requirements of section

Send an e-mail to rule-comments@sec.gov. Please include File Number S7-23-07

Advisers Act of 1940 that establishes an alternative means for investment advisers whox(http://www.sec.gov/rules/final.shtml); or

SUMMARY: The Commission is adopting a temporary rule under the Investment

Use the Commission’s Internet comment form

Comment Date: Comments on the interim final rule should be received on or before[Release No. IA-2653; File No. S7-23-07]xeffective from September 30, 2007 until December 31, 2009.

17 CFR Part 275

ACTION: Interim final temporary rule; Request for comments.

DATES: Effective Date: September 30, 2007, except for 17 CFR 275.206(3)-3T will be

SECURITIES AND EXCHANGE COMMISSION

2

資料４

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became fully subject to the Advisers Act. Broker-dealers would need to register as
investment advisers, if they had not done so already, act as fiduciaries with respect tothose clients, disclose all potential material conflicts of interest, and otherwise fullycomply with the Advisers Act, including the Act’s restrictions on principal trading.

FOR FURTHER INFORMATION CONTACT: David W. Blass, Assistant Director,

Daniel S. Kahl, Branch Chief, or Matthew N. Goldin, Attorney-Adviser, at (202) 551-

6787 or IArules@sec.gov, Office of Investment Adviser Regulation, Division of

Investment Management, U.S. Securities and Exchange Commission, 100 F Street, NE,billion in one million fee-based brokerage accounts.4 We sought the stay to protect theInvestment Advisers Act of 1940 [15 U.S.C. 80b] as an interim final rule.

accounts. We also informed the Court that we would use the period of the stay to

The FPA Decision

1

482 F.3d 481 (D.C. Cir. 2007).

Fee-based brokerage accounts are similar to traditional full-service brokerage accounts,
which provide a package of services, including execution, incidental investment advice,
and custody. The primary difference between the two types of accounts is that acustomer in a fee-based brokerage account pays a fee based upon the amount of assets on
account (an asset-based fee) and a customer in a traditional full-service brokerage
account pays a commission (or a mark-up or mark-down) for each transaction.

1

2

not advisory accounts and were thus not subject to the Advisers Act. 2 As a consequence

Rule 202(a)(11)-1 provided, among other things, that fee-based brokerage accounts were202(a)(11)-1 under the Investment Advisers Act of 1940 (“Advisers Act” or “Act”).

“Court”), in Financial Planning Association v. SEC (“FPA decision”), vacated rule

On March 30, 2007, the Court of Appeals for the District of Columbia Circuit (theA.

May 17, 2007, Motion for the Stay of Mandate, in FPA v. SEC.
Id.
See June 27, 2007, Order of the U.S. Court of Appeals for the District of Columbia
Circuit, in FPA v. SEC.

3
45

issuance of its mandate until October 1, 2007. 5

Court’s decision. On June 27, 2007, the Court granted our motion and stayed theapplication of the Act to fee-based brokerage accounts and other issues arising from theconsider whether further rulemaking or interpretations were necessary regarding thediscuss, make, and implement informed decisions about the assets in the affectedI.

BACKGROUND

the comments that we receive and respond to them in a subsequent release.

interests of those customers and to provide sufficient time for them and their brokers to

FPA decision. 3 We estimated at the time that customers of broker-dealers held $300(“Commission”) is adopting temporary rule 206(3)-3T [17 CFR 275.206(3)-3T] under the

We are soliciting comments on all aspects of the rule. We will carefully consider

temporarily withhold the issuance of its mandate and thereby stay the effectiveness of the

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission

We filed a motion with the Court on May 17, 2007 requesting that the Court

subject to the Advisers Act with respect to those accounts, and the client relationshipshould submit only information that you wish to make available publicly.

Washington, DC 20549-5041.

of the FPA decision, broker-dealers offering fee-based brokerage accounts became4

without change; we do not edit personal identifying information from submissions. You

3

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Section 206(3) of the Advisers Act and the Issue of Principal Trading

Advisers Act, the principal trading provision, poses a significant practical impediment tocontinuing to meet the needs of those customers.

investors, financial planners, and broker-dealers regarding the implications of the FPA

decision. During that process, firms that offered fee-based brokerage accounts informed

6

See, e.g., Letter from Barbara Roper, Director of Investor Protection, Consumer
Federation of America, et al., to Christopher Cox, Chairman, U.S. Securities andExchange Commission, dated April 24, 2007; E-mail from Timothy J. Sagehorn, SeniorVice President – Investments, UBS Financial Services Inc., to Christopher Cox,Chairman, U.S. Securities and Exchange Commission, dated May 15, 2007; Letter fromKurt Schacht, Managing Director, CFA Institute Centre for Financial Market Integrity, toChristopher Cox, Chairman, U.S. Securities and Exchange Commission, dated May 23,
2007; Letter from Joseph P. Borg, President, North American Securities Administrators
Association, Inc., to Christopher Cox, Chairman, U.S. Securities and Exchange
Commission, dated June 18, 2007; Letter from Daniel P. Tully, Chairman Emeritus,
Merrill Lynch & Co., Inc., to Christopher Cox, Chairman, U.S. Securities and Exchange
Commission, dated June 21, 2007; Letter, with Exhibit, from Ira D. Hammerman, Senior
Managing Director and General Counsel, Securities Industry and Financial Markets
Association, to Robert E. Plaze, Associate Director, Division of Investment Management,
U.S. Securities and Exchange Commission, and Catherine McGuire, Chief Counsel,
Division of Market Regulation, U.S. Securities and Exchange Commission, dated June27, 2007 (“SIFMA Letter”); Letter from Raymond A. “Chip” Mason, Chairman andCEO, Legg Mason, Inc., to Christopher Cox, Chairman, U.S. Securities and Exchange
Commission, dated July 10, 2007; Letter from Robert J. McCann, Vice Chairman andPresident – Global Private Client, Merrill Lynch, to Christopher Cox, Chairman, U.S.
Securities and Exchange Commission, dated July 11, 2007; Letter from Samuel L. Hayes,
III, Jacob Schiff Professor of Investment Banking Emeritus, Harvard Business School, toChristopher Cox, Chairman, U.S. Securities and Exchange Commission, dated July 12,
2007; Letter from Duane Thompson, Managing Director, Washington Office, Financial
Planning Association, to Robert E. Plaze, Associate Director, Division of Investment
Management, U.S. Securities and Exchange Commission, dated July 27, 2007 (“FPA
Letter”); Letter from Richard Bellmer, Chair, and Ellen Turf, CEO, National Associationof Personal Financial Advisors, to Robert E. Plaze, Associate Director, Division of
Investment Management, U.S. Securities and Exchange Commission, dated August 14,
2007 (“NAPFA Letter”); Letter from Congressman Dennis Moore, et al., to Christopher
Cox, Chairman, U.S. Securities and Exchange Commission, dated July 13, 2007; andLetter from Congressman Spencer Bachus, Ranking Member, Committee on Financial
Services, to Christopher Cox, Chairman, U.S. Securities and Exchange Commission,

15 U.S.C. 80b-6(3). Section 206(3) also addresses “agency cross transactions,” imposing
the same procedural requirements regarding prior disclosure and consent on thosetransactions as it imposes on principal transactions. Agency cross transactions aretransactions for which an investment adviser provides advice and the adviser, or a person
controlling, controlled by, or under common control with the adviser, acts as a broker forthat advisory client and for the person on the other side of the transaction. See Method forCompliance with Section 206(3) of the Investment Advisers Act of 1940 with Respect toCertain Transactions, Investment Advisers Act Release No. 557 (Dec. 2, 1976) [41 FR
53808] (“Rule 206(3)-2 Proposing Release”).
See Commission Interpretation of Section 206(3) of the Investment Advisers Act of 1940,
Investment Advisers Act Release No. 1732 (July 17, 1998) [63 FR 39505 (July 23,
1998)] (“Section 206(3) Release”) (“[A]n adviser may comply with Section 206(3) either
by obtaining client consent prior to execution of a principal or agency transaction, or after
execution but prior to settlement of the transaction.”). See also Investment Advisers Act
Release No. 40 (Jan. 5, 1945) [11 FR 10997] (“[T]he requirements of written disclosure
and of consent contained in this clause must be satisfied before the completion of eachseparate transaction. A blanket disclosure and consent in a general agreement between
investment adviser and client would not suffice.”).

78

dated July 10, 2007. Each of these letters is available at: www.sec.gov/comments/s7-2307.

consent requirements on a transaction-by-transaction basis.8 An adviser may provide theadviser entering into a principal transaction with a client to satisfy these disclosure andobtaining the consent of the client to such transaction.” 7 Section 206(3) requires an

writing before the completion of such transaction the capacity in which he is acting andsecurity to or purchase any security from a client …, without disclosing to such client in

directly or indirectly “acting as principal for his own account, knowingly to sell any

Section 206(3) of the Advisers Act makes it unlawful for any investment adviser,transaction-based) compensation structure. Firms explained that section 206(3) of thefollowed up with, and has been engaged in an ongoing dialogue with, representatives ofus that, unless the Commission acts before October 1, 2007, one group of fee-based

brokerage firms and on the protections associated with a fee-based (rather thandecision: customers who depend both on access to principal transactions with theirbrokerage customers is particularly likely to be harmed by the consequences of the FPA

6particular consequences to customers who hold fee-based brokerage accounts. Our staff

6

We and our staff received several letters regarding the FPA decision and about

B.

5

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combination of rapid electronic trading systems and the limited availability of many of
the securities traded in principal markets means that an adviser may be unable to provide
written disclosure and obtain consent in sufficient time to obtain such securities at thebest price or, in some cases, at all. 11 Similarly, SIFMA contended that trade-by-trade
written disclosure prior to execution is not practicable because “discussions between
investment advisers and non-discretionary clients about a trade or strategy may occur
before a particular transaction is effected, but at the time that discussion occurs therepresentative may not know whether the transaction will be effected on an agency or aadvisory clients (or do so on a very limited basis), and the rule vacated in the FPA

decision had allowed broker-dealers to offer fee-based accounts without complying with

the Advisers Act, including the requirements of section 206(3). Most informed us thatthey plan to discontinue fee-based brokerage accounts as a result of the FPA decisionbecause of the application of the Advisers Act. They also informed us of their view that,unless they are provided an exemption from, or an alternative means of complying with,section 206(3) of the Advisers Act, they would be unable to provide the same range ofservices to those fee-based brokerage customers who elect to become advisory clients andSection 206(3) Release (“Implicit in the phrase ‘before the completion of suchtransaction’ is the recognition that a securities transaction involves various stages before
it is ‘complete.’ The phrase ‘completion of such transaction’ on its face would appear tobe the point at which all aspects of a securities transaction have come to an end. That
ending point of a transaction is when the actual exchange of securities and payment
occurs, which is known as ‘settlement.’”).

The firms explained that they plan to consult with their customers and obtain customers’
consent to convert the fee-based accounts to one or more other types of accounts alreadyoperating on pre-existing business platforms. We understand that in most cases
customers will be able to choose among different types of brokerage accounts, paying
commissions for securities, and advisory accounts, paying asset-based fees. Firms
indicated to us that, if we provide an alternative means of complying with section 206(3),they believe a significant number of their fee-based brokerage customers will elect toconvert their accounts to non-discretionary advisory accounts. Those accounts operate inmany respects like fee-based brokerage accounts, but fiduciary duties apply to theadviser, and the other obligations of the Advisers Act also apply. Firms offering these

9

10

11

SIFMA Letter, at 21 (“Many fixed income securities, including municipal securities, thathave limited availability are quoted, purchased and sold quickly through electronic
communications networks utilized by bond dealers. . . . In today’s principal markets,
investment advisers do not necessarily have ‘sufficient opportunity to secure the client’s
specific prior consent’ and provide trade-by-trade disclosure, and opportunities to achieve
best execution may be lost if the adviser does not act immediately on current market
prices.”) (quoting Rule 206(3)-2 Proposing Release).

accounts provide investment advice, but clients retain decision making authority overtheir investment selections.

providing a written notice to all the clients with whom they conduct trades in a principal

thousands – of principal trades a day and that, due to the sheer volume of transactions,Firms also explained that they engage in thousands – in many cases, tens ofprincipal basis.” 12

section 206(3)’s written disclosure requirement. SIFMA explained that, for example, thebroker-dealers and investment advisers generally do not offer principal trading to current

would expect few to elect to do so.

Firms explained that there are timing and mechanical impediments to complying withability to engage in principal trades with their clients. Firms that are registered both as10

not feasible for an adviser to offer customers principal transactions for several reasons.

each securities transaction, as required by section 206(3) of the Advisers Act, makes it

Association (“SIFMA”) contended that providing written disclosure before completion of

the client consent requirements of section 206(3) act as an operational barrier to theirDuring our discussions, firms informed our staff that the written disclosure andof the transaction.

Several broker-dealers and the Securities Industry and Financial Markets

written disclosure to a client and obtain the client’s consent at or prior to the completion

9

8

7

138

Under rule 10b-10, a broker-dealer must disclose on its

Id.

Firms asserted that, while possible, providing written notifications by fax or email prior
to a transaction is impractical. Clients may not have ready access to either at the timethey wish to conduct a trade and delaying the trade in order to provide the written
notification likely would not be in the client’s best interest, in particular as market prices
may change rapidly.

17 CFR 240.10b-10. Rule 10b-10 under the Exchange Act requires a broker-dealer, at or
before completion of a transaction, to give or send to its customer a written confirmation
containing specified information about the transaction.

Rule 10b-10(a)(2) under the Exchange Act [17 CFR 240.10b-10(a)(2)].

See Section 206(3) Release.

It may be possible for firms to upgrade their confirmation delivery systems to provide an
additional written disclosure that satisfies the content and chronological requirements ofsection 206(3) of the Act. Based on our experience with changes to confirmationdelivery systems (largely in response to our changes to Exchange Act rule 10b-10), anysuch upgrade could take years to accomplish and would not be available by October 1,
2007, the date the FPA decision becomes effective. Furthermore, even if an automatedsystem were developed to provide those written disclosures at or before completion of thetransaction, no such automated system exists to obtain the required consent from advisory
clients. We also are mindful of the burdens associated with such a system change.
SIFMA has submitted to us that “[t]rade confirmation production systems are among the

12

13

14

15

16

17

no automated system currently exists that could ensure compliance.

18

We have previously expressed our view that some principal trades may serve clients’ bestinterests. See Section 206(3) Release.

most expensive and most difficult to alter anywhere in the brokerage industry, because of
the mass nature of confirmations, the sensitive and private nature of the information, andthe extremely short deadlines for their production and mailing.” Letter from Ira D.
Hammerman, Senior Vice President and General Counsel, Securities Industry and
Financial Markets Association, to Jonathan G. Katz, Secretary, U.S. Securities andExchange Commission, U.S. Securities and Exchange Commission, dated April 4, 2005,
available at: www.sec.gov/rules/proposed/s70604/ihammerman040405.pdf.

broader range of investment opportunities, better trade execution, and more

being paramount. In favorable circumstances, advisers may obtain access to a

only in the context of a fiduciary relationship with the best interests of the client

Depending on the circumstances, clients may benefit from principal trades, but

principal trades in a fiduciary relationship could be beneficial to investors, stating:accounts. 18 For example, the Financial Planning Association (“FPA”) noted thatinventory of a diversified broker-dealer through their non-discretionary advisory

which disclosure and consent may be obtained after execution but before settlement of atransaction,

throughout the transition process, that many customers may wish to access the securities

firms were to rely on the Commission’s 1998 interpretation of section 206(3), under17

investors. We believe, based on our discussions with industry representatives and others

10b-10 may only be available at completion of a transaction, not before. Thus, even if

16

Access to securities held in a firm’s principal accounts is important to many

disadvantage of the firm.

completion of a transaction and much of the information required to be disclosed by ruleintervening market changes or other factors could lead a client to withhold consent to thesettlement to consent to a trade that has already been executed creates too great a risk that

explained that they do not seek post-execution consent because allowing a client until

section 206(3). This is because trade confirmations are sent, rather than delivered, at

15

However, confirmations are provided to customers too late to satisfy the requirements ofconfirmation if it acts as principal for its own account with respect to a transaction.

under the Exchange Act.

206(3), firms indicated that they would be unlikely to trade on such a basis. The firms

notifications, or trade confirmations, that include the information required by rule 10b-10

14consent after execution of a trade but before its completion in satisfaction of section

Additionally, even if an automated system existed to enable the disclosure and10

the system broker-dealers use to provide customers with transaction-specific written

capacity may only be done using automated systems. 13 One such automated system is

9

139

securities) that were available to them in fee-based brokerage accounts – and avoids

disclosure requirements of section 206(3) discussed above, they simply refrain from19

FPA Letter, at 3.

fee-based brokerage accounts if their accounts are converted to advisory accounts instead

many of the investors holding an estimated $300 billion in approximately one million

Act in its entirety is appropriate, we do believe that there may be substantial benefits to

While we do not agree with SIFMA that an exemption from section 206(3) of theaccount.

compensation, rather than convert their fee-based brokerage account to an advisory

to open a traditional brokerage account in which they will pay transaction-based

wish to access firms’ principal inventories may, as a practical matter, have no choice but

A brokerage industry committee formed in 1994 at the suggestion of then-Commission
Chairman Arthur Levitt concluded that fee-based compensation would better align theinterests of broker-dealers and their customers and allow registered representatives tofocus on what the committee described as their most important role – providing
investment advice to individual customers, not generating transaction revenues. See
Report of the Committee on Compensation Practices (Tully Report) (Apr. 10, 1995). We
already have sought and received public comment on the potential benefits to investors offee-based accounts, see Certain Broker-Dealers Deemed Not to be Investment Advisers,
Investment Advisers Act Release No. 2376 (Apr. 12, 2005) [70 FR 20424 (Apr. 19,
2005]; Certain Broker-Dealers Deemed Not to be Investment Advisers, Investment
Advisers Act Release No. 2340 (Jan. 6, 2005) [70 FR 2716 (Jan. 14, 2005)]; and Certain
Broker-Dealers Deemed Not to be Investment Advisers, Investment Advisers Act Release
No. 1845 (Nov. 4, 1999) [64 FR 61226 (Nov. 10, 1999)].

choose an account that offers a similar set of services (including access to the same

because of the practical difficulties with complying with the trade-by-trade written

21

rule both protects investors’ choice – fee-based brokerage customers would be able tofee-based brokerage account. As discussed in this Release, many firms informed us that,

SIFMA asserted that firms should be exempt entirely from section 206(3) of the Act inorder to “preserve the [fee-based brokerage] client’s ability to access certain securities
that are best – or only – available through trades with the adviser or an affiliate of theadviser.” SIFMA Letter, at 3. SIFMA further requested that we provide broker-dealers
an exemption from all of the provisions of the Advisers Act with respect to their feebased brokerage accounts. We are not adopting such a broad exemption.

registered as broker-dealers to comply with section 206(3) of the Act. We believe this(or the firm makes available) a non-discretionary advisory account to replace the client’s

20

an interim final basis, that provides an alternative method for advisers who also arecommunications networks – may be a determinative factor in whether the client selects

engaging in principal trading with their advisory clients. Accordingly, customers who

who previously held fee-based brokerage accounts, we are adopting a temporary rule, on

limited availability and are dealt through a firm’s account using electronic

To address the concerns described above and to protect the interests of customers

advisers.” 22

inability of a client to access certain securities held in the firm’s principal accounts –particularly municipal securities and other fixed income securities that they contend haveprotections of the “federal fiduciary standard [that] govern[s] the conduct of investmentcommission-based brokerage accounts. Several firms emphasized to our staff that thecreates for a broker-dealer, a reason they may have initially opened fee-based brokerage

As a result of the FPA decision, customers must elect on or before October 1,

accounts. 21 They also will enjoy, as the Court pointed out in the FPA decision, thetransaction-based compensation and the incentives such a compensation arrangement

otherwise be available.19

2007, to convert their fee-based brokerage accounts to advisory accounts or to traditionalof traditional brokerage accounts. 20 Those investors will continue to be able to avoid

12

favorable transaction prices for the securities being bought or sold than would

11

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interests of the adviser will prevail over those of its clients.25

longer be offered any fee-based account. We believe the temporary rule will allow fee-prior interpretations, of the section. The temporary rule continues to provide theprotection of transaction-by-transaction disclosure and consent, subject to several
conditions. 26 Specifically, temporary rule 206(3)-3T permits an adviser, with respect to a
non-discretionary advisory account, to comply with section 206(3) of the Advisers Act

means of compliance provided by the rule, and whether those firms serve their clients’best interests.

DISCUSSION

A.

II.

In particular, Congress appears to have been concerned that advisers might

FPA decision, at 16, citing Transamerica Mortgage Advisors Inc. v. Lewis, 444 U.S. 11,
17 (1979).

See Investment Trusts and Investment Companies: Hearings on S. 3580 Before theSubcomm. of the Comm. on Banking and Currency, 76th Cong., 3d Sess. 320 (1940)(statement of David Schenker, Chief Counsel, Securities and Exchange Commission
Investment Trust Study) (“Senate Hearings”). As noted above, section 206(3) also
addresses agency cross transactions, which raise similar concerns regarding an adviser
engaging in transactions to benefit itself or its affiliates, as well as the concern that anadviser may be subject to divided loyalties.

See Senate Hearings at 322 (“[i]f a fellow feels he has a sour issue and finds a client towhom he can sell it, then that is not right. . . .”) (statement of David Schenker, ChiefCounsel, Securities and Exchange Commission Investment Trust Study).

22

23

24

As we have stated before “where an investment adviser effects a transaction as principalwith his advisory account client, the terms of the transaction are necessarily notestablished by arm’s-length negotiation. Instead, the investment adviser is in a position
to set, or to exert influence potentially affecting, the terms by which he participates insuch trade. The pressures of self-interest which may be present in such principaltransactions may require the prophylaxis of the disclosures [required by section 206(3).]”Rule 206(3)-2 Proposing Release.
We similarly provided, in a rule of analogous scope and structure to rule 206(3)-3T, an
alternative means of compliance with the disclosure and consent requirements of section
206(3) relating to “agency cross transactions.” See rule 206(3)-2 under the Advisers Act.

25

26

transaction; and (v) delivering to the client an annual report itemizing the principal

informed the client that it may act in a principal capacity and that the client authorized thedisclose and obtain the consent of its client to the conflicts of interest involved.

before each principal transaction; (iv) sending to the client confirmation statements
disclosing the capacity in which the adviser has acted and disclosing that the adviser

Congress chose not to prohibit advisers from engaging in principal

making certain disclosures, either orally or in writing, and obtaining the client’s consent

client prospectively authorizing the adviser to enter into principal transactions; (iii)

conflicts arising from principal trades; (ii) obtaining written, revocable consent from theand agency transactions, but rather to prescribe a means by which an adviser must

decline in value.

24

use advisory accounts to “dump” unmarketable securities or those the advisers fear may

the client.

23

adviser might engage in principal transactions to benefit itself or its affiliates, rather thanCongress intended section 206(3) of the Advisers Act to address concerns that anby, among other things: (i) providing written prospective disclosure regarding thecomply with the requirements of that section that is consistent with the purposes, and ourrule temporary allows us an opportunity to observe how those firms use the alternative

Overview of Temporary Rule 206(3)-3T

206(3) of the Advisers Act, rule 206(3)-3T provides advisers an alternative means toroughly the same services from, their broker-dealers. We believe further that making the

In light of these concerns and the important protections provided by section

advisers involves serious conflicts of interest and a substantial risk that the proprietary

only available through a firm acting in a principal capacity and who, as a result, may nobased brokerage customers to maintain their existing relationships with, and receive

Congress’s concerns were and continue to be significant. Self-dealing by investment

14

disruption to, and confusion among, investors who may wish to access and sell securities

13

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structure of the rule are similar to our rule 206(3)-2 under the Advisers Act, which, as
noted above, provides an alternative means of complying with the limitations on “agency
cross transactions,” also contained in section 206(3).

in these transactions, inform the client of the circumstances in which the adviser may

effect a trade on a principal basis, and provide the client with meaningful opportunities torefuse to consent to a particular transaction or revoke the prospective general consent to

3T would be available if the adviser acts as principal by causing the client to engage in atransaction with a broker-dealer that is an affiliate of the adviser – that is, a broker-dealer
that controls, is controlled by, or is under common control with the investment adviser.

potential impact on clients of the advisers. Will the advantages described above that we

believe accompany rule 206(3)-3T be beneficial to investors? Have we struck anappropriate balance between investor choice and investor protection? Does the

See Section II.B.7 of this Release.

Section 206(3) Release. For a further discussion, see Section II.B.8 of this Release.

In this regard, see NAPFA Letter (“express[ing] its strong reservations regarding thepossible grant of principal trading relief”).

27

28

29

investor protections?

29

See Section 206(3) Release at n. 3.
Rule 206(3)-3T(a)(1). For purposes of the rule, the term “investment discretion” has thesame meaning as in section 3(a)(35) of the Exchange Act [15 U.S.C. 78c(a)(35)], exceptthat it excludes investment discretion granted by a customer on a temporary or limited
basis. Section 3(a)(35) of the Exchange Act provides that a person exercises ‘‘investment
discretion’’ with respect to an account if, directly or indirectly, such person: (A) is30
31

advisory client on a temporary or limited basis.” 31 Availability of the rule toclient has not granted “investment discretion, except investment discretion granted by theRule 206(3)-3T applies to principal trades with respect to accounts over which the

Non-Discretionary Accounts

controlled by, or is under common control with the adviser. 30 Accordingly, rule 206(3)-agency transaction.” 28 We request comment generally on the need for the rule and its

1.

enter into a principal transaction that is effected by a broker-dealer that controls, isnecessary to alert the client to the adviser’s potential conflicts of interest in a principal or

alternative means of compliance contained in rule 206(3)-3T provide all the necessary

effected by an adviser, but also to certain situations in which an adviser causes a client tobe read together with Sections 206(1) and (2) to require the adviser to disclose facts

We have applied section 206(3) not only to principal transactions engaged in or

security, provided that certain conditions discussed below are met. The scope andadvisers by requiring an adviser to disclose to the client the conflicts of interest involved

these transactions. We note that we have previously stated that “Section 206(3) should

as principal for its own account, sells to or purchases from an advisory client any

These conditions, discussed below, are designed to prevent overreaching bycontrolling, controlled by, or under common control with the investment adviser, acting

thereunder, and the rules of the self-regulatory organization(s) of which it is a member. 27

Rule 206(3)-3T deems an investment adviser to be in compliance with theprovisions of section 206(3) of the Advisers Act when the adviser, or a person

relies on this rule be a brokerage account subject to the Exchange Act, and the rules

dealer under section 15 of the Exchange Act and that each account for which the adviser

Section-by-Section Description of Rule 206(3)-3TB.

16transactions. The rule also requires that the investment adviser be registered as a broker-

15

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based brokerage programs would make the requested relief impractical for firms andaccount to protect himself or herself from overreaching by the adviser.

Rule 206(3)-3T(a)(4). See Section II.B.4 of this Release.

We have not extended the rule to advisory accounts that are held only at investment
advisers, as opposed to firms that are both investment advisers and registered brokerdealers. See Section II.B.7 of this Release.

32

33

We would view a broker-dealer’s discretion to be temporary or limited within themeaning of rule 206(3)-3T(a)(1) when the broker-dealer is given discretion: (i) as to theprice at which or the time to execute an order given by a customer for the purchase orsale of a definite amount or quantity of a specified security; (ii) on an isolated or
infrequent basis, to purchase or sell a security or type of security when a customer isunavailable for a limited period of time not to exceed a few months; (iii) as to cash
management, such as to exchange a position in a money market fund for another money
market fund or cash equivalent; (iv) to purchase or sell securities to satisfy margin
requirements; (v) to sell specific bonds and purchase similar bonds in order to permit acustomer to take a tax loss on the original position; (vi) to purchase a bond with a
specified credit rating and maturity; and (vii) to purchase or sell a security or type of
security limited by specific parameters established by the customer.

authorized to determine what securities or other property shall be purchased or sold by orfor the account; (B) makes decisions as to what securities or other property shall bepurchased or sold by or for the account even though some other person may have
responsibility for such investment decisions; or (C) otherwise exercises such influencewith respect to the purchase and sale of securities or other property by or for the accountas the Commission, by rule, determines, in the public interest or for the protection of
investors, should be subject to the operation of the provisions of this title and rules andregulations thereunder.

defined in Advisers Act rule 205-3?

example, should it apply only with respect to transactions with a “qualified client” aspurposes under the Act, we have presumed are capable of protecting themselves? For

only available for transactions with wealthy or sophisticated clients who, for otherthemselves sufficiently? Should we further limit the availability of the rule so that it isin accounts where clients have granted discretion and may not be in a position to protect

where clients may be better able to protect themselves and monitor trading activity, thanthat the potential for abuse through self-dealing is less in non-discretionary accounts,

We welcome comment on this aspect of our interim final rule. Are we correct

those non-discretionary advisory accounts that were fee-based brokerage accounts.

We accordingly determined not to limit the availability of the temporary rule only totransition and ongoing servicing of these and other accounts subject to the Advisers Act.

accounts will be converting those accounts into non-discretionary accounts offered by theability to continue to access the inventory of securities held by their brokerage firm) nor
be administratively feasible to firms affected by the Court’s ruling with respect to the

As noted above,some portion of the customers converting fee-based brokerage accounts into advisorythat were originally established as fee-based brokerage accounts.

33

would neither serve the best interests of clients (because the effect would be to limit theirthat are of the same type. As such, limiting relief to accounts that were formerly in fee-will not be, or is not in a position to be, sufficiently involved in the management of the

The rule would apply to all non-discretionary advisory accounts, not only thoseelectronic codes allowing or prohibiting certain kinds of trades uniformly for all accounts

substantial, if not complete, control over the account raises significant risks that the client

brokerage accounts and those that were not would be very difficult. Trade execution
routing for investment advisory programs often is derived through unified programs or

In addition, we are of the view that the risk of relaxing theprocedural requirements of section 206(3) of the Advisers Act when a client has cededeach principal transaction.

principal trading distinctions between advisory accounts that were once fee-based

below, that the adviser obtains consent (which may be oral consent) from the client for32

same firm. We understand from our discussions with broker-dealers that maintaining

18

discretionary accounts would be inconsistent with the requirement of the rule, discussed

17

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price), but also often an over-allotment option, and potentially future business (whether
as an underwriter, lender, adviser or otherwise) with the issuer. The incentives may bias

accounts?

2.

security has such a significant conflict of interest as to make such a transaction, with one
exception, an inappropriate subject of the relief we are providing today.

the underwriting as part of its allotment of the offering and then sold to customers inprincipal transactions. As noted above, many broker-dealers have not made such

Rule 206(3)-3T(a)(2). The term “underwriter” is defined in section 202(a)(20) of theAdvisers Act to mean “any person who has purchased from an issuer with a view to, or
sells for an issuer in connection with, the distribution of any security, or participates or
has a direct or indirect participation in any such undertaking, or participates or has aparticipation in the direct or indirect underwriting of any such undertaking; but such term
shall not include a person whose interest is limited to a commission from an underwriteror dealer not in excess of the usual and customary distributor’s or seller’s commission.”

The act of underwriting is purchasing “with a view to . . . the distribution of any
security.” Section 202(a)(20) of the Advisers Act [17 CFR 275.202(a)(20)].
“Investment grade debt securities” are defined in the rule to mean any non-convertible
debt security that is rated in one of the four highest rating categories of at least two
nationally recognized statistical rating organizations (as defined in section 3(a)(62) of the
Exchange Act [15 U.S.C. 78c(a)(62)]). Rule 206(3)-3T(c).

3536

be “dumped” on clients. Also, it may be easier for clients to identify whether the priceconvertible investment grade debt securities may be less risky and therefore less likely tointerests of investors. When a broker-dealer acts as an underwriter with respect to a34

controls, is controlled by, or is under common control with the adviser. 36 Non-convertible investment grade debt securities underwritten by the adviser or a person who

economic interest in the success of the underwriting, which might be different from the

A broker-dealer participating in an underwriting typically has a substantial

We have, however, provided an exception for principal transactions in non-view that an investment adviser who (or whose affiliate) is the issuer or underwriter of asecurities. These securities are typically purchased by the broker-dealer participating inofferings available to advisory clients because of the requirements of section 206(3).

that are likely to adversely affect the objectivity of its advice. We therefore are of thebroker-dealer is the ability to obtain access to potentially profitable public offerings of

A broker-dealer acting as an issuer has similar, if not greater, proprietary interests

underwriter of other securities from its inventory.

One benefit an investor may gain by establishing a brokerage account with a large

broker-dealer acting as an underwriter than for sales by a broker-dealer not acting as an

dealer’s incentives to “dump” securities it is underwriting are greater for sales by aor a control person is an underwriter of non-convertible investment-grade debt securities.

The rule

decision to invest in the offering or the terms of that investment. As such, the broker-

includes one exception – an adviser may rely on the rule for trades in which the adviser

adviser (“control person”) is the issuer or is an underwriter of the security.

34

adviser or a person who controls, is controlled by, or is under common control with theRule 206(3)-3T is not available for principal trades of securities if the investment

the advice being provided or lead the adviser to exert undue influence on its client’s

spread between the underwriter’s purchase price from the issuer and the public offering

Issuer and Underwriter Limitations

successful distribution not only offers the possibility of a concession on the securities (theby the broker-dealers support application of the rule to all non-discretionary advisory

security, it is compensated precisely for the service of distributing that security. 35 A

20

fee-based brokerage accounts? Do the operational burdens and complexities identified

Should we limit the relief provided by the rule to accounts that originally were

19

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those issued or subject to an underwriting by the adviser or a control person) in light ofthe clients’ interest in obtaining access to public offerings? Alternatively, is there an
approach we might take that could distinguish types of underwriting arrangements that do
not present unacceptable risks of conflicts for the adviser? In this regard, we request

even where they or their affiliates are underwriters. Those firms argue that clients may

face difficulties and higher costs in obtaining these debt instruments, particularly

municipal bonds, through an advisory account if the adviser is not permitted to rely on

the interim final rule’s alternative means of complying with section 206(3).

37There is no uniform definition of what constitutes a structured product and the term is notdefined in the temporary rule. Structured products include, among other things,
securitizations of pools of assets, such as asset-backed securities which are supported bya discrete pool of financial assets (e.g., mortgages or other receivables). See generally
Securities Act Release No. 8518 (Dec. 22, 2004) [70 FR 1506 (Jan. 7, 2005)]. The
Financial Industry Regulatory Authority, Inc. (“FINRA”), the self-regulatoryorganization that oversees broker-dealers, defines structured products as “securities
derived from or based on a single security, a basket of securities, an index, a commodity,
a debt issuance and/or a foreign currency.” FINRA Notice to Members 05-59 (Sept.
2005). FINRA has notified its members that they should consider only recommending
structured products to customers who have been approved for options trading. Id. at 4.
See also FINRA Notice to Members 03-71 (Nov. 2003) (expressing concern thatinvestors, particularly retail investors, may not fully understand the risks associated with
non-conventional investments – such as structured securities – and cautioning members

38

Rule 206(3)-3T(a)(3).

to ensure that their sales conduct procedures fully and accurately address any of thespecial circumstances presented by the sale of these products).

adviser may engage in principal transactions with the client; (ii) the nature andclient with written disclosure about: (i) the circumstances under which the investment

from such client. 38 The consent must be obtained only after the adviser provides theacting as principal for its own account, to sell any security to or purchase any security

written, revocable consent prospectively authorizing the adviser directly or indirectly

An adviser may rely on rule 206(3)-3T only after having secured its client’s

Written Prospective Consent Following Written Disclosure3.

person) is an issuer or underwriter of securities in certain circumstances?

requires compliance with section 206(3)’s trade-by-trade written disclosure requirements

such as a structured note, with an advisory client. 37 We request comment on whether wecircumstances in which an adviser should be able to rely on the rule when it (or a control

person of the adviser. It also makes the rule unavailable in connection with – and thus

before – non-discretionary placement by an adviser of a proprietary structured product,

debt securities. Is the exception appropriate under the circumstances? Are there othertransactions in traditional equity or debt offerings of the investment adviser or a control

comment on the one exception we have provided for non-convertible investment gradeconsider making the rule available for principal transactions in all securities (including

them to conduct principal trades with their advisory clients involving these securities,

The limitation on issuer transactions makes the rule unavailable for principal

risks to clients and our interpretation of the purposes of section 206(3)? Should weby the adviser or its control persons. Do commenters agree with our assessment of thedealers, those broker-dealers have asserted that it is in the interest of investors to permit

Moreover, as the staff has discussed the effects of the FPA decision with broker-

We also request comment on our exclusion for securities issued or underwritten

if so, on what terms.

the relative comparability, and the significant size, of the non-convertible investment

grade debt markets.

should consider expanding the availability of the rule to apply to structured products, and22

they are being quoted for a non-convertible investment grade debt security is fair given

21

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accounts they offer? If so, should we add a provision to the rule to address this issue,
such as prohibiting advisers from doing so?

conflicts. 39 We anticipate that this consent normally would be obtained by the adviser

when the client establishes the advisory account.40

adviser to act as principal for its own account with respect to each such transaction. 43
The trade-by-trade disclosure and consent may be written or oral. Although
representatives of the brokerage industry have requested that we eliminate theprospective disclosures more meaningful to clients? Should we require disclosure to beprominent or, alternatively, require disclosure in a separately executed document toassure that the client has separately given attention to the request for consent?

The FPA recommended a similar condition. See FPA Letter, at 3.

No additional disclosure regarding the principal capacity in which the adviser may be
acting need be made pursuant to rule 206(3)-3T(a)(3) at the time of the transaction,
provided the disclosure required by paragraph (a)(3) of the rule has been made and iscorrect in all material respects.

Rule 206(3)-3T(a)(8). The FPA recommended a similar condition. See FPA Letter, at 4.

39

40

41

The right to revoke prospective consent is not intended to allow a client to rescind, after
execution but prior to settlement, a particular trade to which the client provided specificconsent prior to execution.
Rule 206(3)-3T(a)(4).
SIFMA Letter, at 3.

42

43
44

appropriate.

may be effected on a principal basis close in time to the carrying out of such a trade ispreventing an adviser from relying on rule 206(3)-3T with respect to that account goingfor conflicted advice they may be receiving on individual transactions. In light of theconflicts inherent in these transactions, generally notifying the client that a transaction

Thus, thethat such disclosure and consent continues to be important to alert clients to the potential

client must be able to revoke his or her prospective consent at any time, thereby

clarifying that the prospective general consent may be revoked at any time.

41

consent, the investment adviser must include a conspicuous, plain English statement

requirement for transaction-by-transaction disclosure and consent, 44 we have determinedwith respect to the transaction; and (ii) obtain consent from the client for the investment

counterparty? Are there alternative approaches that we could adopt to make theWith each written disclosure, confirmation, and request for written prospective

principal transaction, to: (i) inform the client of the capacity in which the adviser may act

The temporary rule requires an investment adviser, before the execution of each

Trade-by-Trade Consent Following Disclosure

understanding the conflicts and risks inherent in principal trading by a fiduciaryWill the disclosure required by paragraph (a)(3) be meaningful for clients in

4.

a provision in light of the client’s right to revoke his or her consent at any time?

paragraph (a)(3) of the rule 206(3)-3T, or subsequently revokes that consent after having

granted it, so long as the adviser complies with the terms of section 206(3) of the Act.

that the client’s consent be renewed periodically? What benefit would be gained by suchtrades with a client who either never grants the prospective consent required under

The written prospective consent need only be executed once. Should we require

advisers make a client’s consent a condition to participation in non-discretionary advisory

result of those transactions; and (iii) how the investment adviser addresses those

Rule 206(3)-3T is not exclusive. An adviser would still be able to effect principal

forward. 42 Do these provisions adequately ensure that client consent is voluntary? Will24

significance of the conflicts the investment adviser has with its clients’ interests as a

23

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execution of the transaction that the adviser may act in a principal capacity in connection
with the transaction, that the client authorized the transaction, and that the adviser soldthe security to or bought the security from the client for its own account.48 An
investment adviser need not send a duplicate confirmation. An adviser may satisfy its
obligations under paragraph (a)(5) by including, or causing an affiliated broker-dealer toinclude, the additional required disclosure on a confirmation otherwise sent to the client

misunderstanding by advisory clients of the nature of a transaction and the conflicts

inherent in it as well as a meaningful safeguard for investment advisers seeking tocomply with their fiduciary obligations. We understand, however, that in many instances

the adviser may not know whether a particular transaction will be effected on a principal

basis. Accordingly, the rule permits advisers to disclose to clients that they “may” act ina principal capacity with respect to the transaction.

Written Confirmation

45

See rule 206(3)-3T(a)(1) (limiting the availability of the rule to accounts over which theadviser does not exercise discretionary authority).

trade pursuant to rule 206(3)-3T a written confirmation, at or before the completion of the

The investment adviser must send to each client with which it effects a principal

5.

advisers instead view the relief as unworkable?

flexibility to provide oral instead of written disclosure on a trade-by-trade basis. Or, will

For a discussion of the meaning of “completion” of the transaction, see Section 206(3)Release. The temporary rule does not permit advisers to deliver confirmations using thealternative periodic reporting provisions of rule 10b-10(b) under the Exchange Act.
17 CFR 240.10b-10.
Rule 206(3)-3T(a)(5).
Rule 206(3)-2 under the Advisers Act, our agency cross transaction rule, requires similar
confirmation disclosure.

46

47
48
49

alternative periodic reporting provisions of rule 10b-10(b)?

advisers to rely on rule 206(3)-3T and also deliver confirmations to clients pursuant to thecircumstances in which commenters believe it is appropriate for us to permit investment

be able to do so efficiently.

We request comment regarding whether investment advisers find useful the

additional information that should be included in the confirmation? Are there

whether they intend to document receipt of the oral consent and, if so, whether they willadviser effects on a principal basis and that conflicts of interest are inherent in suchtransactions. 49 We request comment on our written confirmation condition. Is there

We are interested in learning from investors whether this consent

that clients are given a written notice and reminder of each transaction that the investment

The requirement to provide a trade-by-trade confirmation is designed to ensure

requirement is informative and helpful. We also are interested in learning from advisersa principal basis.

45

obtain consent for each transaction regardless of whether the transaction will be done on

burden on investment advisers of non-discretionary accounts who must, in most cases,

with respect to a particular principal transaction.

statement informing the advisory client that the adviser disclosed to the client prior to thedisclosure and consent, even if oral, might be a more effective protection against

We do not believe the obligation to make oral disclosure will impose a significant

Exchange Act rule 10b-10, 47 the confirmation must include a conspicuous, plain English

transaction. 46 In addition to the other information required to be in a confirmation by26

increasing complexity of securities products available in the marketplace, trade-by-trade

Given the frequency and speed of trading in some advisory accounts as well as the

25

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Annual Summary Statement

therefore requires that the protections of both the Advisers Act and the Exchange Act
apply when advisers enter into principal transactions with clients in reliance on the rule.

disclosure required pursuant to rule 206(3)-3T, to be able to rely on the rule theinvestment adviser must include a conspicuous, plain English statement that its client’s

Rule 206(3)-3T(a)(6). Rule 206(3)-2(a)(3) contains a similar annual report requirementwith respect to agency cross transactions. In addition, the FPA recommended a similar
condition. See FPA Letter, at 4.

51

Rule 206(3)-3T(a)(8).

apply to the relationship between a broker-dealer and its customer in addition to theCommission and self-regulatory organization sales practice and best execution rules that

Commenters are invited to submit suggestions for possible enhancements to the50

investment advisers and their employees must comply with the comprehensive set of

Our decision not to extend the rule to advisory accounts that are held only at

is required with respect to agency cross transactions pursuant to rule 206(3)-2(a)(3), we

consequence to the client for consenting to those trades. Are our concerns justified?

trade with a control person, even if that control person is a registered broker-dealer.

transactions with respect to which they are relying on this rule. Although that disclosure

dealers, is based on several considerations. First, firms that are both broker-dealers andwould be unable to rely on rule 206(3)-3T if it causes a client to enter into a principal

amount of all commissions or other remuneration they receive in connection withreflect the actual economic benefit to the adviser with respect to those trades or thealso are registered as broker-dealers, an adviser who is not also a registered broker-dealer

For example, we are not requiring advisers to disclose in an annual statement the total

investment advisers, as opposed to entities that are both investment advisers and broker

person of the adviser). Because we have decided to apply the rule only to advisers whoare concerned that disclosure of such amounts for principal trades may not accuratelyof its own account) or indirectly (out of an account of another person who is a control

additional information that we should require to be included in each summary statement?

adviser that also is registered as a broker-dealer to execute a principal trade directly (outsummary statement be provided more or less frequently than annually? Is there

We request comment generally on this aspect of the interim final rule. Should a

The temporary rule permits, subject to compliance with the rule’s conditions, an

and the rules of applicable self-regulatory organizations (e.g., FINRA). 52 The rule

the frequency with which their adviser engages in such trades. As with each otherwritten prospective consent may be revoked at any time.

section must be a brokerage account subject to the Exchange Act, the rules thereunder,of the principal trading activity in their accounts and are afforded an opportunity to assess

51

with us as a broker-dealer. Each account for which the investment adviser relies on thisThe annual summary statement is designed to ensure that clients receive a periodic record

Advisory Account Must be a Brokerage Account7.

Rule 206(3)-3T is only available to an investment adviser that also is registeredaccount in reliance on rule 206(3)-3T, including the date and price of such transactions. 50

significance of their consenting to principal trades.

disclosures in annual statements that could enhance the disclosure to clients of the28

year, written disclosure containing a list of all transactions that were executed in the

The investment adviser must deliver to each client, no less frequently than once a

6.

27

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Advisers Act or by other applicable provisions of federal law. 55

a practical matter, advisory clients most frequently need and desire principal trading

prevent violations of the Advisers Act (and the rules thereunder) by the adviser or any of
its supervised persons. 56 Thus, an adviser relying on rule 206(3)-3T as an alternativemeans of complying with section 206(3) must have adopted and implemented written

as broker-dealers thus addresses a large category of the situations in which clients arelikely to benefit from access to the inventory of the adviser/broker-dealer without

sacrificing pricing or other sales practice protections.

Other Obligations Unaffected

Rule 206(3)-3T(a)(7).

We note that fee-based brokerage accounts have been subject to Commission and selfregulatory organization sales practice and best execution rules since their inception.

52

53

clients, including fulfilling the duty with respect to the best price and execution for ainvestment adviser from its obligation to act in the best interests of each of its advisory

Rule 206(3)-3T(b) clarifies that the temporary rule does not relieve in any way an

8.

investment advisers and so are unnecessary in this context?

regulation that are clearly duplicative or clearly inapplicable to the regulation ofRule 206(3)-2(e) contains a similar provision.
Section 206(3) Release. See also SIFMA Memo at Exhibit page 23 (noting that, inconnection with any relief provided under section 206(3), “[t]he adviser will continue toact in the best interests of the client, including a duty to provide best execution, and will
be required to meet all disclosure obligations imposed by Sections 206(1) and (2) of theAdvisers Act and by other applicable provisions of the federal securities laws and rules of
SROs”); section 406 of the Employee Retirement Income Security Act of 1974(“ERISA”) (describing “prohibited transactions” of fiduciaries subject to ERISA); section
4975(c)(1) of the Internal Revenue Code (the “Code”) (describing “prohibited
transactions” of fiduciaries governed by the Code).
Rule 206(4)-7(a) [17 CFR 275.206(4)-7(a)].
17 CFR 275.204-2.
17 CFR 240.17a-3.
17 CFR 240.17a-4.

55

56
57
58
59

effects.

registered as broker-dealers? Would they choose to register as a broker-dealer in order to54adviser to make, keep, and retain records relating to the principal trades the adviserorganizations? What will be the impact of the rule on advisers that are not themselves

take advantage of the new rule? Are there particular requirements of broker-dealer

In addition, rule 204-2,57 as well as Exchange Act rules 17a-3 58 and 17a-4, 59 requires thebenefit to customers of maintaining the sales practice rules of self-regulatory

policies and procedures reasonably designed to comply with the requirements of the rule.

with us to adopt and implement written policies and procedures reasonably designed toof complying with section 206(3) of the Advisers Act for advisers that also are registered

We request comment on this aspect of the interim final rule. What will be theto rule 206(4)-7, which, among other things, requires an investment adviser registered

they generally carry large inventories of securities. Providing a variation in the method

We note specifically that an adviser engaging in principal transactions is subject

investment adviser from its fiduciary obligation imposed by sections 206(1) or (2) of theapplication of the laws and rules regarding broker-dealers to these accounts. 53 Second, asservices from firms that are dually registered as an adviser and a broker-dealer because

particular transaction. 54 Compliance with rule 206(3)-3T also does not relieve an

30

fiduciary duties an adviser owes a client. We believe that it is important to maintain the

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Limited Duration of Relief

Other Mattersthe effect of the rule on competition, efficiency, and capital formation, which we address
below in Section VII of this Release. For the reasons described in this Release, we

further Commission action no later than the end of that period if the Commission intends

to continue the same or similar relief.

govern the conduct of investment advisers, broadly defined, . . . and second, by requiring
full disclosure of all conflicts of interest.” 62 The Congressional intent was to eliminate or
expose all conflicts of interest that might incline an investment adviser, consciously or
unconsciously, to render advice that was not disinterested. 63 The Court further noted that
Congress’s purpose in enacting the Advisers Act was to establish fiduciary standards andrequire full disclosure of all conflicts of interests of investment advisers. 64

their brokerage firm. Those customers also could have faced renewed disruption andconfusion if the rule on principal trades were abolished or substantially modified in the

short term. Similarly, broker-dealers would have faced the same uncertainty about thecontinuation of the rule, which could have caused some broker-dealers to decide not tomake the necessary expenditures and investments to offer advisory accounts with accessto principal trades.

60

The FPA recommended a similar condition. See FPA Letter, at 2.

be modified.

also welcome comment on any other aspects of the rule that commenters believe should

See 15 U.S.C. 80b-6a.
FPA decision, at 490.
Id.
Id.

61
62
63
64

text of section 206(3), which reflects the basic conflict disclosure purposes of the Act.

The temporary rule adopted today meets those purposes and adheres closely to theto Congress in two principal ways: First, by establishing a federal fiduciary standard tocontinuation of access through their advisory accounts to the securities in the inventory of

We request comment on whether the 27-month time frame is appropriate. We

that the “overall statutory scheme of the [Advisers Act] addresses the problems identified

disadvantaged former fee-based brokerage customers because of the uncertainty about theIn the FPA decision, the Court described the purposes of the Act, emphasizing

purposes fairly intended by the policy and provisions of the Advisers Act.

they conduct principal trades with their clients, they put their clients’ interests first. A

significantly shorter period than the one we have established, however, may havethe protection of investors. We also believe that the temporary rule is consistent with the

how firms comply with their disclosure obligations under the rule, and whether, when

believe that the rule is necessary or appropriate in the public interest and consistent withintended by the policy and provisions of the Advisers Act. 61 We also need to consider

months from its effective date. 60 Setting a termination date for the rule will necessitate

We believe limiting the duration of the rule will give us an opportunity to observe(ii) consistent with the protection of investors; and (iii) consistent with the purposes fairly

This rulemaking action must be: (i) necessary or appropriate in the public interest;

10.

32

Commission, the temporary rule will expire on December 31, 2009, which is about 27

Rule 206(3)-3T(d) contains a sunset provision. Absent further action by the

9.

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65

benefit from the rule, the investment adviser must also be a broker-dealer registered withus. Therefore, the firm must comply with the comprehensive set of Commission and selfregulatory organization sales practice and best execution rules that apply to therelationship between a broker-dealer and customer in addition to the fiduciary duties anadviser owes a client.

to obtain prospective written consent of the client in response to that initial

disclosure;

before each transaction, to inform the advisory client, orally or in writing, thatthe adviser may act in a principal capacity with respect to the transaction andSection 206(3) Release at text accompanying note 5.

xxadviser addresses those conflicts;

Another significant protection is that, as we discuss in Section II.B.7 above, topurpose behind section 206(3) of the Act.

engage in principal transactions, the nature and significance of conflicts with

its client’s interests as a result of the transactions, and how the investment

We believe that these transaction-specific steps, taken together, fulfill the Congressional

circumstances under which the investment adviser directly or indirectly may

revoke his or her prospective consent at any time.

to acknowledge explicitly in each required disclosure the right of the client toadditional investor protections measures by requiring an adviser:at the outset of the relationship with the client, to disclose in writing thetransaction; andtransaction disclosure and consent (as required by section 206(3) of the Act), but adds

xtransaction during the preceding year and the date and price of each suchto send to the advisory client an annual statement listing each principal

procedural means of complying with section 206(3) that retains transaction-by-

The temporary rule complies with Congressional intent. It provides an alternativex

transaction, and that the adviser sold the security to, or bought the security

address these particular conflicts of interest by imposing a disclosure and client consent

xcapacity in connection with the transaction, that the client authorized theengaging in all principal and agency transactions with clients. Rather, Congress chose tofrom, the client for its own account;

execution of the transaction that the adviser may be acting in a principal

unwanted securities into client accounts], but did not prohibit advisers entirely fromrequirement in Section 206(3) of the Advisers Act.”

the Exchange Act, discloses that the adviser informed the client prior to therecognized the potential for [abuses such as price manipulation or the placing of65

confirmation that, in addition to the information required by rule 10b-10 under

to send to the client, at or before completion of the transaction, a written trade

the capacity in which the adviser is acting and must obtain the consent of the client to thetransaction. As we have stated before, “[i]n adopting Section 206(3), Congresstransaction;

advisory client, must disclose to the client in writing before completion of the transactionx

to obtain the consent from the advisory client, orally or in writing, for the34

That section provides that an adviser, before engaging in a principal trade with an

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representatives of investors, financial planners, and broker-dealers about the terms ofrelief, considered their specific comments, and took those comments into account indeveloping the temporary rule we are adopting today.

therefore employs a range of features to achieve the transaction-by-transaction conflictdisclosure and consent purposes and policies of the Advisers Act. The rule additionallyenables the adviser to discharge its fiduciary duties by bolstering them with broker-dealer

Effective Datecritical to a customer who invests primarily in fixed income securities (which generally
are traded by firms on a principal basis) to know whether he or she could continue toaccess a firm’s inventory of those securities (or sell those securities to the firm) in anadvisory account. But firms informed us that they would not permit that kind of trading
without a rule that is effective and that provides an alternative means of complying withsection 206(3) of the Act. Until we could publish a rule for comment, receive andanalyze those comments, and adopt a final rule, that customer would be left with the
choice between a traditional brokerage account without the ability to pay a fee based on
assets – presumably the customer’s preferred manner of payment – or a fee-based
advisory account without the ability to invest in fixed income products.

investors as a result of the Court’s decision. One area of significance identified as ourdeliberative process continued was the area of principal trades. Under the rule vacated in

the FPA decision, principal trades in fee-based brokerage accounts were not subject tosection 206(3) of the Act. Through the process of discussions with interested parties, it

was brought to our attention that a large number of fee-based brokerage customers favorhaving the choice of advisory accounts with access to the inventory of a diversified

broker-dealer and that for certain customers the access to such securities – many of which

would otherwise be unavailable – was a critical component of their investment strategy.

We also learned that, as discussed above, the traditional method for complying with theprincipal trading restrictions on an adviser in section 206(3) – written disclosure andknow what services will be offered in advisory accounts. For example, it would beareas in which Commission action or relief might be required to protect the interests ofpossible for those customers to make a meaningful, well-informed decision if they do notadvisory accounts or to traditional commission-based brokerage accounts. It is notbrokerage accounts must now consider whether they should convert their accounts toissuance of the Court’s mandate to vacate the former rule, investors with fee-based

communications with affected customers, broker-dealers, and investment advisers about

In the time since the FPA decision, the Commission staff has had numerous

including those discussed above, we have acted on an interim final basis.

This temporary rule takes effect on September 30, 2007. For several reasons,11.

Because of the FPA decision and the October 1, 2007 expiration of the stay of thefor principal trading relief from firms and the staff engaged in discussions withresponsibilities.

adviser to engage in principal trading with its clients. The Commission received requests

conduct principal trades with their clients, they put their clients’ interests first. The ruleconsent before completion of each securities transaction – made it not feasible for an

36

opportunity to observe how firms comply with their obligations, and whether, when they

We further believe that the temporary nature of the rule will give us an

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firm’s inventory of securities, then elect an advisory account only after a rule subject tonotice and comment is finalized. This type of serial account change is costly to firms forthe same reasons it is costly for them to convert accounts pursuant to the FPA decision.
Moreover, such switching of account types can be confusing to customers if it is the firmor she needs to make informed decisions about the services available in each type ofaccount. We believe that it serves such investors’ interests best to adopt the rule on aninterim final basis, which permits them to continue the same kind of account, with similar

services, that they had when they were fee-based brokerage customers.

brokerage to advisory or other accounts. Otherwise, the risk of disrupting services to theinvestors, depriving them of the choice of an advisory account with a broker-dealer, andconfusing them with a series of changes to the services available to them would havebeen substantial. Obtaining a further postponement of the stay of the mandate to allow
advance notice and comment rulemaking did not appear feasible. For these reasons,issuance of an immediately effective rule is necessary to ameliorate the likely harm toinvestors.

For example, in order to comply with the October 1 deadline, those firms needed to draftor revise agreements, policies, and other documents, hire and train employees, and makechanges to data and record keeping, order entry, billing, and other systems. The firms

offering fee-based brokerage accounts urged us to reduce the burdens that apply to themby adopting a rule that is effective on or before October 1 and that permits an alternative

method of complying with section 206(3) of the Act (or, alternatively, to exempt themfrom section 206(3) altogether). They informed us that this would simplify the process of

temporary rule. Setting a 27-month termination date for the rule will necessitate further
Commission action no later than the end of that period if the Commission intends tocontinue the same or similar relief. The sunset provision will result in the Commission

discretionary advisory accounts as they were in fee-based brokerage accounts – the firms

would not have to explain why the services a customer has become accustomed to arechanging, or why the manner of payment is changing.

assessing the operation of the rule and intervening developments, as well public comment

carefully consider and respond to them in a subsequent release. Moreover, this is abecause the services and manner of payments would be substantially similar in non-

Furthermore, we emphasize that we are requesting comments on the rule and willavailable at the same time the broker-dealers complete the transition from fee-based

accounts requires a great deal of time and imposes significant conversion costs on firms.

communicating with their customers and reduce investor confusion. This is mostly

Those factors led to this rule and similarly explain why the rule needs to be

many as one million fee-based brokerage accounts to non-discretionary advisory or otherthat is recommending the changes.

recommend) a commission-based brokerage account in order to have access to theirand one or more firms about the options available to give the investor the information he

We are aware that, as a result of the FPA decision, the process for converting as

FPA decision takes effect, fee-based brokerage customers may elect (or the firm may

The firms also were concerned that, without a rule that is effective by the date the38

confusing to many investors, requiring a series of communications between the investor

Changing accounts and methods of payments can be highly disruptive and

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The Commission will have another opportunity to assess the operation and terms of theat all.

several months ahead of schedule. The results of the RAND Study are expected toprovide an important empirical foundation for the Commission to consider what action totake to improve the way investment advisers and broker-dealers provide financial
services to customers. One option then available to the Commission will be making the
RAND Study results available to the public and seeking comments on them and theirbrokerage firm and could have faced renewed disruption and confusion if the rule on

principal trades were abolished or substantially modified in the short term. Similarly,

broker-dealers would have faced the same uncertainty about the continuation of the rule,

which could have caused some broker-dealers to decide not to make the necessary

expenditures and investments to offer advisory accounts with access to principal trades.

Commission commissioned a study comparing the levels of protection afforded

affect investors (the “RAND Study”). As we have previously announced, thecomparing how the different regulatory systems that apply to broker-dealers and advisers

66

Commission Seeks Time for Investors and Brokers to Respond to Court Decision on FeeBased Accounts, SEC Press Release No. 2007-95 (May 14, 2007).

feasible for them to do so and, if written consent is required, many fee-based brokerage

205 of the Act. Broker-dealers have informed us that, as a practical matter, it is notadvisory agreement that meets the requirements of the Advisers Act, in particular section

to them in a subsequent release.

In addition, we are awaiting a report being prepared by RAND Corporation

written consent from each of their fee-based brokerage customers to enter into an

Broker-dealers have asked whether they must, before October 1, 2007, obtain

The Commission is requesting comments from all members of the public during

Client Consent

A.

REQUEST FOR COMMENTS

the next 60 days. We will carefully consider the comments that we receive and respondIII.

accounts to advisory accounts and meet the requirements of this rule by October 1, 2007.

an exemption and relieves a restriction.

We are today providing guidance to assist broker-dealers who have offered fee-

TRANSITION GUIDANCE

based brokerage accounts and are seeking the consent of their clients to convert thoseIV.

interest. In addition, the rule in part has interpretive aspects and is a rule that recognizes

effectiveness of the rule are impracticable, unnecessary, and contrary to the public

effect on September 30, 2007, and that notice and public procedure in advance of the

bearing on the terms of this rule.

Study is expected to be delivered to the Commission no later than December 2007,of having access through their advisory accounts to the securities in the inventory of their

As a result, the Commission finds that it has good cause to have the rule takeregulatory systems that apply to broker-dealers and advisers affect investors. The RAND

have disadvantaged investors. They would have faced uncertainty about the continuation

rule when it receives the results of the RAND Study comparing how the different

customers of broker-dealers and investment advisers under the federal securities laws. 66

letters, and considering whether to continue the rule with or without modification or not

A significantly shorter period than the 27-month period we have established could

40

39

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V.

prospective consent from each client authorizing the investment adviser to engage inMarch 31 , 2008. An agency may not conduct or sponsor, and a person is not required torespond to, a collection of information unless it displays a currently valid OMB control
number. The title for the collection of information is: “Temporary rule for principal
trades with certain advisory clients, rule 206(3)-3T” and the OMB control number for thecollection of information is 3235-0630.

including the condition in paragraph (a)(4) of the rule, which requires that the adviser

make certain disclosures and obtain client consent before effecting a principal trade withthe client. They also must provide a client with the written disclosure required byparagraph (a)(3) of the temporary rule prior to effecting the first trade with that client inreliance on this rule.

required to be in Part II of Form ADV at the time of, or prior to, entering into an advisory

clients with a disclosure statement, or brochure, containing at least the information

Advisers Act rule 204-3 requires an investment adviser to furnish its advisory

44 U.S.C. 3501 et seq.

approved the collection of information on an emergency basis with an expiration date ofperiod, investment advisers must comply with the other conditions of rule 206(3)-3T,

68

approval in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The OMB has

his or her account to a non-discretionary advisory account. During this transitional

The Advisers Act does not specify any means by which a client must execute a newadvisory contract or agree to changes in an existing one. For purposes of transitioning
clients from fee-based brokerage accounts, advisers presumably must look to the terms ofthe contracts they have in place, as well as applicable contract law, to determine themanner in which they need to enter into new contract or amend existing contracts in order
to come into compliance with the Act.

Separately, we have submitted the collection of information to OMB for review andwritten consent no later than January 1, 2008 from each fee-based customer who converts

67(“OMB”) for review in accordance with 44 U.S.C. 3507(j) and 5 CFR 1320.13.

its effective date to those customers, we will not object if an adviser obtains the required

Client Brochures

new. We submitted these requirements to the Office of Management and Budget

To make the alternative means provided in the interim final rule useful immediately uponB.

meaning of the Paperwork Reduction Act of 1995. 68 The collection of information isconvert their accounts to non-discretionary advisory accounts prior to October 1, 2007.

Rule 206(3)-3T contains “collection of information” requirements within theadvisers to obtain these written consents from fee-based brokerage customers who

BackgroundA.

principal transactions with the client. We understand that it likely will be impossible for

PAPERWORK REDUCTION ACT

than January 1, 2008.

alternative means for complying with section 206(3) of the Act to obtain a written

convert to non-discretionary advisory accounts, advisers deliver this statement no later

deadline, we will not object if, with respect to the fee-based brokerage customers thatbased brokerage accounts, which may not be best for them.

Interim final rule 206(3)-3T(a)(3) requires an adviser wishing to rely on the rule’s

contract. 67 In light of the time constraints firms face in complying with the October 1st

42

customers will experience interrupted service or will be placed in traditional commission-

41

155

adviser. With respect to each type of collection, the information would be maintained by
the adviser. Under Advisers Act rule 204-2(e), an adviser must preserve for five years
the records required by the collection of information pursuant to rule 206(3)-3T.
Although the rule does not call for any of the information collected to be provided to us,
to the extent advisers include any of the information required by the rule in a filing, suchas Form ADV, the information will not be kept confidential. The collection of
information delivered by investment advisers pursuant to rule 206(3)-3T would be
provided to clients and also would be maintained by investment advisers. The collectionof information delivered by clients to advisers would be subject to the confidentiality
strictures that govern those relationships, and we would expect them to be confidential
communications.

obtain consent for each transaction in which the adviser acts in a principal capacity. Rule206(3)-3T permits an adviser, with respect to a non-discretionary advisory account, tocomply with section 206(3) by: (i) making certain written disclosures; (ii) obtaining

written, revocable consent from the client prospectively authorizing the adviser to enter

into principal trades; (iii) making oral or written disclosure that the adviser may act in a

principal capacity and obtaining the client’s consent orally or in writing prior to the

execution of each principal transaction; (iv) sending to the client confirmation statements

disclosing the capacity in which the adviser has acted and indicating that the adviser

disclosed to the client that it may act in a principal capacity and that the client authorized

the transaction; and (v) delivering to the client an annual report itemizing the principaltransactions.

investment adviser must provide written, prospective disclosure to the client explaining:(i) the circumstances under which the investment adviser directly or indirectly may
engage in principal transactions; (ii) the nature and significance of conflicts with its
client’s interests as a result of the transactions; and (iii) how the investment adviser
addresses those conflicts. Pursuant to paragraph (a)(8) of the rule, the written,
prospective disclosure must include a conspicuous, plain English statement that a client’s

compliance provided by the rule is substantially similar to the approach advisers currently

employ to comply with the disclosure and consent obligations of section 206(3) of theAdvisers Act and the approach that broker-dealers employ to comply with theconfirmation requirements of rule 10b-10 under the Exchange Act. Thus, as discussed

below, we estimate that rule 206(3)-3T will impose only small additional burdens.

Prospective Disclosure and Consent: Pursuant to paragraph (a)(3) of the rule, an

the burden of each of the collections reflects the fact that the alternative means ofUnder rule 206(3)-3T, there are four distinct collection burdens. Our estimate ofCollections of Information

adviser to its advisory clients and information collected from advisory clients by anclients. In the absence of this rule, an adviser must provide a written disclosure andCollections of Information and Associated Burdens

The rule contains two types of collections of information: information provided by anB.

benefit of the alternative means of complying with section 206(3) of the Advisers Act.

act in a principal capacity with respect to transactions with certain of their advisory

Providing the information required by rule 206(3)-3T is necessary to obtain the

44

registered with us as broker-dealers to meet the requirements of section 206(3) when they

Rule 206(3)-3T provides an alternative method for investment advisers that are

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156

were eligible to rely on the temporary rule (i.e., also registered as broker-dealers), 395 ofwhich indicate that they have non-discretionary advisory accounts. 71 We estimate that 90
percent of those 395 advisers, or a total of 356 of those advisers, will rely on this rule.72
Of the 239 eligible advisers that do not currently provide non-discretionary advisoryof information is necessary to explain to investors how their interests might be different

from the interests of their investment adviser when the adviser engages in principal tradeswith them. It is designed to provide investors with sufficient information to be able todecide whether to consent to such trades.

provided by this rule. 73 Thus, the total number of advisers we anticipate will rely on the

distributing the required disclosure to clients with respect to the accounts for which the

IARD data as of August 1, 2007, for Items 6.A(1) and 5.F(2)(e) of Part 1A of Form
ADV.
We anticipate that most dually-registered advisers will make use of the rule to engage in,at a minimum, riskless principal transactions to limit the need for these advisers toprocess trades for their advisory clients with other broker-dealers. We estimate that 10%of these firms will determine that the costs involved to comply with the rule are too
significant in relation to the benefits that the adviser, and their clients, will enjoy.
We estimate that 10% of the dually-registered advisers that do not currently have nondiscretionary advisory programs will create them due to a combination of market forces

71

72

73

previously engaged in principal trades with their non-discretionary advisory clients, will

be approximately 5 hours on average. We expect that some advisers, particularly the69

We note that disclosure about the conflicts of interest for an adviser that engages inprincipal trades already is required to be disclosed by investment advisers in Form ADV.
See Item 8 of Part 1A of Form ADV; Item 9 of Part II of Form ADV; Item 7(l) of
Schedule H to Part II of Form ADV.

disclosure for each eligible adviser, taking into account both those advisers that

We estimate that the average burden for drafting the required prospective

account, the ongoing burden will be minimal.

The opportunities to engage in principal trades with advisory clients will vary greatly
among eligible investment advisers. We believe many of these advisers are registered as
broker-dealers for limited purposes and do not engage in market-making activities orotherwise carry extensive inventories of securities. These firms likely would limit theirprincipal trading operations significantly. For example, they may choose to engage only
in riskless principal trades, which may pose limited conflicts of interest resulting in brief
disclosures. Investment advisers with large inventories of securities and multi-faceted
operations, however, likely will have much more extensive disclosure.
70

and is integrated into materials provided upon opening a non-discretionary advisory

investment adviser seeks to rely on the rule.69 Once the disclosure has been developed

discretionary advisory programs and rely on the alternative means of complianceadvisers develop and deliver the required disclosure. This will require drafting andservices, we estimate that 10 percent of these advisers, or 24 advisers, will create non-engage with in principal trading. As of August 1, 2007, there were 634 advisers that

We anticipate that the cost of this collection will mostly be borne upfront as

individual non-discretionary advisory accounts that adviser administers or seeks tofor clients in non-discretionary advisory accounts with a particular firm. This collection

advisers may choose not to rely on rule 206(3)-3T. Further, we expect the drafting

revocable consent after receiving such written, prospective disclosure.

distribution of a written disclosure statement, which we anticipate will be largely uniform

conflicts, to describe. 70 Other advisers may take significantly less time and some eligible

rule 206(3)-3T with respect to an account, the client must have executed a written,

burden will be uniform with respect to each eligible adviser regardless of how many

disclosure because they may have more principal trading practices, and potentially more

notice to the investment adviser from the client. And, for the adviser to be able to rely on

The first part of this collection of information involves the preparation andlarge financial services firms, may take significantly longer to draft the required46

written, prospective consent may be revoked without penalty at any time by written

45

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Discussion with broker-dealers that have fee-based brokerage programs have informed usthat approximately 40 percent of the existing fee-based brokerage accounts are retirement
accounts, and are unlikely to engage in principal trading. We anticipate that all eligible
advisers that are converting fee-based brokerage accounts to non-discretionary advisoryaccounts will conduct principal trading in reliance on the rule. Thus, we estimate thateligible investment advisers will distribute the prospective disclosure to approximately
600,000 former fee-based brokerage customers. When aggregated with the 196,200
existing non-retirement, non-discretionary advisory accounts we believe likely will

discretionary advisory accounts held with eligible advisers. 76 Discussions with eligible

advisers indicate that approximately: (i) 90 percent of these non-discretionary advisoryaccounts administered by them, or 2,943,000 accounts, are in programs to which the rule

will not apply, such as mutual fund asset allocation programs; and (ii) 40 percent of theremaining 327,000 non-discretionary advisory accounts administered by them, or

130,800 accounts, are retirement accounts, and thus unlikely to participate in principal

trading, 77 leaving 196,200 existing non-retirement non-discretionary advisory accounts

administered by eligible advisers. 78

356 dually-registered advisers that currently have non-discretionary advisory accountprograms + 24 dually-registered advisers that do not currently have non-discretionary
advisory programs, but we expect will initiate them = 380 eligible advisers that will havenon-discretionary advisory programs.

5 hours per adviser x 380 eligible advisers that will rely on the rule = 1,900 total hours.

IARD data as of August 1, 2007, for Item 5.F(2)(e) of Part 1A of Form ADV.

We have based this estimate on discussions with industry representatives. The Code and
ERISA impose restrictions on certain types of transactions involving certain retirement
accounts. We do not take a position on whether the Code or ERISA limits theavailability of rule 206(3)-3T.

3,270,000 existing non-discretionary advisory accounts among eligible advisers –2,943,000 accounts in wrap fee and other programs to which the rule will not apply –130,800 retirement accounts = 196,200 non-retirement, non-discretionary advisoryaccounts among eligible advisers.

74

75

76

77

78

This assumption may result in the estimated paperwork burdens and costs of proposed
rule 206(3)-3T being overstated.
Industry representatives have informed us that substantially all fee-based brokerage
accounts are held with twelve broker-dealers, all of which also are registered as
investment advisers according to IARD data as of August 1, 2007.
196,200 existing non-retirement, non-discretionary advisory accounts we estimate arelikely to receive prospective disclosures + 600,000 fee-based brokerage accounts weestimate will be converted to non-discretionary advisory accounts = 796,200 total

79

80

81

disclosure will be approximately 0.1 hours (six minutes) for every account. Based on the

We estimate that the burden for administering the distribution of the prospective

clients will receive prospective disclosure to be 796,200.81

receive the prospective disclosure, we estimate the total number of accounts for whichthem are held at investment advisers that also are registered as broker-dealers. 80

Registration data indicates that there are approximately 3,270,000 existing non-and the ability to enter into principal trades more efficiently as a result of the rule. We
base this estimate on discussions with industry representatives.

discretionary advisory accounts. 79 Of those accounts, we estimate that substantially all of

discretionary advisory accounts for which an adviser seeks to rely on rule 206(3)-3T.

of the estimated 1 million fee-based brokerage accounts will be converted to non-discretionary advisory accounts. For purposes of our analysis, we have assumed that all

The prospective disclosure will need to be distributed to all clients who have non-firms, we anticipate that most fee-based brokerage accounts will be converted to non-hours. 75

As noted in Section I.B of this Release and confirmed by discussions with several

48

disclosure statement for the estimated 380 advisers that will rely on the rule will be 1,900

rule is 380. 74 Accordingly, we estimate that the total drafting burden for the prospective

47

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solicitation for existing non-discretionary advisory accounts and fee-based brokerage
accounts being converted to non-discretionary advisory accounts will be integrated into
the prospective written disclosure. For new clients, we anticipate that the consent
solicitation provision will be included in the account agreement signed by a client upon
opening a non-discretionary advisory account. Once the consent solicitation has beenother hand, advisers with more significant conflicts are likely to engage outside legal

services to assist in preparation of the prospective written disclosure. We also estimate a

one-time average cost for printing and physical distribution of the various disclosure

documents, including a disclosure and consent form and, if necessary, a revised accountagreement, to be approximately $1.50 per account,85 for a total of $1,194,300. 86

0.1 hours (six minutes) per account x 796,200 accounts = 79,620 hours.

Outside legal fees are in addition to the projected 5 hour per adviser burden discussed innote 75 and accompanying text.

$400 per hour for legal services x 3 hours per adviser x 380 eligible advisers that we
expect to rely on the rule = $456,000. The hourly cost estimate is based on ourconsultation with advisers and law firms who regularly assist them in compliancematters.

This estimate is based on discussions with firms. It represents our estimate of the average
cost for printing and distribution, which we expect will include distribution of hard copies
for approximately 85% of accounts and distribution of electronic copies forapproximately 15% of accounts.

82

83

84

85

86

$1.50 per account x 796,200 accounts = $1,194,300.

(three minutes) in connection with reviewing the consent solicitation, asking questions,written disclosure. We estimate an average burden per accountholder of 0.05 hours

because we expect the consent solicitation to be integrated into the firm’s prospectivein the burdens and costs of drafting and distributing the notices described above. This is

We believe that the burden and costs to advisers of soliciting consent is included

integrated into the account-opening paperwork, the ongoing burden will be minimal.

of the burden of this collection will be borne upfront. We expect that the consent

are unlikely to seek outside legal services in drafting the prospective disclosure. On theaccounts we expect to receive the prospective disclosure addressed in paragraph (a)(3) ofrule 206(3)-3T.

executed written, prospective consent from advisory clients. We anticipate that the bulk

with their clients. We believe that those advisers that engage in riskless principal trading,Compliance with this part of the temporary rule will require advisers to collectconsent to such transactions.

eligible adviser on average,83 for a total of $456,000. 84 As we discuss above, advisersthat rely on the rule will face widely varying numbers and severity of conflicts of interest

their clients in reliance on the rule inform their clients that they have a right not toconsent. It is designed to ensure that advisers that wish to engage in principal trades withto include outside legal fees for approximately three hours of review to total $1,200 per

We estimate an average one-time cost of preparation of the prospective disclosure

information is necessary to verify that a client has provided the required prospective

security to or purchase any security from the advisory client. This collection ofparagraph (a)(3) of rule 206(3)-3T for distribution of the prospective written disclosure to

be 79,620 hours.

a broker-dealer affiliate of the adviser, to act as principal for its own account, to sell any

eligible former fee-based brokerage accounts. We estimate the total hour burden under82

executed written, revocable consent prospectively authorizing the investment adviser, or

The second part of this burden is that the adviser must receive from each client an

50

of approximately 796,200 eligible existing non-discretionary advisory accounts anddiscussion above, we estimate that the prospective disclosure will be distributed to a total

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preparation and communication of the requisite disclosure to a client, and for the client totransaction. This collection of information is necessary to alert an advisory client that a

796,200 eligible accountholders x 90 percent = 716,580 accountholders who will return
their prospective consents. We refer herein to these 716,580 accountholders who return
their consents, and whose advisers are therefore eligible to rely on the rule with respect tothem, as “eligible accountholders.”

dealers, a burden of 0.0083 hours (approximately 30 seconds) per trade on average forfrom the advisory client to act as principal for its own account with respect to such88

seeks to rely on rule 206(3)-3T. 90 We estimate, based on our discussions with broker-

prior to the execution of each principal transaction, must obtain oral or written consent

100 hours per eligible adviser x 380 eligible advisers that will rely on the rule = a total
burden of 38,000 hours for updating disclosure, maintaining records, and processing newconsents and revocations.
These assumptions may result in the estimated paperwork burdens and costs of proposed
rule 206(3)-3T being overstated.
50 trades per account per year x 716,580 accountholders that will provide prospective
consent and therefore enable their advisers to rely on the rule with respect to them x

89

90

91

consent, for an estimated total burden of approximately 297,381 hours per year. 91

of this analysis, all those trades are principal trades for which the investment adviser

such transaction. Also pursuant to paragraph (a)(4) of the rule, an investment adviser,

0.05 hours (three minutes) per accountholder x 796,200 accountholders executing andreturning the consent = 39,810 total burden hours on accountholders with respect toreturning consents.

advisers engage in an average of approximately 50 trades per year and that, for purposes

the advisory client, orally or in writing, of the capacity in which it may act with respect to87estimate conservatively that non-discretionary advisory accountholders at eligible

fee-based brokerage accounts and existing non-discretionary advisory programs, wean investment adviser, prior to the execution of each principal transaction, must inform

Trade-By-Trade Disclosure and Consent: Pursuant to paragraph (a)(4) of the rule,communicate it to clients. Based on discussions with industry and their experience withadvisers electing to rely on the rule will need to begin to prepare such disclosure and100 hours per eligible adviser per year. We estimate that the total burden for all advisers

to keep prospective consent information up to date will be 38,000 hours.

regarding conflicts of interest associated with principal trading in particular securities),

prospective consents granted subsequent to the initial solicitation will be approximately

89

advisory accountholders (and thus are not preparing and providing written disclosurethat advisers are not currently engaging in principal trades with non-discretionary

costly than compliance with section 206(3) in many situations. However, to the extent

records on prospective consents provided, and processing consent revocations andFinally, we estimate that the burden of updating the disclosure, maintaining

consent.

of rule 206(3)-3T provides an alternative method of compliance that is likely to be lesspercent of these accountholders, or 716,580 accountholders, will execute and return the88

disclosure in connection with principal trades. We believe that complying with this part

accountholders for reviewing and/or returning consents. 87 We further estimate that 90

We note that section 206(3) of the Advisers Act requires written trade-by-trade

withhold its authorization for the trade to be executed on a principal basis.

Assuming that there are 796,200 accountholders who receive prospective disclosure and aprospective consent solicitation we estimate a total burden of 39,810 hours on

specific trade may be executed as principal and provide the client with the opportunity to

52

providing consent, and, for those that so wish, revoking that consent at a later date.

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reliance upon the rule, and the date and price of such transactions. This report will
require a collection of information that should already be available to the adviser or its
broker-dealer affiliate executing the client’s transactions. Pursuant to paragraph (a)(8) of
the rule, each principal transactions report must include a conspicuous, plain English
statement that the written, prospective consent described above may be revoked without
penalty at any time by written notice to the investment adviser from the client. This
collection of information is necessary to ensure that clients receive a periodic record of
the principal trading activity in their accounts and are afforded an opportunity to assess
the frequency with which their adviser engages in such trades.

may be acting in a principal capacity in connection with the transaction and the client

authorized the transaction; and (ii) owned the security sold to the advisory client (orbought the security from the client for its own account). Pursuant to paragraph (a)(8) of

the rule, each confirmation must include a conspicuous, plain English statement that thewritten, prospective consent described above may be revoked without penalty at any timeby written notice to the investment adviser from the client. This collection of informationis necessary to ensure that an advisory client is reminded that a particular trade was madeon a principal basis and is given the opportunity to revoke prospective consent to suchtrades.

0.0083 hours (approximately 30 seconds) per trade for disclosure = a burden of 297,381
hours per year.

For example, investment advisers that are qualified custodians for purposes of rule206(4)-2 under the Advisers Act and that maintain custody of their advisory clients’assets must, at a minimum, send quarterly account statements to their clients pursuant torule 206(4)-2(a)(3).

periodic or annual statements to clients. 93 Thus, to comply, advisers will need to add

reprogramming computer systems that generate confirmations to ensure that all the93

dealers executing trades for their clients. Advisers and broker-dealers already sendburden associated with this requirement. We estimate a one-time cost burden for$20,000 to program system generating confirmations per adviser x 380 eligible advisersthat will rely on the rule = $7,600,000 total programming costs for confirmations. Ourestimate for the cost to program the confirmation system was derived from discussions
with broker-dealers.

contained in the statement is already maintained by investment advisers and/or broker-

under the Exchange Act. As such, we do not believe that there will be an ongoing hour92

the burden of this collection will not be substantial because the information required to bealready required to be assembled and communicated to clients pursuant to requirements

We estimate that other than the actual aggregation and delivery of this statement,

disclosure containing a list of all transactions that were executed in the account inplain English statement that the investment adviser: (i) informed the advisory client that it

The majority of the information required in this collection of information isinvestment adviser must deliver to each client, no less frequently than annually, written

Principal Transactions Report: Pursuant to paragraph (a)(6) of the rule, theincluded in such confirmations of $20,000 per eligible adviser for a total of $7,600,000. 92

information required for purposes of paragraphs (a)(5) and (a)(8) of rule 206(3)-3T is54required by rule 10b-10 under the Exchange Act [17 CFR 240.10b-10], a conspicuous,completion of each principal transaction that includes, in addition to the information

investment adviser must deliver to its client a written confirmation at or before

Trade-By-Trade Confirmations: Pursuant to paragraph (a)(5) of the rule, an

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We also estimate that in addition to the hour burden, firms may have costsOnce

5 hours per eligible adviser for programming relating to the principal trade report x 380
advisers = a total programming burden relating to the principal trade report of 1,900
hours. Advisers that use proprietary systems will likely devote considerably more time toprogramming reports. However, these advisers are also likely to have alreadyprogrammed systems to meet the requirements of rule 206(3)-2(a)(3), which contains asimilar annual report requirement with respect to agency cross transactions. Other
advisers may be using commercial software to track and report trades in accounts. Thesesoftware packages should take little time for an adviser to implement, and consequently
should impose significantly less than a 5 hour burden.

$10,000 for retaining outside professionals to assist in programming in connection withthe principal transactions report per adviser x 380 advisers = $3,800,000 in outsideprogramming costs in connection with the principal transactions report. We based ouroutside programming cost estimate on a rate of $250 per hour for 40 hours ofprogramming consultant time. We anticipate that the advisers that rely on commercial
software solutions, many of which will be components to trading software they alreadyhave acquired, will not have to retain outside programming consultants.

0.05 hours (three minutes) per eligible accountholder to generate and deliver reports x
716,580 eligible accountholder = 35,829 hours total burden for generating and delivering
reports to accountholders. Because, as we note above, the information required by therule will be added to documents advisers already send to clients, we estimate that there isno added cost associated with delivering the reports to clients (e.g., postage costs).

94

95

96

35,829 hours per year.

$456,000 for outside professional fees associated with preparation of the prospective
disclosure + $1,194,300 for printing and physical distribution costs associated with theprospective disclosure + $7,600,000 for programming costs for outside professionals for
rendering trade confirmations compliant with the rule + $3,800,000 for programming
costs for outside professionals to create principal trading reports = a total of $13,050,300.
1,900 hours for drafting prospective disclosure + 79,620 hours for administering
distribution of prospective disclosure to accountholders + 39,810 hours for review byaccountholders of the consent solicitation and returning consents + 38,000 hours foradvisers maintaining and updating consent information + 297,381 hours for preparationand communication of trade-by-trade disclosure and consent + 1,900 hours for
programming to create principal trading reports + 35,829 hours for ongoing generation ofprincipal trading reports = a total of 494,440 hours.

97

98$13,050,300. 97 We estimate that the hour burden will be 494,440 hours.98

including capital and start-up costs, for compliance with the rule is approximately

with processing and maintaining information. We estimate that the total amount of costs,

discussed above, some amount of time, effort and expense may be required in connection

collecting, validating and verifying information may be necessary. In addition, as

developing, acquiring, installing, and using technology and systems for the purpose of

0.05 hours (three minutes) per eligible non-discretionary advisory account, or a total of96

Some amount of training of personnel on compliance with the rule andthe requirements of rule 10b-10 under the Exchange Act.

Act and also is similar to the approach broker-dealers employ to comply with certain of

to comply with the disclosure and consent obligations of section 206(3) of the Advisers

the alternative means of compliance is similar to the approach advisers currently employ

average ongoing burden of generating the reports and delivering them to clients will becomputer systems enable these reports to be generated electronically, we estimate that thethese costs to average $10,000 per adviser for a total upfront cost of $3,800,000.

95

associated with retaining outside professionals to assist in programming. We estimate

hours.

Act contained in rule 206(3)-3T. As discussed above, our estimates reflect the fact that

this burden to be on average approximately 5 hours per eligible firm for a total of 1,900

94

comply with the alternative means for compliance with section 206(3) of the Advisers

already available and maintained by advisers or their broker-dealer affiliates. We estimate

For purposes of the Paperwork Reduction Act, we estimate an annual incremental
increase in the burden for investment advisers and their affiliated broker-dealers toprogramming computer systems to generate the report, aggregating information that is

expect that there will be a one-time burden associated with this requirement relating to

Summary of Estimated Paperwork Burden

C.

56

information they already maintain to documents they already prepare and send. We

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Request for Comment

clients. We are adopting this rule as part of our response to a recent court decision
invalidating rule 202(a)(11)-1, which provided that fee-based brokerage accounts were

evaluate whether there are ways to minimize the burden of the collections of informationon those who respond, including through the use of automated collection techniques or

which the adviser may act and obtaining the client’s consent orally or in writing prior tocollection of information between 30 and 60 days after publication of this release.

Comments are requested pursuant to 44 U.S.C. 3506(c)(2)(B).

to enter into principal trades; (iii) making oral or written disclosure of the capacity inWashington, DC 20549. The OMB is required to make a decision concerning thestatements disclosing the capacity in which the adviser has acted and indicating that thethe execution of each principal transaction; (iv) sending to the client confirmation

obtaining written, revocable consent from the client prospectively authorizing the adviser

Commission, Records Management, Office of Filings and Information Services,99

account, to comply with section 206(3) by: (i) making certain written disclosures; (ii)writing, refer to File No. S7-23-07, and be submitted to the Securities and Exchange

Rule 206(3)-3T permits an adviser, with respect to a non-discretionary advisory

OMB by the Commission with regard to these collections of information should be inaccounts, we are adopting rule 206(3)-3T.

Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC

Summary of Temporary Ruleholding an estimated $300 billion in approximately one million fee-based brokerage

Regulatory Affairs, Washington, DC 20503, and should send a copy to Nancy M. Morris,B.

brokerage accounts. To maintain investor choice and protect the interests of investors

Officer for the Securities and Exchange Commission, Office of Information and20549-1090, with reference to File No. S7-23-07. Requests for materials submitted toduty and other requirements of the Advisers Act, unless converted to commission-based

court’s decision, these fee-based accounts are advisory accounts subject to the fiduciary

should direct the comments to the Office of Management and Budget, Attention: Desk

Persons submitting comments on the collection of information requirements

not advisory accounts and were thus not subject to the Advisers Act. As a result of theact in a principal capacity with respect to transactions with certain of their advisoryenhance the quality, utility, and clarity of the information to be collected; and (iv)other forms of information technology.

registered with us as broker-dealers to meet the requirements of section 206(3) when theyburden of the collections of information; (iii) determine whether there are ways to99

Advisers Act, which provides an alternative means for investment advisers that are

the information will have practical utility; (ii) evaluate the accuracy of our estimate of theinformation are necessary for the proper performance of our functions, including whether

BackgroundWe are adopting, as an interim final temporary rule, rule 206(3)-3T under the

COST-BENEFIT ANALYSIS
A.

VI.

within 30 days of publication.

Consequently, a comment to OMB is assured of having its full effect if OMB receives it

58

described in this section of this Release in order to: (i) evaluate whether the collections of

Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment with respect to the collections

We invite comment on each of these estimates and the underlying assumptions.

D.

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markets that it effectively stands in the way of their being able to give clients access tocertain securities that might most cheaply or quickly be traded with a client on a principal
basis. In fact, with respect to some securities, for which the risks might be relatively low(such as investment-grade debt securities), absent principal trading, clients may not haveaccess to them at all. For other securities, execution may be improved where the adviser

principal transactions. These conditions are designed to require an adviser to fully

apprise the client of the conflicts of interest involved in these transactions, inform theclient of the circumstances in which the adviser may effect a trade on a principal basis,and provide the client with meaningful opportunities to revoke prospective consent orrefuse to authorize a particular transaction.

Advisers Act and of the Commission’s rules and regulations under the Exchange Act aswell as those of the SROs.

having the choice of advisory accounts with access to the inventory of a diversified

broker-dealer but that meeting the requirements set out in section 206(3) is not feasible

section 206(3) by, among other things, providing oral disclosure prior to the execution offor each specific principal transaction. Rule 206(3)-3T permits an adviser to comply withimpediment to their providing access to certain securities which they hold in their own

See supra note 5 and accompanying text.

rule our view has been that an adviser must provide written disclosure and obtain consent

requirements, investment advisers can avoid what they have indicated to us is a critical100

an adviser to engage in principal transactions. As discussed above, in the absence of thisdealers. By complying with what we believe to be relatively straightforward procedural

Another benefit of Rule 206(3)-3T is that it provides a lower cost alternative forwill have the benefit of the fiduciary duties imposed on the investment adviser by theone million fee-based brokerage accounts. It is our understanding that investors favor

for advisers affiliated with broker-dealers or advisers that also are registered as broker-

adviser relying on the rule must also be a registered broker-dealer. As a result, clientsrules of the Exchange Act and the relevant self-regulatory organizations because an

A third benefit of the rule is that it provides the protections of the sales practiceinvestor choice and protects the interests of investors holding an estimated $300 billion in

As discussed above, the principal benefit of rule 206(3)-3T is that it maintains

Benefits

formation in these areas.

C.

expire on December 31, 2009.

dually registered firms will have easier access to a wider range of securities. This in turnwill likely increase liquidity in the markets for these securities and promote capitalFor

A resulting second benefit of the rule is that non-discretionary advisory clients ofreasons explained below, we are adopting the rule on a temporary basis so that it willthat it will be available when the Court’s decision takes effect on October 1, 2007.

100

fee-based brokerage accounts, we are adopting rule 206(3)-3T on an interim final basis so

or affiliated broker-dealer can provide the best execution of the transaction.

to us that the trade-by-trade written disclosure requirement is so impracticable in today’s

authorized the transaction; and (v) delivering to the client an annual report itemizing the

To avoid disruption that would otherwise occur to customers who currently holdaccounts—namely, written trade-by-trade disclosure. These advisers have communicated60

adviser disclosed to the client that it may act in a principal capacity and that the client

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estimate that advisers would incur costs of approximately $1,480 on average per adviser,protection of investors, less costly and less burdensome.

of distribution of the prospective disclosure and solicitation consent to existing non-prospective disclosure must include a conspicuous, plain English statement that a client’s

be delivered to clients. For purposes of the Paperwork Reduction Act, we have estimatedadvisers, such advisers will be able to include them in other materials already required tosolicitation will be borne upfront. Once these items have been generated by eligible

We estimate that the costs of preparing the prospective disclosure and consent

opening process.

revocations of consent and grants of consent that occur subsequent to the accountsolicitation to clients; and (iii) ongoing management of information, including

disclosure and consent solicitation; (ii) distribution of the disclosure and consent

costs associated with this requirement include: (i) preparation of the prospective

revocable consent after receiving such written, prospective disclosure. The principal

rule 206(3)-3T with respect to an account, the client must have executed a written,

notice to the investment adviser from the client. And, for the adviser to be able to rely on

We expect that the internal preparation function will most likely be performed bycompliance professionals. Data from the SIFMA’s Report on Office Salaries in the
Securities Industry 2006 (“Industry’s Salary Report”), modified to account for an 1,800hour work-year and multiplied by 2.93 to account for bonuses, firm size, employee
benefits and overhead, suggest that the cost for a Compliance Clerk is approximately $56
per hour. $56 per hour x 5 hours on average per adviser = $280 on average per adviser ofinternal costs for preparation of the prospective disclosure. $280 on average per adviserof internal costs + $1,200 on average per adviser of costs for external consultants =$1,480 on average per adviser.
$1,480 on average per adviser in costs for preparation of the prospective disclosure x 380
advisers = $562,400 in total costs for preparation of the prospective disclosure.
See section V.B of this Release. We estimate the following burdens and/or costs: (i) for
printing the prospective disclosure (including a disclosure and consent form and, if
necessary, a revised Form ADV brochure and account agreement), approximately $1.50
on average per eligible account, of which we estimate there are approximately 796,200,
for a total of $1,194,300 (which, if divided by the estimated 380 eligible advisers, equals
a total cost for printing of approximately $3,143 on average per adviser); (ii) for
distributing the prospective disclosure, approximately 0.1 hours on average per eligible

102

103

104

See section V.B of this Release. We estimate the following burdens and/or costs: (i) for
drafting the required prospective disclosure, approximately 5 hours on average pereligible adviser, of which we estimate there are 380, for a total of 1,900 hours; and (ii) for
utilizing outside legal professionals in the preparation of the prospective disclosure,approximately $1,200 on average per eligible adviser, for a total of $456,000.

disclosure and consent solicitation as 210 hours and $3,143. 104 We expect that the costs

addresses those conflicts. Pursuant to paragraph (a)(8) of the rule, the written,

101hours and costs the average adviser would spend on the distribution of their prospective

client’s interests as a result of the transactions; and (iii) how the investment adviser

written, prospective consent may be revoked without penalty at any time by written

For purposes of the Paperwork Reduction Act, we have estimated the number ofsolicitation, we estimate that the total costs will be $562,400. 103

engage in principal transactions; (ii) the nature and significance of conflicts with its

registered broker-dealers) that will prepare the prospective disclosure and consent(i) the circumstances under which the investment adviser directly or indirectly may

legal consultation.102 Assuming there are 380 eligible advisers (i.e., advisers that also areinvestment adviser must provide written, prospective disclosure to the client explaining:

Prospective Disclosure and Consent: Pursuant to paragraph (a)(3) of the rule, an

including a conflicts review process, drafting efforts and consultation with clients, andof their prospective disclosure and consent solicitation. 101 Based on those estimates, wedifficult and costly. This alternative means of compliance should be, consistent with theCosts

the number of hours and costs the average adviser would spend in the initial preparationeach principal transaction. As discussed above, we understand traditional compliance is

D.

62

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cost of updating the written prospective disclosure, maintaining records on prospective$5.60 on average per client, for a total of $4,458,720. 105

We estimate that the costs

107

We expect that the distribution function for the prospective written disclosure andconsent solicitation will most likely be performed by a general clerk. Data from theIndustry’s Salary Report, modified to account for an 1,800-hour work-year andmultiplied by 2.93 to account for bonuses, firm size, employee benefits and overhead,suggest that cost for a General Clerk is approximately $41 per hour. $41 per hour x 0.1
hours on average for distribution per account = approximately $4.10 on average peraccount for distribution. $1.50 on average printing cost per account + $4.10 on average
distribution cost per account = $5.60 on average per account. $5.60 on average peraccount x 796,200 accounts to which we expect the disclosure to be distributed = a total
printing and distribution cost for the prospective disclosure and consent solicitation of$4,458,720 (which, if divided by the estimated 380 eligible advisers, equals a total costfor distribution of approximately $11,733 on average per eligible adviser).

See section V.B of this Release. We estimate that the burden per client account that will
return an executed consent (eligible accountholder), of which we estimate that there will
be approximately 716,580, will be 0.05 hours (3 minutes) on average, for a total burdenof 35,829 hours. We do not believe there will be a significant difference in burden
between those clients that consent and those that do not.

$0.50 on average for each accountholder who receives a written prospective disclosure
document x 796,200 eligible accountholders = $398,100. We do not believe there will bea significant difference in burden between those accountholders that consent and thosethat do not.

105

106

107

account, for a total of 79,620 hours (which, if divided by the estimated 380 eligible
advisers, equals a total burden of 210 hours on average per adviser).

transitional solicitation, we estimate that the total cost to clients will be $398,100.

the written disclosure document and 716,580 that will provide consent during theaccountholder. Assuming that there are 796,200 eligible accountholders who will receive

corresponding to this hour burden will be approximately $0.50 on average per eligible

document and, if it wishes, returning an executed consent.

106

hours the average accountholder would spend on reviewing the written disclosure

See section V.B of this Release. We estimate that the burden per eligible adviser ofongoing maintenance of the prospective disclosure and consent solicitation efforts will beapproximately 100 hours on average per year, for a total of 38,000 hours.
We expect that this function will most likely be performed by compliance professionals
at $56 per hour. See Industry’s Salary Report. 100 hours on average per adviser per year
x $56 per hour = $5,600 on average per adviser per year.
$5,600 on average per adviser per year x 380 eligible advisers = $2,128,000.
$1,480 on average per adviser in costs for preparation of the prospective disclosure andconsent solicitation + $11,733 on average per adviser in costs for printing anddistributing the prospective disclosure and consent solicitation = total one-time costs for
preparation, printing and distribution of the prospective disclosure and consent
solicitation of $13,213 on average per adviser.
($13,213 average one time cost per adviser x 380 eligible advisers) + ($5,600 averageongoing costs per adviser x 380 eligible advisers) + ($0.50 average costs per
accountholder x 796,200 accountholders who will review the written disclosure) =$5,020,940 + $2,128,000 + $398,100 = $7,547,040 total cost of compliance withparagraph (a)(3) of rule 206(3)-3T.

108

109

110
111

112

disclosure and consent requirement of the rule to be $7,547,040. 112

costs. As such, we estimate the total costs associated with the prospective written

costs; 111 (ii) $5,600 per adviser in ongoing costs; and (iii) $0.50 per client account inof rule 206(3)-3T to be on average approximately: (i) $13,213 per adviser in one-time

Based on the discussion above, we estimate the costs relating to paragraph (a)(3)

information up to date will be $2,128,000. 110

year. 109 We estimate that the annual cost for all eligible advisers to keep consent

to the initial solicitation will be approximately $5,600 on average per eligible adviser per

consents provided, and processing consent revocations and consents granted subsequentand consent solicitation efforts.108 Based on those estimates, we estimate that the average

For purposes of the Paperwork Reduction Act, we have estimated the number ofhours the average adviser would spend in ongoing maintenance of prospective disclosure

and other mailing related expenses. We estimate that these costs will be approximately

For purposes of the Paperwork Reduction Act, we have estimated the number of64

accounts to non-discretionary advisory accounts will include duplication charges, postage

discretionary advisory clients and fee-based brokerage accountholders converting their

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analysis, we have estimated that eligible clients engage in an average of approximately 50
trades per year, all of which we have conservatively assumed are principal trades. We
further estimate that communicating the disclosure to clients orally will be at most aminimal cost (note that system programming costs are discussed separately under thesubsection entitled “Related Costs” below). As such, we estimate the total annual cost forsuch transaction. Also pursuant to paragraph (a)(4) of the rule, an investment adviser,prior to the execution of each principal transaction, must obtain oral or written consent

from the advisory client to act as principal for its own account with respect to suchtransaction. Further, investment advisers likely will want to document for their own

evidentiary purposes the receipt of trade-by-trade consent by their representatives.

Reduction Act, we have estimated the number of hours advisers would spend onand (ii) communicating that disclosure to clients. For purposes of the Paperwork

relating to the conflicts associated with executing that transaction on a principal basis;

disclosures to clients and obtaining their consents could include: (i) preparing disclosure

We estimate that the costs of preparing and communicating trade-by-tradesuch tailored disclosure and communicate it to clients.

We expect that this function will most likely be performed by compliance professionals
at $56 per hour (see Industry’s Salary Report) and that the preparation andcommunication of trade-by-trade disclosure will comprise an average burden of
approximately 0.0083 hours (30 seconds) per trade. 0.0083 hours on average per trade x$56 per hour = approximately $0.47 on average per trade.
783 hours on average per adviser per year x $56 per hour = $43,848 on average peradviser per year. $43,848 on average per eligible adviser per year x 380 eligible advisers= $16,662,240 total costs per year.

115

may be acting in a principal capacity in connection with the transaction and the client

written disclosure regarding conflicts of interest associated with principal trading in

114

plain English statement that the investment adviser: (i) informed the advisory client that itwith non-discretionary advisory accountholders (and thus are not preparing and providing

See section V.B of this Release. We estimate that based on discussions with industry
representatives that there will be approximately 50 trades (which we conservatively
assume will be principal trades) on average made per year per eligible account. We
estimate a burden of 0.0083 hours (30 seconds) on average per trade for communicationof the requisite disclosure to an eligible accountholder, of which we estimate there will be
716,580, for an estimated total burden of approximately 297,381 hours per year. The
burden for the average adviser would thus be 297,381 total hours per year ÷ 380 eligible
advisers = approximately 783 hours on average per adviser per year.

required by rule 10b-10 under the Exchange Act [17 CFR 240.10b-10], a conspicuous,section 206(3). To the extent that advisers are not currently engaging in principal trades

113

completion of each principal transaction that includes, in addition to the information

alternative method of compliance that is likely to be less costly than compliance withparticular securities), advisers electing to rely on the rule will need to begin to prepare

investment adviser must deliver to its client a written confirmation at or before

Trade-by-Trade Confirmations: Pursuant to paragraph (a)(5) of the rule, an

We believe that complying with this requirement of rule 206(3)-3T provides an

Act already requires written trade-by-trade disclosure in connection with principal trades.

compliance with paragraph (a)(4) of rule 206(3)-3T to be approximately $16,662,240. 115

approximately $0.47 on average.114 For purposes of the Paperwork Reduction Act

the advisory client, orally or in writing, of the capacity in which it may act with respect to

As noted in our Paperwork Reduction Act analysis, section 206(3) of the Advisers

we estimate that the cost of preparing each trade-by-trade disclosure will be

providing trade-by-trade disclosure and consent solicitation. 113 Based on those estimates,

66

an investment adviser, prior to the execution of each principal transaction, must inform

Trade-by-Trade Disclosure and Consent: Pursuant to paragraph (a)(4) of the rule,

65

167

(iii) systems programming costs to aggregate already-collected information to generate

the subsection entitled “Related Costs” below.

programs, to prepare compliant confirmations and principal transaction reports and to beable to track both prospective and trade-by-trade consents. For purposes of thePaperwork Reduction Act analysis, we have estimated the number of hours the averagereliance upon the rule, and the date and price of such transactions. This report will

require advisers to aggregate and distribute information that should already be available

to the adviser or its broker-dealer affiliate executing the client’s transactions.

information they already maintain to documents they already prepare and send. We

periodic or annual statements to clients. Thus, to comply, advisers will need to add

dealers executing trades for their clients. Advisers and broker-dealers already send

statement is already collected and maintained by investment advisers and/or broker-

collection will not be substantial because the information required to be contained in theother than the actual aggregation and delivery of this statement, the burden of this116

See section V.B of this Release. We estimate the following burdens and costs: (i) for
programming computer systems to generate trade confirmations compliant with rule206(3)-3T, approximately $20,000 on average per eligible adviser, of which we estimate
there are approximately 380, for a total of $7,600,000; (ii) for the internal burden
associated with programming computer systems relating to principal trade reports
compliant with rule 206(3)-3T, approximately five hours on average per eligible adviser,
for a total of 1,900 hours; (iii) for assistance of outside professionals to assist in
programming computer systems to generate principal trade reports, approximately$10,000 on average per eligible adviser, for a total of $3,800,000; and (iv) for generationand delivery of annual principal trade reports each year, approximately 0.05 hours (threerule. 116 Based on those estimates, we estimate the costs of programming, generating andadviser would spend on programming computer systems to facilitate compliance with thecomputer systems, regardless of the size of their non-discretionary advisory accountdisclosure containing a list of all transactions that were executed in the account in

As noted in the Paperwork Reduction Act section of this Release, we estimate that

we have estimated the cost an average adviser would incur on programming theirinvestment adviser must deliver to each client, no less frequently than annually, written

compliant principal transactions reports. For purposes of the Paperwork Reduction Act,

confirmations contain all of the information required by paragraph (a)(4) of the rule; andcontained in the confirmations. Costs associated with programming are described underPrincipal Transactions Report: Pursuant to paragraph (a)(6) of the rule, theconsents (described above); (ii) systems programming costs to ensure that tradesystems that generate confirmations to ensure that all the required information is

below.

communicated to clients pursuant to requirements under the Exchange Act. We expect206(3)-3T relate to: (i) the initial distribution of prospective disclosure and collection of

associated with programming are described under the subsection entitled “Related Costs”

provision requires to be delivered to clients is already required to be assembled andparagraph (a)(5) of rule 206(3)-3T will stem principally from programming computer

already available and maintained by advisers or their broker-dealer affiliates. Costs

Paperwork Reduction Act section of this Release, the majority of the information that thisRelated Costs: We expect that the bulk of the costs of compliance with rule

programming computer systems to generate the report, aggregating information that isbought the security from the client for its own account). As noted above in thethat the costs associated with conforming trade confirmations to the requirements of

expect that there will be a one-time cost associated with this requirement relating to

68

authorized the transaction; and (ii) owned the security sold to the advisory client (or

67

168

for a total of $12,996,289.

118

Request for Comment

We expect that the internal programming function most likely will be performed bycomputer programmers. Data from the Industry’s Salary Report, modified to account for
an 1,800-hour work-year and multiplied by 2.93 to account for bonuses, firm size,
employee benefits and overhead, suggest that cost for a Sr. Computer Operator isapproximately $67 per hour. Five hours on average per adviser x $67 per hour = $335 on
average per adviser (or, across all 380 eligible advisers, $127,300). We expect that thegeneration and delivery of annual principal trade reports will most likely be performed bygeneral clerks at $41 per hour. $41 per hour x 35,829 total hours per year = $1,468,989(or, if divided among all 380 eligible advisers, approximately $3,866 on average peradviser per year). $20,000 on average per adviser for programming to generate compliant
trade confirmations + $335 on average per adviser for internal programming costs inconnection with developing an annual principal trades report + $10,000 on average peradviser for outside computing assistance in developing the annual principal trade report +$3,866 on average per adviser for generation and delivery of annual principal tradereports per year = approximately $34,201 on average per adviser in connection withcompliance with the confirmation and principal trade report requirements.

$7,600,000 for programming to generate compliant trade confirmations + $127,300 for
internal programming costs in connection with developing an annual principal trades
report + $3,800,000 for outside computing assistance in developing the annual principal
trade report + $1,468,989 for generation and delivery of annual principal trade reports
per year = $12,996,289 total costs in connection with compliance with the confirmationand principal trade report requirements.

$7,547,040 total costs in connection with compliance with the prospective disclosure andconsent requirements of the rule + $16,662,240 total costs in connection with compliancewith the trade-by-trade disclosure and consent requirements of the rule + $12,996,289
total costs in connection with compliance with the confirmation and principal trade report

117

118

119

minutes) on average per eligible account, of which we estimate there are approximately
716,580, for a total of 35,829 hours total per year.

$37,205,569.

119

advisers and eligible accounts, relating to compliance with rule 206(3)-3T are

requirements of the rule = $37,205,569 total costs in connection with compliance with therule.

the rule will require to be disclosed in the principal trading reports?

comments on the extent to which firms already aggregate the information thatwould require for the principal trading reports. Are we correct? We solicito We assumed that firms already collect much of the information that the ruleo Have we accurately estimated the costs of compliance with the rule?

securities to clients who do not consent to principal transactions?

o What will the effect of the rule be on the availability of account services andrevoke its consent, to principal trading in reliance on the rule?

execution of a principal transaction whether it should continue to consent, or

simply with prospective disclosure and trade-by-trade disclosure prior to theclients that will enable the client to evaluate more effectively than it would

result in a meaningful identification of an adviser’s trading patterns with its

annually, of the transactions undertaken with the client in reliance on the ruleo Does the rule’s requirement that a report be provided to each client, at leastin any way to mitigate costs? If so, how?

and minimize costs to advisers.

Total Costs: The total overall costs, including estimated costs for all eligible

are the types of costs, and what are the amounts? Should the rule be modified

o What, if any, additional costs are involved in complying with the rule? Whatcosts of rule 206(3)-3T.

o We solicit quantitative data to assist with our assessment of the benefits andE.

70

IV of this Release, that is designed, among other things, to avoid disruptions to clients

discretionary advisory accounts, we are providing transition relief, described in section

For those advisers that are converting fee-based brokerage accounts to non-

$34,201 on average per eligible adviser,

117

delivering compliant confirmations and principal trade reports to be approximately

69

169

Section 202(c) of the Advisers Act mandates that the Commission, when

PROMOTION OF EFFICIENCY, COMPETITION AND CAPITALFORMATION

120

15 U.S.C. 80b-2(c).

dealer, has in inventory, despite the conflicts inherent in principal trading, if thoseinventory. Clients might want access to securities an adviser, or an affiliated broker-

result, advisers may provide access to certain securities the adviser or its affiliate has inadvisers may be more willing to engage in principal trades with advisory clients. As aand less burdensome. As discussed above, by permitting oral trade-by-trade disclosure,compliance with section 206(3) of the Advisers Act that we believe will be less costly

Rule 206(3)-3T may increase efficiency by providing an alternative means ofreport itemizing the principal transactions.

that the client consented to the transaction; and (v) delivering to the client an annual

principal trade that disclose the capacity in which the adviser has acted and indicatingeach principal transaction; (iv) sending to the client confirmation statements for eachdisclosure and obtaining the client’s consent orally or in writing prior to the execution of

authorizing the adviser to enter into principal trades; (iii) making oral or written

disclosures; (ii) obtaining written, revocable consent from the client prospectively

advisory account, to comply with section 206(3) by: (i) making certain written

Rule 206(3)-3T permits an investment adviser, with respect to a non-discretionary

formation. 120

investors, whether the action will promote efficiency, competition, and capitalnecessary or appropriate in the public interest, consider, in addition to the protection ofengaging in rulemaking that requires it to consider or determine whether an action is

VII.

71

121

See, e.g., SIFMA Letter.

securities markets with a potential positive effect on capital formation.

reasons described above, opening the door to greater investor participation in theuniverse of purchasers of securities, in particular investment grade debt securities for therequirements of trade-by-trade written disclosure might serve to broaden the potential

must provide trade-by-trade written disclosure. Providing an alternative to the traditional

trade with non-discretionary advisory client accounts on a principal basis so long as they

be positive, although indirect. We understand that most investment advisers will not

We believe that if rule 206(3)-3T has any effect on capital formation it is likely to206(3)-3T.

possible that some advisers may elect to register as broker-dealers in order to rely on rulebenefits. We are not able to predict with certainty the effect of the rule on them, but it isseek to market their services without principal trades and their associated costs andtheir affiliates’) inventory. Advisers that are not also registered as broker-dealers may

also are registered broker-dealers will be able to offer advisory clients access to their (anddid not frequently engage in principal trades. By relying on the rule, advisers that areinvestor choice for different types of advisory accounts. As a practical matter, advisers

We expect that rule 206(3)-3T will promote competition because it preserves

trading with an adviser. 121

execution, advantages a client may deem to outweigh the risks presented by principal

securities from, or selling them to, an adviser could lead to faster or less expensive

securities are scarce or hard to acquire. Firms have argued that purchasing such

72

170

Need for and Objectives of the Rule

includes well developed sales practice rules, apply to advisers entering into principaltransactions with clients.

of the services the clients desire in the non-discretionary advisory accounts to which they

will be transitioned.

Id.

122

125

registration requirement of the rule is too onerous for small advisers despite theassets under management having a total value of less than $25 million; (ii) did not haveSee 17 CFR 275.0-7.

the Advisers Act should be available to more of them? Do they believe that the dual

Regulatory Flexibility Act an investment adviser generally is a small entity if it: (i) has

IARD Data as of August 1, 2007.

investment advisers believe an alternative means of compliance with section 206(3) ofadviser, including small entities. Under Advisers Act rule 0-7, for purposes of the124

We welcome comment on the availability of the rule to small entities. Do small

broker-dealer controlling, controlled by or under common control with the investment

123

rely on rule 206(3)-3T, and that all of these small entities would rely on the new rule. 125

under the Exchange Act; and (ii) effect trades with clients directly or indirectly through a

Although the requirements of the Regulatory Flexibility Act are not applicable to rules
adopted under the Administrative Procedure Act’s “good cause” exception, see 5 U.S.C.
601(2) (defining “rule” and notice requirements under the Administrative Procedures
Act), we nevertheless prepared a FRFA.

these small entities (those that are both as investment advisers and broker-dealers) could

were small entities. 124 The Commission assumes for purposes of this FRFA that 29 of

206(3) and is available to all investment advisers that: (i) are registered as broker-dealers

Rule 206(3)-3T is an alternative method of complying with Advisers Act section

The Commission estimates that as of August 1, 2007, 597 investment advisers

important that the protections of both the Advisers Act and the Exchange Act, which

and to address the stated inability of the sponsors of those accounts to offer clients someSmall Entities Affected by the Ruleconflicts of interest, and which are executed through broker-dealers, we believe it istransition of customers in fee-based brokerage accounts in the wake of the FPA decisionB.

discussed above, in the context of principal trades which implicate potentially significant

dealers under the Exchange Act. We have taken this approach because, as more fully

have instead restricted it to investment advisers that are dually registered as broker-

We have opted not to make the relief available to all investment advisers, but

recent fiscal year. 123

206(3)-3T. As we discuss in detail above, our reasons include the need to facilitate theSections I and II of this Release describe the reasons for and objectives of ruleA.

Release. 122

accordance with 5 U.S.C. 604. It relates to rule 206(3)-3T, which we are adopting in thisperson (other than a natural person) that had $5 million or more on the last day of its mostinvestment adviser that has assets under management of $25 million or more, or any

VIII. FINAL REGULATORY FLEXIBILITY ANALYSISThis Final Regulatory Flexibility Analysis (“FRFA”) has been prepared indoes not control, is not controlled by, and is not under common control with anothertotal assets of $5 million or more on the last day of its most recent fiscal year; and (iii)74

likely to promote efficiency, competition, and capital formation.

The Commission requests comment on whether the proposed amendments are

73

171

Projected Reporting, Recordkeeping, and Other Compliance
Requirements

disclosures are already required by rules applicable to broker-dealers.

many of the disclosures pursuant to their fiduciary obligations to clients. Other

the principal transactions. Advisers are already required to communicate the content ofconsented to the transaction; and (v) delivering to the client an annual report itemizing

disclose the capacity in which the adviser has acted and indicating that the clienttransaction; (iv) sending to the client confirmation statements for each principal trade thatthe client’s consent orally or in writing prior to the execution of each principal

adviser to enter into principal trades; (iii) making oral or written disclosure and obtaining(ii) obtaining written, revocable consent from the client prospectively authorizing the206(3) of the Advisers Act by, among other things: (i) making certain written disclosures;

adviser, with respect to a non-discretionary advisory account, to comply with section

prospective, trade-by-trade and annual basis. Specifically, rule 206(3)-3T permits anadvisory accounts would be required to make certain disclosures to clients on aAct. Investment advisers taking advantage of the rule with respect to non-discretionary

alternative means of compliance with the requirements of section 206(3) of the Adviserswith their clients on a principal basis. Rule 206(3)-3T is designed to provide aninvestment advisers that also are registered as broker-dealers to engage in transactions

recordkeeping requirements, but are not expected to materially alter the time required for

The provisions of rule 206(3)-3T would impose certain new reporting orC.

Small entities registered with the Commission as investment advisers seeking to

Duplicative, Overlapping, or Conflicting Federal Rulesdeliver this information in confirmations that fulfill the requirements of rule 10b-10 under

the customer or is working as a dealer for its own account. Brokers and dealers typicallycontaining certain information, including whether the member is acting as a broker forrequires broker-dealers that are members of FINRA to deliver a written notification

their customers regarding the transactions they effect. Furthermore, FINRA Rule 2230

separate confirmation rule that requires broker-dealers to provide certain information to

The Commission notes, however, that rule 10b-10 under the Exchange Act is arequirements of section 206(3) of the Advisers Act that relate to principal transactions.

rule 206(3)-3T, which presents an alternative means of compliance with the procedural

The Commission believes that there are no rules that duplicate or conflict withE.

corresponding burdens imposed.

another wherever possible in light of the objectives of the rule, to reduce thecalling for disclosures that are already generated by the relevant firms in one form or

impact on a substantial number of small entities, and included flexibility where possible,

requirements of the rule, we considered the extent to which they would have a significant

therefore those small entities are eligible to rely on the rule. In developing theestimate that 25 small entities are registered as both advisers and broker-dealers andto rely on the rule if it also is registered with us as a broker-dealer. As noted above, we

In each case, however, an investment adviser, whether large or small, would only be able

rely on the rule would be subject to the same disclosure requirements as larger entities.

protections afforded to clients by the broker-dealer regulations?

Agency Action to Minimize Effect on Small Entities

D.

76

discussion in subsection F below? If so, how do they propose replicating the additional

75

172

connection with principal trading than larger investment advisers. We believe, therefore,that it is important for the disclosure protections required by the rule to be provided toadvisory clients by all advisers, not just those that are not considered small entities.
Further consolidation or simplification of the proposals for investment advisers that are

securities, including municipal fund securities. In addition, investment advisers that are

qualified custodians for purposes of rule 206(4)-2 under the Advisers Act and thatmaintain custody of their advisory clients’ assets must send quarterly account statements

to their clients pursuant to rule 206(4)-2(a)(3) under the Advisers Act.

Significant Alternatives

organization(s) of which it is a member, reflect what we believe is an important elementof our balancing between easing regulatory burdens (by affording advisers an alternative

than design standards; and (iv) exempting small entities from coverage of the rule, or any

part of the rule.

126

See 5 U.S.C. 603(c).

127

See Section II.B.7 of this Release.

to be consistent with our statutory mandate of investor protection in the present context.

the risk that the investors who are advised by and effect securities transactions throughsuch small entities would not receive adequate disclosure. Moreover, different disclosure

objectives.127 Finally, we do not consider using performance rather than design standards

timetables for small entities, or an exemption from coverage for small entities, may createmeans of compliance with section 206(3) of the Act) and meeting our investor protection

Exchange Act, and the rules thereunder, and the rules of the self-regulatorycompliance requirements under the rule for small entities; (iii) using performance rather

The Commission believes that special compliance or reporting requirements orregistered adviser seeks to rely on the rule must be a brokerage account subject to theresources available to small entities; (ii) clarifying, consolidating, or simplifying

eligible advisers. The condition that advisers seeking to rely on the rule must also be
registered as broker-dealers and that each account with respect to which a dually-

Alternatives in this category would include: (i) establishing

may benefit from the Commission’s approach to the new rule to the same degree as othermeeting our regulatory objectives. It was our goal to ensure that eligible small entitieson all investment advisers eligible to rely on the rule, including small entities, while

We have endeavored through rule 206(3)-3T to minimize the regulatory burden

protection.

different compliance or reporting standards or timetables that take into account theon small entities.

126

would accomplish our stated objective, while minimizing any significant adverse impact

The Regulatory Flexibility Act directs us to consider significant alternatives thatF.

permitting firms to incorporate the required disclosure into one confirmation statement.

has designed the temporary rule to work efficiently together with existing rules bysmall entities would be inconsistent with the Commission’s goals of fostering investor

investment advisers have different conflicts of interest with their advisory clients incontains a separate confirmation rule that governs member transactions in municipal

These rules overlap with certain elements of rule 206(3)-3T, but the Commission

requirements could create investor confusion if it creates the impression that small

78

the Exchange Act. Rule G-15 of the Municipal Securities Rulemaking Board also

77

173

General Request for Comments

Neither the investment adviser nor any person controlling, controlled by,

*

*

*

*

An investment adviser shall be deemed in compliance with the provisions

indirectly, acting as principal for its own account, sells to or purchases from an advisoryof section 206(3) of the Advisers Act (15 U.S.C. 80b-6(3)) when the adviser directly or(a)§ 275.206(3)-3T Temporary rule for principal trades with certain advisory clients.

2. Section 275.206(3)-3T is added to read as follows:*

80b-6(4), 80b-6a, and 80b-11, unless otherwise noted.

Authority: 15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(17), 80b-3, 80b-4, 80b-4a,

1. The general authority citation for Part 275 is revised to read as follows:

PART 275 -- RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF
1940

The advisory client has executed a written, revocable consent

The circumstances under which the investment adviser directly or

The nature and significance of conflicts with its client’s interests as a(iii)

How the investment adviser addresses those conflicts;

result of the transactions; and(ii)

indirectly may engage in principal transactions;(i)client explaining:client, so long as such written consent is obtained after written disclosure to the advisory

for its own account in selling any security to or purchasing any security from the advisory

prospectively authorizing the investment adviser directly or indirectly to act as principal(3)

section);Regulations is amended as follows:

For the reasons set out in the preamble, Title 17, Chapter II of the Code of Federal

controlled by, or under common control with the investment adviser may be an

List of Subjects in 17 CFR Part 275

underwriter of an investment grade debt security (as defined in paragraph (c) of this80b-2(a)(20))) of, the security; except that the investment adviser or a person controlling,

TEXT OF RULE

Investment advisers, Reporting and recordkeeping requirements.

the sale, an underwriter (as defined in section 202(a)(20) of the Advisers Act (15 U.S.C.

or under common control with the investment adviser is the issuer of, or, at the time of(2)

211(a) of the Advisers Act.

The Commission is adopting Rule 206(3)-3T pursuant to sections 206A and

STATUTORY AUTHORITY

temporary or limited basis, with respect to the client’s account;data to support the extent of the impact.

IX.

(15 U.S.C. 78c(a)(35))), except investment discretion granted by the advisory client on acommenters describe the nature of any impact on small entities and provide empirical

The investment adviser exercises no “investment discretion” (as such termis defined in section 3(a)(35) of the Securities Exchange Act of 1934 (“Exchange Act”)(1)

client any security if:

80

whether the rule will have any effects that we have not discussed. We request that

We solicit written comments regarding our analysis. We request comment on

G.

79

174

Informs the advisory client, orally or in writing, of the capacity in which it

The investment adviser, prior to the execution of each principal

Obtains consent from the advisory client, orally or in writing, to act asThis section shall not be construed as relieving in any way an investment

The investment adviser sends to the client, no less frequently than

Sold the security to, or bought the security from, the client for its own

The investment adviser is a broker-dealer registered under section 15 ofandthereunder, and the rules of the self-regulatory organization(s) of which it is a member;relies on this section is a brokerage account subject to the Exchange Act, and the rules

the Exchange Act (15 U.S.C. 78o) and each account for which the investment adviser(7)

client’s account in reliance upon this section, and the date and price of such transactions;annually, written disclosure containing a list of all transactions that were executed in the(6)account;(ii)

September 24, 2007

Nancy M. Morris
Secretary

This section will expire and no longer be effective on December 31, 2009.
By the Commission.

(d)

78c(a)(62))).

organizations (as defined in section 3(a)(62) of the Exchange Act (15 U.S.C.

the four highest rating categories of at least two nationally recognized statistical ratingclient authorized the transaction; andFor purposes of paragraph (a)(2) of this section, an investment grade debt

security means a non-convertible debt security that, at the time of sale, is rated in one of(c)adviser may be acting in a principal capacity in connection with the transaction and theDisclosed to the client prior to the execution of the transaction that theof the federal securities laws.

client that the investment adviser:(i)

imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions

by 17 CFR 240.10b-10, a conspicuous, plain English statement informing the advisory

with respect to the best price and execution for the particular transaction for the advisoryadviser from acting in the best interests of an advisory client, including fulfilling the duty(b)

investment adviser.

paragraph (a)(3) of this section without penalty at any time by written notice to theclient; nor shall it relieve such person or persons from any obligation that may be

The investment adviser sends a written confirmation at or before

Each written disclosure required by this section includes a conspicuous,plain English statement that the client may revoke the written consent referred to in

(8)

82

completion of each such transaction that includes, in addition to the information required(5)

principal for its own account with respect to such transaction;(ii)

may act with respect to such transaction; and(i)transaction:

(4)

81

資料５

175

176

177

178

179

180

181

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183

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2

auch ohne dass eine Dienstleistung für andere vorliegt (Hochfrequenzhandel),zusammenbringt, die zu einem Vertrag über den Kauf dieser Finanzinstrumente führt (Betrieb eines

1cc)ein hohes untertägiges Mitteilungsaufkommen im Sinne des Artikels 19 der Delegierten Verordnung (EU)2017/565 in Form von Aufträgen, Kursangaben oder Stornierungen

Informationsverbreitungskanäle oder für die Öffentlichkeit bekannt gegeben wird (Anlageberatung),

Verkauf von Finanzinstrumenten innerhalb des Systems und nach festgelegten Bestimmungen in einer Weise

geltenden Fassung, einzuleiten, zu erzeugen, weiterzuleiten oder auszuführen und

Umstände des Anlegers gestützt oder als für ihn geeignet dargestellt wird und nicht ausschließlich über1b.der Betrieb eines multilateralen Systems, das die Interessen einer Vielzahl von Personen am Kauf und

an Wertpapierfirmen und die Bedingungen für die Ausübung ihrer Tätigkeit sowie in Bezug auf die Definition
bestimmter Begriffe für die Zwecke der genannten Richtlinie (ABl. L 87 vom 31.3.2017, S. 1) in der jeweils

bestimmten Finanzinstrumenten beziehen, sofern die Empfehlung auf eine Prüfung der persönlichen

Delegierten Verordnung (EU) 2017/565 der Kommission vom 25. April 2016 zur Ergänzung der Richtlinie

elektronischer

2014/65/EU des Europäischen Parlaments und des Rates in Bezug auf die organisatorischen Anforderungendirekter

1a.die Abgabe von persönlichen Empfehlungen an Kunden oder deren Vertreter, die sich auf Geschäfte mit

oderbb)die Fähigkeit des Systems, einen Auftrag ohne menschliche Intervention im Sinne des Artikels 18 derHosting(Anlagevermittlung),

Proximity

1.die Vermittlung von Geschäften über die Anschaffung und die Veräußerung von Finanzinstrumenten

Kollokation,

und die keine Kreditinstitute sind. 2Finanzdienstleistungen sindaufweist:
Hochgeschwindigkeitszugang,oder in einem Umfang erbringen, der einen in kaufmännischer Weise eingerichteten Geschäftsbetrieb erfordert,

Aufträge

Orderübertragung (Latenzen), die mindestens eine der folgenden Vorrichtungen für die Eingabe
algorithmischer(1a) 1Finanzdienstleistungsinstitute sind Unternehmen, die Finanzdienstleistungen für andere gewerbsmäßig

Handelssystems mittels einer hochfrequenten algorithmischen Handelstechnik, die gekennzeichnet ist durchaa)eine Infrastruktur zur Minimierung von Netzwerklatenzen und anderen Verzögerungen bei der

gleichwertiger Garantien (Emissionsgeschäft),11. [aufgehoben]d)Kaufen oder Verkaufen von Finanzinstrumenten für eigene Rechnung als unmittelbarer oder mittelbarer
Teilnehmer eines inländischen organisierten Marktes oder eines multilateralen oder organisierten

10.die Übernahme von Finanzinstrumenten für eigenes Risiko zur Plazierung oder die Übernahme

12.die Tätigkeit als zentrale Gegenpartei im Sinne von Absatz 31.

Internalisierung),c)Anschaffen oder Veräußern von Finanzinstrumenten für eigene Rechnung als Dienstleistung für andere oder

9.die Durchführung des bargeldlosen Scheckeinzugs (Scheckeinzugsgeschäft), des Wechseleinzugs(Wechseleinzugsgeschäft) und die Ausgabe von Reiseschecks (Reisescheckgeschäft),Kundenaufträge außerhalb eines geregelten Marktes oder eines multilateralen oder organisierten
Handelssystems ausgeführt werden, ohne dass ein multilaterales Handelssystem betrieben wird (systematische

7.die Eingehung der Verpflichtung, zuvor veräußerte Darlehensforderungen vor Fälligkeit zurückzuerwerben,

8.die Übernahme von Bürgschaften, Garantien und sonstigen Gewährleistungen für andere (Garantiegeschäft),b)häufige organisierte und systematische Betreiben von Handel für eigene Rechnung in erheblichem Umfang
außerhalb eines organisierten Marktes oder eines multilateralen oder organisierten Handelssystems, wennmit

6.die Tätigkeit als Zentralverwahrer im Sinne des Absatzes 6,

andere5.die Verwahrung und die Verwaltung von Wertpapieren für andere (Depotgeschäft),füra)kontinuierliche Anbieten des An- und Verkaufs von Finanzinstrumenten zu selbst gestellten Preisen fürVermögen

eigene Rechnung unter Einsatz des eigenen Kapitals,

angelegter(Finanzkommissionsgeschäft),4.der Eigenhandel durch das

3.der Ankauf von Wechseln und Schecks (Diskontgeschäft),Finanzinstrumenten

4.die Anschaffung und die Veräußerung von Finanzinstrumenten im eigenen Namen für fremde Rechnungin

Entscheidungsspielraum (Finanzportfolioverwaltung),

einzelner

3.die

1a.die in § 1 Abs. 1 Satz 2 des Pfandbriefgesetzes bezeichneten Geschäfte (Pfandbriefgeschäft),2.die Gewährung von Gelddarlehen und Akzeptkrediten (Kreditgeschäft),Verwaltung

2.die Anschaffung und Veräußerung von Finanzinstrumenten im fremden Namen für fremde Rechnung

1.die Annahme fremder Gelder als Einlagen oder anderer unbedingt rückzahlbarer Gelder des Publikums,(Abschlußvermittlung),(Betrieb eines organisierten Handelssystems),

der einen in kaufmännischer Weise eingerichteten Geschäftsbetrieb erfordert. 2Bankgeschäfte sind

Rücksicht darauf, ob Zinsen vergütet werden (Einlagengeschäft),

Systems auf eine Weise zusammenführt, die zu einem Vertrag über den Kauf dieser Finanzinstrumente führt(1) 1Kreditinstitute sind Unternehmen, die Bankgeschäfte gewerbsmäßig oder in einem Umfang betreiben,

sofern der Rückzahlungsanspruch nicht in Inhaber- oder Orderschuldverschreibungen verbrieft wird, ohne

multilaterales Handelssystem handelt und das die Interessen einer Vielzahl Dritter am Kauf und Verkauf vonSchuldverschreibungen, strukturierten Finanzprodukten, Emissionszertifikaten oder Derivaten innerhalb des§ 1 Begriffsbestimmungen1d.der Betrieb eines multilateralen Systems, bei dem es sich nicht um einen organisierten Markt oder ein

1c.das Platzieren von Finanzinstrumenten ohne feste Übernahmeverpflichtung (Platzierungsgeschäft),multilateralen Handelssystems),●KWG（抜粋）【参照条文】

資料６

185(2)（以下、略）

9.der laufende Ankauf von Forderungen auf der Grundlage von Rahmenverträgen mit oder ohne Rückgriff

1a.von zwei oder mehr Mitgliedstaaten der Europäischen Union gegründete internationale Finanzinstitute, diedem Zweck dienen, Finanzmittel zu mobilisieren und seinen Mitgliedern Finanzhilfen zu gewähren, sofern
diese von schwerwiegenden Finanzierungsproblemen betroffen oder bedroht sind;Investmentvermögens im Sinne des § 1 Absatz 1 des Kapitalanlagegesetzbuchs für eine Gemeinschaft vonAnlegern, die natürliche Personen sind, mit Entscheidungsspielraum bei der Auswahl der Finanzinstrumente,

sofern dies ein Schwerpunkt des angebotenen Produktes ist und zu dem Zweck erfolgt, dass diese Anleger an

OTC-Handels

desUnternehmenszum

3Gesamthandelsvolumen in einem bestimmten Finanzinstrument in der Europäischen Union. 8Die

desAnlagevermittlung zwischen Kunden und

4

Nummer 6 erbringen;

Verhältnis

8.Unternehmen, die als Finanzdienstleistungen für andere ausschließlich die Anlageberatung und die

demFinanzinstrument

nach

7.Unternehmen, die ausschließlich Finanzdienstleistungen im Sinne sowohl der Nummer 5 als auch dererheblichem Umfang im Sinne des Satzes 2 Nummer 4 Buchstabe b vorliegt, bemisst sich entweder nach dem

Anteil des OTC-Handels an dem Gesamthandelsvolumen des Unternehmens in einem bestimmten

oder

6.Unternehmen, deren Finanzdienstleistung für andere ausschließlich in der Verwaltung eines Systems vonArbeitnehmerbeteiligungen an den eigenen oder an mit ihnen verbundenen Unternehmen besteht;

Nummer 4 Buchstabe b vorliegt, bemisst sich nach der Zahl der Geschäfte außerhalb eines Handelsplatzes im

Ausführung von Kundenaufträgen, die für eigene Rechnung durchgeführt werden. 7Ob ein Handel inaufgeführten Dienstleistungen oder Nebendienstleistungen als Finanzdienstleistungen erbringen;Satz 1 des Stabilisierungsfondsgesetzes. 6Ob ein häufiger systematischer Handel im Sinne des Satzes 2

Sinne des § 2 Absatz 22 des Wertpapierhandelsgesetzes (OTC-Handel) mit einem Finanzinstrument zur

kollektive Vermögensverwaltung erbringen oder neben der kollektiven Vermögensverwaltung ausschließlich
die in Artikel 6 Absatz 3 der Richtlinie 2009/65/EG oder die in Artikel 6 Absatz 4 der Richtlinie 2011/61/EU

Finanzdienstleistungsinstitut. 5Die Sätze 3 und 4 gelten nicht für Abwicklungsanstalten nach § 8a Absatz 1

Nebendienstleistungen als Finanzdienstleistungen erbringen;5b.EU-Verwaltungsgesellschaften und ausländische AIF-Verwaltungsgesellschaften, sofern sie nur die

einem

4Ein Unternehmen, das als Finanzdienstleistung geltendes Eigengeschäft nach Satz 3 betreibt, gilt alsoder

die in § 20 Absatz 2 und 3 des Kapitalanlagegesetzbuchs aufgeführten Dienstleistungen oderFinanzholding-Gruppe

Finanzkonglomerat angehört, der oder dem ein CRR-Kreditinstitut angehört.

gemischten

kollektive Vermögensverwaltung erbringen oder neben der kollektiven Vermögensverwaltung ausschließlich

oder

2.einer

Finanzholding-betreibt, der einen in kaufmännischer Weise eingerichteten Geschäftsbetrieb erfordert, undeiner

5a.Kapitalverwaltungsgesellschaften und extern verwaltete Investmentgesellschaften, sofern sie nur die

1.dieses Geschäft, ohne bereits aus anderem Grunde Institut zu sein, gewerbsmäßig oder in einem Umfang

Instituts-,

5.Unternehmen, die Finanzdienstleistungen im Sinne des § 1 Absatz 1a Satz 2 ausschließlich für ihre
Mutterunternehmen oder ihre Tochter- oder Schwesterunternehmen erbringen;

Eigengeschäft von einem Unternehmen betrieben wird, das

3Die Anschaffung und die Veräußerung von Finanzinstrumenten für eigene Rechnung, die nicht Eigenhandel

im Sinne des § 1 Absatz 1a Satz 2 Nummer 4 ist (Eigengeschäft), gilt als Finanzdienstleistung, wenn das

anderen Staates des Europäischen Wirtschaftsraums und deren Zentralbanken;
4.private und öffentlich-rechtliche Versicherungsunternehmen;

im Sinne des § 1 Absatz 3 des Kapitalanlagegesetzbuchs (eingeschränktes Verwahrgeschäft).

3.die öffentliche Schuldenverwaltung des Bundes oder eines Landes, eines ihrer Sondervermögen oder eines

die Mitglieder des Europäischen Systems der Zentralbanken sind;

11.die Anschaffung und die Veräußerung von Finanzinstrumenten außerhalb der Verwaltung eines

2.die Kreditanstalt für Wiederaufbau;

1.die Deutsche Bundesbank und vergleichbare Institutionen in den anderen Staaten der Europäischen Union,

Investmentvermögens im Sinne des § 1 Absatz 1 des Kapitalanlagegesetzbuchs (Finanzierungsleasing),

der Wertentwicklung der erworbenen Finanzinstrumente teilnehmen (Anlageverwaltung),(6) 1Als Finanzdienstleistungsinstitute gelten nicht

Objektgesellschaften im Sinne des § 2 Absatz 6 Satz 1 Nummer 17 außerhalb der Verwaltung eines

12.die Verwahrung und die Verwaltung von Wertpapieren ausschließlich für alternative Investmentfonds (AIF)§ 2

10.der Abschluss von Finanzierungsleasingverträgen als Leasinggeber und die Verwaltung von

Ausnahmen(1b) Institute im Sinne dieses Gesetzes sind Kreditinstitute und Finanzdienstleistungsinstitute.

8. [aufgehoben](Factoring),

systematische Internalisierung geltenden Regelungen unterworfen und einen entsprechenden Erlaubnisantrag
bei der Bundesanstalt gestellt hat.

7.der Handel mit Sorten (Sortengeschäft),Handel in erheblichem Umfang überschritten werden oder wenn ein Unternehmen sich freiwillig den für die

Schlüsseln, die dazu dienen, Kryptowerte zu halten, zu speichern oder zu übertragen, für andere(Kryptoverwahrgeschäft),12 bis 17 der Delegierten Verordnung (EU) 2017/565 bestimmte Obergrenze für häufigen systematischen
Handel als auch die in der vorgenannten Delegierten Verordnung bestimmte einschlägige Obergrenze für den

6.die Verwahrung, die Verwaltung und die Sicherung von Kryptowerten oder privaten kryptografischen

Voraussetzungen der systematischen Internalisierung sind erst dann erfüllt, wenn sowohl die in den Artikeln

5.die Vermittlung von Einlagengeschäften mit Unternehmen mit Sitz außerhalb des Europäischen

Wirtschaftsraums (Drittstaateneinlagenvermittlung),

186

oder

Aktien1anAbsatzdes（以下、略）

nach§3

Nummer3

desTreibhausgas-Emissionshandelsgesetzes,
Emissionsreduktionseinheiten nach § 2 Nummer 20 des Projekt-Mechanismen-Gesetzes und zertifiziertef)Berechtigungen1.Aktien,

6

Inflationsraten oder andere volkswirtschaftliche Variablen oder sonstige Vermögenswerte, Indices oderden Finanzmärkten handelbar sind, insbesondere

5

Emissionshandelsregister gehalten werden dürfen (Emissionszertifikate);
2.Termingeschäfte mit Bezug auf Waren, Frachtsätze, Klima- oder andere physikalische Variablen,

Gattungen von übertragbaren Wertpapieren mit Ausnahme von Zahlungsinstrumenten, die ihrer Art nach auf

Emissionsreduktionen nach § 2 Nummer 21 des Projekt-Mechanismen-Gesetzes, soweit diese jeweils im

Begriffsbestimmungen(1) Wertpapiere im Sinne dieses Gesetzes sind, auch wenn keine Urkunden über sie ausgestellt sind, alle§ 2e)derivative Geschäfte oderd)Indices der Basiswerte der Buchstaben a, b, c oder f, andere Finanzindizes oder Finanzmessgrößen,c)Zinssätze oder andere Erträge,

besonders vergüten zu lassen;●WpHG（抜粋）b)Devisen, soweit das Geschäft nicht die in Artikel 10 der Delegierten Verordnung (EU) 2017/565 genannten
Voraussetzungen erfüllt, oder Rechnungseinheiten,

Anlageberatung im Rahmen einer anderen beruflichen Tätigkeit erbringen, ohne sich die Anlageberatunga)Wertpapiere oder Geldmarktinstrumente,

283 des Kapitalanlagegesetzbuchs gelten nicht als Anteile an Investmentvermögen im Sinne dieser Vorschrift;(Termingeschäfte) mit Bezug auf die folgenden Basiswerte:

1.als Kauf, Tausch oder anderweitig ausgestaltete Festgeschäfte oder Optionsgeschäfte, die zeitlich verzögert
zu erfüllen sind und deren Wert sich unmittelbar oder mittelbar vom Preis oder Maß eines Basiswertes ableitet

erhält eine entsprechende Erlaubnis nach § 32 Abs. 1; Anteile oder Aktien an Hedgefonds im Sinne von §（・・・・略）(3) Derivative Geschäfte im Sinne dieses Gesetzes sind

Besitz an Geldern oder Anteilen von Kunden zu verschaffen, es sei denn, das Unternehmen beantragt und

15.Unternehmen, die als Finanzdienstleistung im Sinne des § 1 Abs. 1a Satz 2 ausschließlich die

3.ihre Fälligkeit bei Emission höchstens 397 Tage beträgt,
es sei denn, es handelt sich um Zahlungsinstrumente.

und die Unternehmen nicht befugt sind, sich bei der Erbringung dieser Finanzdienstleistungen Eigentum oder

AIF, die nach § 330a des Kapitalanlagegesetzbuchs vertrieben werden dürfen, oder auf Vermögensanlagen im

Sinne des § 1 Absatz 2 des Vermögensanlagengesetzes, die erstmals öffentlich angeboten werden, beschränken

1.ihr Wert jederzeit bestimmt werden kann,2.es sich nicht um Derivate handelt undausländischen AIF, die nach dem Kapitalanlagegesetzbuch vertrieben werden dürfen, mit Ausnahme solcher

gehandelt werden, insbesondere Schatzanweisungen, Einlagenzertifikate, Commercial Papers und sonstige§§ 20, 21 oder §§ 20, 22 des Kapitalanlagegesetzbuchs erhalten hat oder die von einer EU-

vergleichbare Instrumente, sofern im Einklang mit Artikel 11 der Delegierten Verordnung (EU) 2017/565(2) Geldmarktinstrumente im Sinne dieses Gesetzes sind Instrumente, die üblicherweise auf dem Geldmarkt

Satz 1 des Kapitalanlagegesetzbuchs vorgesehenen Zeitraum noch fortbesteht, oder eine Erlaubnis nach den

der Richtlinie 2011/61/EU erhalten hat, oder auf Anteile oder Aktien an EU-Investmentvermögen oder1), in der jeweils geltenden Fassung.

hat, die für den in § 345 Absatz 2 Satz 1, Absatz 3 Satz 2, in Verbindung mit Absatz 2 Satz 1, oder Absatz 4

Verwaltungsgesellschaft ausgegeben werden, die eine Erlaubnis nach Artikel 6 der Richtlinie 2009/65/EG oder

Anforderungen an Wertpapierfirmen und die Bedingungen für die Ausübung ihrer Tätigkeit sowie in Bezug
auf die Definition bestimmter Begriffe für die Zwecke der genannten Richtlinie (ABl. L 87 vom 31.3.2017, S.

nach § 7 oder § 97 Absatz 1 des Investmentgesetzes in der bis zum 21. Juli 2013 geltenden Fassung erhalten

enthält die Delegierte Verordnung (EU) 2017/565 der Kommission vom 25. April 2016 zur Ergänzung derAnteile§Richtlinie 2014/65/EU des Europäischen Parlaments und des Rates in Bezug auf die organisatorischen

sich

auf

des
inländischensofernFinanzdienstleistungen

Sinne

Investmentvermögen, die von einer Kapitalverwaltungsgesellschaft ausgegeben werden, die eine Erlaubnis

diese

im

betreiben,

Vermögensanlagen2 berechtigen oder zu einer Barzahlung führen, die in Abhängigkeit von Wertpapieren, von Währungen,vonZinssätzen oder anderen Erträgen, von Waren, Indices oder Messgrößen bestimmt wird; nähere Bestimmungen

Emittenten

Vermögensanlagengesetzes

odere)Anbietern

2

Hinterlegungsscheine, die Schuldtitel vertreten,

EU-b)sonstige Wertpapiere, die zum Erwerb oder zur Veräußerung von Wertpapieren nach den Nummern 1 und

Investmentgesellschaften,

Verwaltungsgesellschaften oder ausländischen AIF-Verwaltungsgesellschaften oderverwaltetend)Kapitalverwaltungsgesellschaften,

extern3.Schuldtitel,a)insbesondere Genussscheine und Inhaberschuldverschreibungen und Orderschuldverschreibungen sowiec)Unternehmen, die auf Grund einer Rechtsverordnung nach § 53c gleichgestellt oder freigestellt sind,b)Instituten oder Finanzunternehmen mit Sitz in einem anderen Staat des Europäischen Wirtschaftsraums, die

die Voraussetzungen nach § 53b Abs. 1 Satz 1 oder Abs. 7 erfüllen,

2.andere Anteile an in- oder ausländischen juristischen Personen, Personengesellschaften und sonstigen
Unternehmen, soweit sie Aktien vergleichbar sind, sowie Hinterlegungsscheine, die Aktien vertreten,a)inländischen Instituten,

187d)Kaufen oder Verkaufen von Finanzinstrumenten für eigene Rechnung als unmittelbarer oder mittelbarer
Teilnehmer eines inländischen organisierten Marktes oder eines multilateralen oder organisierten
Handelssystems mittels einer hochfrequenten algorithmischen Handelstechnik im Sinne von Absatz 44, auchohne Dienstleistung für andere (Hochfrequenzhandel),2.Anteile an Investmentvermögen im Sinne des § 1 Absatz 1 des Kapitalanlagegesetzbuchs,

3.Geldmarktinstrumente im Sinne des Absatzes 2,4.derivative Geschäfte im Sinne des Absatzes 3,

Systems auf eine Weise zusammenführt, die zu einem Vertrag über den Kauf dieser Finanzinstrumente führt

8

Schuldverschreibungen, strukturierten Finanzprodukten, Emissionszertifikaten oder Derivaten innerhalb des(6) Waren-Spot-Kontrakt im Sinne dieses Gesetzes ist ein Vertrag im Sinne des Artikels 3 Absatz 1 Nummer

15 der Verordnung (EU) Nr. 596/2014.

7

9.der Betrieb eines multilateralen Systems, bei dem es sich nicht um einen organisierten Markt oder ein
multilaterales Handelssystem handelt und das die Interessen einer Vielzahl Dritter am Kauf und Verkauf von(5) Waren im Sinne dieses Gesetzes sind fungible Wirtschaftsgüter, die geliefert werden können; dazu zählen

auch Metalle, Erze und Legierungen, landwirtschaftliche Produkte und Energien wie Strom.

zusammenbringt, die zu einem Vertrag über den Kauf dieser Finanzinstrumente führt (Betrieb eines
multilateralen Handelssystems),

nicht erst nach Befriedigung aller nicht nachrangigen Gläubiger zurückgezahlt wird.

von Finanzinstrumenten innerhalb des Systems und nach nichtdiskretionären Bestimmungen in einer Weise

Nummer 1 und 2 des Kreditwesengesetzes zu betreiben, ausgegeben werden, wenn das darauf eingezahlte

Kapital im Falle des Insolvenzverfahrens über das Vermögen des Instituts oder der Liquidation des Instituts

Entscheidungsspielraum (Finanzportfolioverwaltung),
8.der Betrieb eines multilateralen Systems, das die Interessen einer Vielzahl von Personen am Kauf und Verkauf

genannten Kreditinstitut, das über eine Erlaubnis verfügt, Bankgeschäfte im Sinne von § 1 Absatz 1 Satz 2

1 Absatz 3d Satz 1 des Kreditwesengesetzes, dem eine Erlaubnis nach § 32 Absatz 1 des Kreditwesengesetzes

erteilt worden ist, oder von einem in Artikel 2 Absatz 5 Nummer 5 der Richtlinie 2013/36/EU namentlich

6.die Platzierung von Finanzinstrumenten ohne feste Übernahmeverpflichtung (Platzierungsgeschäft),7.die Verwaltung einzelner oder mehrerer in Finanzinstrumenten angelegter Vermögen für andere mit

der Fälligkeit zum vollen Nennwert zurückgezahlt wird, und die von einem CRR-Kreditinstitut im Sinne des §5.die Übernahme von Finanzinstrumenten für eigenes Risiko zur Platzierung oder die Übernahme
gleichwertiger Garantien (Emissionsgeschäft),an einer Genossenschaft im Sinne des § 1 des Genossenschaftsgesetzes sowie Namensschuldverschreibungen,ausgestattet sind, bei denen das investierte Kapital ohne Anrechnung von Zinsen ungemindert zum Zeitpunkt(Anlagevermittlung),

7.Vermögensanlagen im Sinne des § 1 Absatz 2 des Vermögensanlagengesetzes mit Ausnahme von Anteilen

die mit einer vereinbarten festen Laufzeit, einem unveränderlich vereinbarten festen positiven Zinssatz(Abschlussvermittlung),
4.die Vermittlung von Geschäften über die Anschaffung und die Veräußerung von Finanzinstrumenten

6.Rechte auf Zeichnung von Wertpapieren und

3.die Anschaffung oder Veräußerung von Finanzinstrumenten in fremdem Namen für fremde Rechnung(Eigenhandel) oder(4) Finanzinstrumente im Sinne dieses Gesetzes sind

1.Wertpapiere im Sinne des Absatzes 1,

5.Emissionszertifikate,

Internalisierung),c)Anschaffen oder Veräußern von Finanzinstrumenten für eigene Rechnung als Dienstleistung für andere

5.Termingeschäfte mit Bezug auf die in Artikel 8 der Delegierten Verordnung (EU) 2017/565 genannten

zu erfüllen sind und dem Transfer von Kreditrisiken dienen (Kreditderivate);

Basiswerte, sofern sie die Bedingungen der Nummer 2 erfüllen.

Kundenaufträge außerhalb eines geregelten Marktes oder eines multilateralen oder organisierten
Handelssystems ausgeführt werden, ohne dass ein multilaterales Handelssystem betrieben wird (systematische

4.als Kauf, Tausch oder anderweitig ausgestaltete Festgeschäfte oder Optionsgeschäfte, die zeitlich verzögert

b)häufige organisierte und systematische Betreiben von Handel für eigene Rechnung in erheblichem Umfang
außerhalb eines organisierten Marktes oder eines multilateralen oder organisierten Handelssystems, wenn

3.finanzielle Differenzgeschäfte;gestellten Preisen für eigene Rechnung unter Einsatz des eigenen Kapitals (Market-Making),

aufweisen und nichtkommerziellen Zwecken dienen,

und sofern sie keine Kassageschäfte im Sinne des Artikels 7 der Delegierten Verordnung (EU) 2017/565 sind;

2.dasa)kontinuierliche Anbieten des An- und Verkaufs von Finanzinstrumenten an den Finanzmärkten zu selbstc)die Merkmale anderer Derivatekontrakte im Sinne des Artikels 7 der Delegierten Verordnung (EU) 2017/565(Finanzkommissionsgeschäft),werden und nicht über ein organisiertes Handelssystem gehandelte Energiegroßhandelsprodukte im Sinne vonAbsatz 20 sind, die effektiv geliefert werden müssen, oder(8) 1Wertpapierdienstleistungen im Sinne dieses Gesetzes sind
1.die Anschaffung oder Veräußerung von Finanzinstrumenten im eigenen Namen für fremde Rechnungb)auf einem organisierten Markt oder in einem multilateralen oder organisierten Handelssystem geschlossen

Nummer 29 der Verordnung (EU) Nr. 596/2014.

verlangen, ohne dass dieses Recht durch Ausfall oder ein anderes Beendigungsereignis begründet ist,

(7) Referenzwert im Sinne dieses Gesetzes ist ein Kurs, Index oder Wert im Sinne des Artikels 3 Absatz 1

Messwerte als Basiswerte, sofern siea)durch Barausgleich zu erfüllen sind oder einer Vertragspartei das Recht geben, einen Barausgleich zu

188

einem

dem

Verhältnis

desOTC-Handels

desWertpapierdienstleistungsunternehmenszum§ 3 Ausnahmen; Verordnungsermächtigung

Verwaltungsgesellschaften oder ausländischen AIF-Verwaltungsgesellschaften oder
Vermögensanlagengesetzes
betreiben, sofern sich diese Wertpapierdienstleistungen auf Anteile oder Aktien von inländischen
Investmentvermögen, die von einer Kapitalverwaltungsgesellschaft ausgegeben werden, die eine Erlaubnis
nach § 7 oder § 97 Absatz 1 des Investmentgesetzes in der bis zum 21. Juli 2013 geltenden Fassung hat, die
für den in § 345 Absatz 2 Satz 1, Absatz 3 Satz 2, in Verbindung mit Absatz 2 Satz 1, oder Absatz 4 Satz 1 desKapitalanlagegesetzbuchs vorgesehenen Zeitraum noch fortbesteht, oder die eine Erlaubnis nach den §§ 20,
21 oder den §§ 20, 22 des Kapitalanlagegesetzbuchs hat, oder die von einer EU-Verwaltungsgesellschaft
ausgegeben werden, die eine Erlaubnis nach Artikel 6 der Richtlinie 2009/65/EG des Europäischen Parlaments
und des Rates vom 13. Juli 2009 zur Koordinierung der Rechts- und Verwaltungsvorschriften betreffend

10e)Anbietern

erlaubnispflichtige Anlageverwaltung nach § 1 Absatz 1a Satz 2 Nummer 11 des Kreditwesengesetzes.

(9) Wertpapiernebendienstleistungen im Sinne dieses Gesetzes sind

1.die Verwahrung und die Verwaltung von Finanzinstrumenten für andere, einschließlich Depotverwahrung

und verbundener Dienstleistungen wie Cash-Management oder die Verwaltung von Sicherheiten mit

Ausnahme der Bereitstellung und Führung von Wertpapierkonten auf oberster Ebene (zentrale

Kontenführung) gemäß Abschnitt A Nummer 2 des Anhangs zur Verordnung (EU) Nr. 909/2014

2.die Gewährung von Krediten oder Darlehen an andere für die Durchführung von Wertpapierdienstleistungen,sofern das Unternehmen, das den Kredit oder das Darlehen gewährt, an diesen Geschäften beteiligt ist,

3.die Beratung von Unternehmen über die Kapitalstruktur, die industrielle Strategie sowie die Beratung und

9(Depotgeschäft),Vermögensanlagen

im

Sinne

des

§

1

Absatz2d)Kapitalverwaltungsgesellschaften,

der Verordnung (EU) Nr. 600/2014 und der Artikel 72 bis 76 der Delegierten Verordnung (EU) 2017/565 dievonfreigestellt sind,

85 bis 92 dieses Gesetzes sowie des Artikels 20 Absatz 1 der Verordnung (EU) Nr. 596/2014, des Artikels 26

Emittentenc)Unternehmen, die aufgrund einer Rechtsverordnung nach § 53c des Kreditwesengesetzes gleichgestellt oderdarstellt (Eigengeschäft). 7Der Finanzportfolioverwaltung gleichgestellt ist hinsichtlich der §§ 63 bis 83 undoder

die Voraussetzungen nach § 53b Abs. 1 Satz 1 oder Abs. 7 des Kreditwesengesetzes erfüllen,von Finanzinstrumenten für eigene Rechnung, die keine Dienstleistung für andere im Sinne des Satzes 1 Nr. 2

des

EU-

b)Instituten oder Finanzunternehmen mit Sitz in einem anderen Staat des Europäischen Wirtschaftsraums, dieder Bundesanstalt beantragt hat. 6Als Wertpapierdienstleistung gilt auch die Anschaffung und Veräußerung

Investmentgesellschaften,a)Instituten im Sinne des Kreditwesengesetzes,

geltenden Regelungen unterworfen und eine Erlaubnis zum Betreiben der systematischen Internalisierung bei

verwalteten

Anlagevermittlung zwischen Kunden und

den häufigen systematischen Handel als auch die Obergrenze für den Handel in erheblichem Umfangüberschritten werden oder wenn ein Unternehmen sich freiwillig den für die systematische Internalisierung

extern

１〜６号 （略）7.Unternehmen, die als Wertpapierdienstleistung für andere ausschließlich die Anlageberatung und die

Voraussetzungen der systematischen Internalisierung sind erst dann erfüllt, wenn sowohl die Obergrenze fürKreditinstitute,

Bestimmungen enthalten die Artikel 12 bis 17 der Delegierten Verordnung (EU) 2017/565. 5Die

(1) 1Als Wertpapierdienstleistungsunternehmen gelten nicht

nach

Gesamthandelsvolumen in einem bestimmten Finanzinstrument in der Europäischen Union; nähere

oder

sind

in einem Umfang erbringen, der einen in kaufmännischer Weise eingerichteten Geschäftsbetrieb erfordert.

Gesamthandelsvolumen des Wertpapierdienstleistungsunternehmens in einem bestimmten Finanzinstrument

Gesetzes

Wertpapierdienstleistungen allein oder zusammen mit Wertpapiernebendienstleistungen gewerbsmäßig oderdiesesin erheblichem Umfang vorliegt, bemisst sich entweder nach dem Anteil des OTC-Handels an dem

Sinne

von dem Wertpapierdienstleistungsunternehmen für eigene Rechnung durchgeführt werden. 4Ob ein Handel

im

Finanzdienstleistungsinstitute und nach § 53 Abs. 1 Satz 1 des Kreditwesengesetzes tätige Unternehmen, die

Wertpapierdienstleistungsunternehmen(10)

eines Handelsplatzes (OTC-Handel) mit einem Finanzinstrument zur Ausführung von Kundenaufträgen, die

Zusammenhang mit Wertpapierdienstleistungen oder Wertpapiernebendienstleistungen stehen.

Emission. 3Ob ein häufiger systematischer Handel vorliegt, bemisst sich nach der Zahl der Geschäfte außerhalb

Wertpapierdienstleistungsunternehmen oder einem Kreditinstitut ausgegeben werden, im Zeitpunkt ihrervon

6.Dienstleistungen, die im Zusammenhang mit dem Emissionsgeschäft stehen,die

7.Dienstleistungen, die sich auf einen Basiswert im Sinne des Absatzes 2 Nr. 2 oder Nr. 5 beziehen und im

Finanzinstrumenten,

Vereinbarungenvon2Das Finanzkommissionsgeschäft, der Eigenhandel und die Abschlussvermittlung umfassen den Abschluss vonVerkaufÖffentlichkeit bekannt gegeben wird (Anlageberatung).

den(Anlageempfehlung),

für ihn geeignet dargestellt wird und nicht ausschließlich über Informationsverbreitungskanäle oder für dieüberArtikels 3 Absatz 1 Nummer 34 der Verordnung (EU) Nr. 596/2014 (Anlagestrategieempfehlung) oder vonAnlageempfehlungen im Sinne des Artikels 3 Absatz 1 Nummer 35 der Verordnung (EU) Nr. 596/2014

beziehen, sofern die Empfehlung auf eine Prüfung der persönlichen Umstände des Anlegers gestützt oder als

4.Devisengeschäfte, die in Zusammenhang mit Wertpapierdienstleistungen stehen,
5.das Erstellen oder Verbreiten von Empfehlungen oder Vorschlägen von Anlagestrategien im Sinne des2017/565 an Kunden oder deren Vertreter, die sich auf Geschäfte mit bestimmten Finanzinstrumenten

das Angebot von Dienstleistungen bei Unternehmenskäufen und Unternehmenszusammenschlüssen,

10.die Abgabe von persönlichen Empfehlungen im Sinne des Artikels 9 der Delegierten Verordnung (EU)

(Betrieb eines organisierten Handelssystems),

189
verpflichtet,

Wertpapierdienstleistungen

und

Form

über

das

und
Anlagestrategien,

über

seine

11

12

2.hinsichtlich aller Kosten und Nebenkosten:oder(3) 1Ein Wertpapierdienstleistungsunternehmen muss sicherstellen, dass es die Leistung seiner Mitarbeiter

Wertpapierdienstleistung

Anlagestrategien verbunden sind, unddiec)ob die Art des Finanzinstruments für Privatkunden oder professionelle Kunden bestimmt ist;überSachlage zu treffen.

Entscheidungb)geeignete Warnhinweise zu den Risiken, die mit dieser Art von Finanzinstrumenten oder den einzelnen

seine

Wertpapiernebendienstleistung, in deren Zusammenhang der Interessenkonflikt auftritt, in Kenntnis derwird,

Anlagestrategien,versetzt

2.unter Berücksichtigung der Einstufung des Kunden im Sinne des § 67 so detailliert sein, dass der Kunde in

die

Lage

Berücksichtigung des Zielmarktes im Sinne des Absatzes 3 oder 4:a)geeignete Leitlinien zur Anlage in solche Arten von Finanzinstrumenten oder zu den einzelnen

1.hinsichtlich der Arten von Finanzinstrumenten und der vorgeschlagenen Anlagestrategie unter1.mittels eines dauerhaften Datenträgers erfolgen undzur Verfügung gestellt werden. 3Die Informationen nach Satz 1 müssen folgende Angaben enthalten:

vernünftigem Ermessen zu gewährleisten, dass das Risiko der Beeinträchtigung von Kundeninteressen

vermieden wird. 2Die Darlegung nach Satz 1 muss

Grundlage ihre Anlageentscheidung treffen können. 2Die Informationen können auch in standardisierter Form

Beeinträchtigung der Kundeninteressen unternommenen Schritte eindeutig darzulegen, soweit dieorganisatorischen Vorkehrungen nach § 80 Absatz 1 Satz 2 Nummer 2 nicht ausreichen, um nach

Kunden nach vernünftigem Ermessen die Art und die Risiken der ihnen angebotenen oder von ihnen

vorgeschlagenen

nachgefragten Arten von Finanzinstrumenten oder Wertpapierdienstleistungen verstehen und auf dieser

die

Wertpapierdienstleistungsunternehmenund(2) 1Ein Wertpapierdienstleistungsunternehmen hat einem Kunden, bevor es Geschäfte für ihn durchführt,Finanzinstrumente

die allgemeine Art und Herkunft von Interessenkonflikten und die zur Begrenzung der Risiken derdieInformationen
überangemessene

Ausführungsplätze und alle Kosten und Nebenkosten zur Verfügung zu stellen, die erforderlich sind, damit die

istzu erbringen.

Wertpapierdienstleistungsunternehmen

Dienstleistungen,Ein

Wertpapiernebendienstleistungen ehrlich, redlich und professionell im bestmöglichen Interesse seiner Kunden(1)(7) 1Wertpapierdienstleistungsunternehmen sind verpflichtet, ihren Kunden rechtzeitig und in verständlicher

Artikel 22 der Verordnung (EU) 2017/1129 und § 7 des Wertpapierprospektgesetzes bleiben unberührt.

（以下、略）

Allgemeine Verhaltensregeln; Verordnungsermächtigung

2Marketingmitteilungen müssen eindeutig als solche erkennbar sein. 3 § 302 des Kapitalanlagegesetzbuchs,

anderen beruflichen Tätigkeit erbringen, ohne sich die Anlageberatung gesondert vergüten zu lassen,§ 63(6) 1Alle Informationen, die Wertpapierdienstleistungsunternehmen Kunden zugänglich machen,
einschließlich Marketingmitteilungen, müssen redlich und eindeutig sein und dürfen nicht irreführend sein.

12.Unternehmen, die als Wertpapierdienstleistung ausschließlich die Anlageberatung im Rahmen einer

9 genannten Zielmarktes, und sicherstellen, dass es Finanzinstrumente nur anbietet oder empfiehlt, wenn dies
im Interesse der Kunden liegt.

Kreditwesengesetzes; Anteile oder Aktien an Hedgefonds im Sinne des § 283 des Kapitalanlagegesetzbuchs

８〜１１号 （略）gegenüber es Wertpapierdienstleistungen erbringt, beurteilen, auch unter Berücksichtigung des in § 80 Absatz

das Unternehmen beantragt und erhält eine entsprechende Erlaubnis nach § 32 Abs. 1 desgelten nicht als Anteile an Investmentvermögen im Sinne dieser Vorschrift,(5) 1Ein Wertpapierdienstleistungsunternehmen muss die von ihm angebotenen oder empfohlenen
Finanzinstrumente verstehen. 2Es muss deren Vereinbarkeit mit den Bedürfnissen der Kunden, denen

Finanzdienstleistungen Eigentum oder Besitz an Geldern oder Anteilen von Kunden zu verschaffen, es sei denn,

2Das Wertpapierdienstleistungsunternehmen muss zumutbare Schritte unternehmen, um zu gewährleisten,dass das Finanzinstrument an den bestimmten Zielmarkt vertrieben wird.

2.die Strategie für den Vertrieb der Finanzinstrumente mit diesem Zielmarkt vereinbar ist.

dürfen, mit Ausnahme solcher AIF, die nach § 330a des Kapitalanlagegesetzbuchs vertrieben werden dürfen,

angeboten werden, beschränken und die Unternehmen nicht befugt sind, sich bei der Erbringung dieser

1.sie den Bedürfnissen eines bestimmten Zielmarktes im Sinne des § 80 Absatz 9 entsprechen und

EU-Investmentvermögen oder ausländischen AIF, die nach dem Kapitalanlagegesetzbuch vertrieben werdenoder auf Vermögensanlagen im Sinne des § 1 Absatz 2 des Vermögensanlagengesetzes, die erstmals öffentlich(4) 1Ein Wertpapierdienstleistungsunternehmen, das Finanzinstrumente zum Verkauf an Kunden konzipiert,muss sicherstellen, dass diese Finanzinstrumente so ausgestaltet sind, dassvom 12.6.2014, S. 349, L 74 vom 18.3.2015, S. 38) geändert worden ist, hat, oder auf Anteile oder Aktien ananderes Finanzinstrument anbieten könnte, das den Bedürfnissen des Privatkunden besser entspricht.

2003/41/EG und 2009/65/EG und der Verordnungen (EG) Nr. 1060/2009 und (EU) Nr. 1095/2010 (ABl. L

174 vom 1.7.2011, S. 1, L 115 vom 27.4.2012, S. 35), die zuletzt durch die Richtlinie 2014/65/EU (ABl. L 173

noch durch Verkaufsziele oder in sonstiger Weise Anreize dafür setzen, einem Privatkunden ein bestimmtes
Finanzinstrument zu empfehlen, obwohl das Wertpapierdienstleistungsunternehmen dem Privatkunden ein

des Rates vom 8. Juni 2011 über die Verwalter alternativer Investmentfonds und zur Änderung der Richtlinien

32, L 269 vom 13.10.2010, S. 27), die zuletzt durch die Richtlinie 2014/91/EU (ABl. L 257 vom 28.8.2014, S.

186) geändert worden ist, oder nach Artikel 6 der Richtlinie 2011/61/EU des Europäischen Parlaments undnicht in einer Weise vergütet oder bewertet, die mit seiner Pflicht, im bestmöglichen Interesse der Kunden zu
handeln, kollidiert. 2Insbesondere darf es bei seinen Mitarbeitern weder durch Vergütungsvereinbarungenbestimmte Organismen für gemeinsame Anlagen in Wertpapieren (OGAW) (ABl. L 302 vom 17.11.2009, S.

190

13

14

mit

der

Gewährungeines

Darlehensals
Ausnutzung einer Kreditobergrenze eines bereits bestehenden Darlehens oder eines bereits bestehenden

gemeinsam

die Art und Weise, wie ihre Wechselwirkung das Risiko beeinflusst, zu informieren.

nicht

Wertpapiernebendienstleistung im Sinne des § 2 Absatz 7 Nummer 2 erbringt, außer sie besteht in derPrivatkunden in angemessener Weise über die einzelnen Bestandteile, die mit ihnen verknüpften Risiken und

Wertpapierdienstleistung

Verordnung (EU) 2017/565 genannten Kriterien erfüllen,
2.dieseverknüpften Risiken von den mit den einzelnen Bestandteilen verknüpften Risiken abweichen, hat esf)andere nicht komplexe Finanzinstrumente für Zwecke dieses Absatzes, die die in Artikel 57 der Delegierten

nachweisen. 2Besteht die Wahrscheinlichkeit, dass die mit dem Gesamtpaket oder der Gesamtvereinbarungvoneinander bezogen werden können und dem Kunden für jeden Bestandteil getrennt Kosten und Gebühren

e)strukturierte Einlagen, mit Ausnahme solcher, die eine Struktur aufweisen, die es dem Kunden erschwert,
das Ertragsrisiko oder die Kosten des Verkaufs des Produkts vor Fälligkeit zu verstehen oder

Dienstleistungen oder anderen Produkten als Gesamtpaket oder in der Form an, dass die Erbringung der

Wertpapierdienstleistungen, der anderen Dienstleistungen oder der Geschäfte über die anderen Produkte

Bedingung für die Durchführung der jeweils anderen Bestandteile oder des Abschlusses der anderend)Anteile oder Aktien an OGAW im Sinne von § 1 Absatz 2 des Kapitalanlagegesetzbuchs, mit Ausnahme derin Artikel 36 Absatz 1 Unterabsatz 2 der Verordnung (EU) Nr. 583/2010 genannten strukturierten OGAW,(9) 1Bietet ein Wertpapierdienstleistungsunternehmen Wertpapierdienstleistungen verbunden mit anderen

Vereinbarungen ist, muss es den Kunden darüber informieren, ob die einzelnen Bestandteile auch getrenntc)Geldmarktinstrumente, mit Ausnahme solcher, in die ein Derivat eingebettet ist, und solcher, die eine
Struktur aufweisen, die es dem Kunden erschwert, die mit ihnen einhergehenden Risiken zu verstehen,Europäischen Gemeinschaftsrechts, die Kreditinstitute und Verbraucherkredite betreffen, unterliegt.

sind, mit Ausnahme solcher, in die ein Derivat eingebettet ist und solcher, die eine Struktur aufweisen, die es

zur Verfügung zu stellen.

dem Kunden erschwert, die mit ihnen einhergehenden Risiken zu verstehen,einem diesem gleichwertigen Markt eines Drittlandes oder einem multilateralen Handelssystem zugelassen

Nebenkosten nach den Sätzen 4 und 5 unverlangt unter Verwendung einer formalisierten Kostenaufstellung

angeboten werden, das in Bezug auf die Informationspflichten bereits anderen Bestimmungen desb)Schuldverschreibungen und andere verbriefte Schuldtitel, die zum Handel an einem organisierten Markt,§ 64 Absatz 2 Satz 3 zur Verfügung gestellt, sind dem Kunden die Informationen hinsichtlich aller Kosten und(8) Die Absätze 6 und 7 gelten nicht für Wertpapierdienstleistungen, die als Teil eines Finanzprodukts

Drittlandes oder an einem multilateralen Handelssystem zugelassen sind, mit Ausnahme von Aktien an AIF im
Sinne von § 1 Absatz 3 des Kapitalanlagegesetzbuchs, und von Aktien, in die ein Derivat eingebettet ist,

ausdrücklich auf dieses Recht hinzuweisen. 11Wird einem Kunden ein standardisiertes Informationsblatt nachAnlagevermittlung erbringt in Bezug aufa)Aktien, die zum Handel an einem organisierten Markt, an einem diesem gleichwertigen Markt eines

Informationen über Kosten und Nebenkosten zur Verfügung zu stellen. 10Der Kunde ist bei Bereitstellung desindividuellen Produktinformationsblattes nach § 7 des Altersvorsorgeverträge-Zertifizierungsgesetzes(11) Die Pflichten nach Absatz 10 gelten nicht, soweit das Wertpapierdienstleistungsunternehmen
1.auf Veranlassung des Kunden Finanzkommissionsgeschäft, Eigenhandel, Abschlussvermittlung oder

Zertifizierungsgesetzes als erfüllt. 9Dem Kunden sind auf Nachfrage die nach diesem Absatz erforderlichen

6Der Hinweis nach Satz 3 und die Information nach Satz 4 können in standardisierter Form erfolgen.

Sinne des Altersvorsorgeverträge-Zertifizierungsgesetzes gilt die Informationspflicht nach diesem Absatz

durch Bereitstellung des individuellen Produktinformationsblattes nach § 7 des Altersvorsorgeverträge-

ist. 5Näheres zur Angemessenheit und zu den Pflichten, die im Zusammenhang mit der Beurteilung derAngemessenheit geltenden Pflichten regeln die Artikel 55 und 56 der Delegierten Verordnung (EU) 2017/565.

Verordnung (EU) 2017/565 genannten Voraussetzungen regelmäßig, mindestens jedoch jährlich während derKapitalanlagegesetzbuchs bleiben unberührt. 8Bei zertifizierten Altersvorsorge- und Basisrentenverträgen im

Kunden darüber zu informieren, dass eine Beurteilung der Angemessenheit im Sinne des Satzes 1 nicht möglich

Verfügung stellen. 6Solche Informationen sollen dem Kunden unter den in Artikel 50 Absatz 9 der Delegierten

Laufzeit der Anlage zur Verfügung gestellt werden. 7Die §§ 293 bis 297, 303 bis 307 desWertpapierdienstleistung für den Kunden nicht angemessen ist, hat es den Kunden darauf hinzuweisen.
4Erlangt das Wertpapierdienstleistungsunternehmen nicht die erforderlichen Informationen, hat es den

Wertpapierdienstleistungsunternehmen eine Aufstellung, die nach den einzelnen Posten aufgegliedert ist, zur

Kunden angemessen ist. 3Gelangt ein Wertpapierdienstleistungsunternehmen auf Grund der nach Satz 1
erhaltenen Informationen zu der Auffassung, dass das vom Kunden gewünschte Finanzinstrument oder die

Wertpapierdienstleistungsunternehmen

Wirkung der Kosten auf die Rendite der Anlage verstehen kann. 5Auf Verlangen des Kunden muss dasdaszusammengefasster Weise darstellen, damit der Kunde sowohl die Gesamtkosten als auch die kumulativemuss

2Sind verbundene Dienstleistungen oder Produkte im Sinne des Absatzes 9 Gegenstand des Kundenauftrages,

werden,muss das Wertpapierdienstleistungsunternehmen beurteilen, ob das gesamte verbundene Geschäft für denverursacht

inMarktrisikoliegendes

Angemessenheit der Finanzinstrumente oder Wertpapierdienstleistungen für die Kunden beurteilen zu können.

4Informationen zu Kosten und Nebenkosten, einschließlich solchen Kosten und Nebenkosten im

Zusammenhang mit der Wertpapierdienstleistung und dem Finanzinstrument, die nicht durch ein zugrunde

einzuholen über Kenntnisse und Erfahrungen der Kunden in Bezug auf Geschäfte mit bestimmten Arten vonFinanzinstrumenten oder Wertpapierdienstleistungen, soweit diese Informationen erforderlich sind, um dieb)Kosten der Finanzinstrumente, die dem Kunden empfohlen oder an ihn vermarktet werden sowiec)Zahlungsmöglichkeiten des Kunden einschließlich etwaiger Zahlungen durch Dritte.

(10) 1Vor der Erbringung anderer Wertpapierdienstleistungen als der Anlageberatung oder derFinanzportfolioverwaltung hat ein Wertpapierdienstleistungsunternehmen von den Kunden Informationena)Informationen in Bezug auf Kosten und Nebenkosten sowohl der Wertpapierdienstleistungen als auch der

Wertpapiernebendienstleistungen, einschließlich eventueller Beratungskosten,

191

die

Anlageberatung beeinträchtigt wird, undgiltnach den §§ 164 und 166 des Kapitalanlagegesetzbuchs,
2.bei Anteilen oder Aktien an geschlossenen Publikums-AIF die wesentlichen Anlegerinformationen nach den

16

Informationsblattes treten
1.bei Anteilen oder Aktien an OGAW oder an offenen Publikums-AIF die wesentlichen Anlegerinformationen

Bestimmungen zu Inhalt und Aufbau der formalisierten Kostenaufstellung nach Absatz 7 Satz 11 erlassen. 2Das

Bundesministerium der Finanzen kann die Ermächtigung durch Rechtsverordnung auf die Bundesanstalt

15

nach Satz 1 Nummer 1 ein standardisiertes Informationsblatt verwendet werden. 4An die Stelle des7.Art, Inhalt und Zeitpunkt der Berichtspflichten nach Absatz 12 aus den Artikeln 59 bis 63.

und für Verbraucherschutz durch Rechtsverordnung, die nicht der Zustimmung des Bundesrates bedarf, nähere

der Anlageberatung an einem organisierten Markt gehandelt werden, kann anstelle des Informationsblattes

Artikeln 54 bis 56,(14) 1Das Bundesministerium der Finanzen kann im Einvernehmen mit dem Bundesministerium der Justiz

zur Verfügung zu stellen. 2Die Angaben in den Informationsblättern nach Satz 1 dürfen weder unrichtig noch

5.Art, Inhalt, Gestaltung und Zeitpunkt der nach Absatz 7 notwendigen Informationen für die Kunden aus den

irreführend sein und müssen mit den Angaben des Prospekts vereinbar sein. 3Für Aktien, die zum Zeitpunkt

nicht irreführend angesehen werden aus den Artikeln 36 und 44,

Artikeln 38, 39, 41, 45 bis 53, 61 und 65,

3.in den Fällen des Satzes 4 ein dort genanntes Dokument anstelle des in Nummer 1 genannten
Informationsblatts

4.den Voraussetzungen, unter denen Informationen im Sinne von Absatz 6 Satz 1 als redlich, eindeutig und

6.Art, Umfang und Kriterien der nach Absatz 10 von den Kunden einzuholenden Informationen aus den

2.in den Fällen des Satzes 3 ein in Nummer 1 genanntes Informationsblatt oder wahlweise ein standardisiertes
Informationsblatt oder

3.der Vergütung oder Bewertung nach Absatz 3 aus Artikel 27,

1.über jedes Finanzinstrument, auf das sich eine Kaufempfehlung bezieht, ein kurzes und leicht verständliches
Informationsblatt,1.der Verpflichtung nach Absatz 1 aus den Artikeln 58, 64, 65 und 67 bis 69,

rechtzeitig vor dem Abschluss eines Geschäfts über Finanzinstrumente, für die kein Basisinformationsblattnach der Verordnung (EU) Nr. 1286/2014 erstellt werden muss,(13) Nähere Bestimmungen zu den Absätzen 1 bis 3, 6, 7, 10 und 12 ergeben sich aus der Delegierten

Verordnung (EU) 2017/565, insbesondere zu

2.Art, Umfang und Form der Offenlegung nach Absatz 2 aus den Artikeln 34 und 41 bis 43,

Absatz 8 gelten entsprechend.
(2) 1Im Falle einer Anlageberatung hat das Wertpapierdienstleistungsunternehmen einem Privatkunden

ausdrücklich auf dieses Recht hinzuweisen.

Absatz erforderlichen Informationen über Kosten und Nebenkosten zur Verfügung zu stellen. 5Der Kunde ist

bei Bereitstellung der jährlichen Information nach § 7a des Altersvorsorgeverträge-Zertifizierungsgesetzes

der empfohlenen Finanzinstrumente zur Verfügung stellt.
2 § 63 Absatz 7 Satz 2 und bei Vorliegen der dort genannten Voraussetzungen die Ausnahme nach § 63

Altersvorsorgeverträge-Zertifizierungsgesetzes als erfüllt. 4Dem Kunden sind auf Nachfrage die nach diesem

3.ob das Wertpapierdienstleistungsunternehmen dem Kunden regelmäßig eine Beurteilung der Geeignetheit

Altersvorsorgeverträge-Zertifizierungsgesetzes

Informationspflicht gemäß Satz 1 bei Beachtung der jährlichen Informationspflicht nach § 7a desdeswirtschaftliche Verbindungen bestehen, die so eng sind, dass das Risiko besteht, dass die Unabhängigkeit der

Sinne

und

im

andererseits, sofern relevant, Informationen zu den angefallenen Kosten. 3Bei zertifizierten Altersvorsorge-

Basisrentenverträgenbeschränkt ist, die von Anbietern oder Emittenten stammen, die in einer engen Verbindung zum
Wertpapierdienstleistungsunternehmen stehen oder zu denen in sonstiger Weise rechtliche oder

2.ob sich die Anlageberatung auf eine umfangreiche oder eine eher beschränkte Analyse verschiedener Artenvon Finanzinstrumenten stützt, insbesondere, ob die Palette an Finanzinstrumenten auf Finanzinstrumente

beinhaltet einerseits nach den in den Artikeln 59 bis 63 der Delegierten Verordnung (EU) 2017/565 näher

bestimmten Fällen regelmäßige Berichte an den Kunden, wobei die Art und Komplexität der jeweiligen

1.ob die Anlageberatung unabhängig erbracht wird (Unabhängige Honorar-Anlageberatung) oder nicht;

dauerhaften Datenträger über die erbrachten Wertpapierdienstleistungen berichten; insbesondere müssen sie

nach Ausführung eines Geschäftes mitteilen, wo sie den Auftrag ausgeführt haben. 2Die Pflicht nach Satz 1

Finanzinstrumente sowie die Art der erbrachten Wertpapierdienstleistungen zu berücksichtigen ist, und

den Informationen nach § 63 Absatz 7 rechtzeitig vor der Beratung und in verständlicher Form darüber
informieren(1) 1Erbringt ein Wertpapierdienstleistungsunternehmen Anlageberatung, muss es den Kunden zusätzlich zu

3.den Kunden ausdrücklich darüber informiert, dass keine Angemessenheitsprüfung im Sinne des Absatzes 10(12) 1Wertpapierdienstleistungsunternehmen müssen ihren Kunden in geeigneter Weise auf einem

Verordnungsermächtigung

vorgenommen wird, wobei diese Information in standardisierter Form erfolgen kann.

§ 64

duldet und hierfür vereinbarungsgemäß ein Entgelt verlangt, und

Besondere Verhaltensregeln bei der Erbringung von Anlageberatung und Finanzportfolioverwaltung;übertragen.

Konto, ohne eingeräumte Überziehungsmöglichkeit die Überziehung des Kontos durch den Darlehensnehmer(Überziehungsmöglichkeit) oder darin, dass der Darlehensgeber im Rahmen eines Vertrages über ein laufendes

laufendes Konto dem Darlehensnehmer das Recht einräumt, sein Konto in bestimmter Höhe zu überziehen

Darlehens, das in der Weise gewährt wurde, dass der Darlehensgeber in einem Vertragsverhältnis über ein

192

Verkaufeines

Finanzinstruments

mittelseines

Absatz1

keinerlei nichtmonetäre Zuwendungen von einem Dritten, der nicht Kunde dieser Dienstleistung ist oder vondem Kunden dazu beauftragt worden ist, angenommen werden. 3Monetäre Zuwendungen dürfen nur dann

18

empfehlen zu können, das oder die für ihn geeignet ist und insbesondere seiner Risikotoleranz und seiner

17

einholen, die erforderlich sind, um dem Kunden ein Finanzinstrument oder eine Wertpapierdienstleistung

Fähigkeit, Verluste zu tragen, entspricht. 2Ein Wertpapierdienstleistungsunternehmen darf seinen Kunden nur

2.darf sich die Unabhängige Honorar-Anlageberatung allein durch den Kunden vergüten lassen.
2Es dürfen nach Satz 1 Nummer 2 im Zusammenhang mit der Unabhängigen Honorar-Anlageberatung

3.über seine Anlageziele, einschließlich seiner Risikotoleranz,

Wertpapierdienstleistungsunternehmen stehen oder in sonstiger Weise so enge rechtliche oder wirtschaftliche
Verbindung zu diesem unterhalten, dass die Unabhängigkeit der Beratung dadurch gefährdet werden könnte;

2.über die finanziellen Verhältnisse des Kunden, einschließlich seiner Fähigkeit, Verluste zu tragen, undemittiert oder anbietet oder deren Anbieter oder Emittenten in einer engen Verbindung zum

1.über Kenntnisse und Erfahrungen des Kunden in Bezug auf Geschäfte mit bestimmten Arten vonFinanzinstrumenten oder Wertpapierdienstleistungen,a)hinsichtlich ihrer Art und des Emittenten oder Anbieters hinreichend gestreut sind undb)nicht beschränkt sind auf Finanzinstrumente, die das Wertpapierdienstleistungsunternehmen selbst(3) 1Das Wertpapierdienstleistungsunternehmen muss von einem Kunden alle Informationen

Informationsblatt nach § 4 des Wertpapierprospektgesetzes, soweit der Anbieter der Wertpapiere zur

Erstellung eines solchen Wertpapier-Informationsblatts verpflichtet ist.

1.muss bei der Beratung eine ausreichende Palette von auf dem Markt angebotenen Finanzinstrumenten
berücksichtigen, die10.bei Wertpapieren im Sinne des § 2 Nummer 1 des Wertpapierprospektgesetzes das Wertpapier-verschieben, damit der Kunde die Möglichkeit hat, die Geeignetheitserklärung zuvor zu erhalten.

7(5) 1Ein Wertpapierdienstleistungsunternehmen, das Unabhängige Honorar-Anlageberatung erbringt,§

Organismen für gemeinsame Anlagen handelt undnach

Nummer 1, 3 oder Nummer 4, sofern es sich um Anteile an den in Nummer 1, 3 oder Nummer 4 genannten

Produktinformationsblatt

Geeignetheitserklärung unverzüglich nach Vertragsschluss zur Verfügung gestellt wird und das

individuelle

Wertpapierdienstleistungsunternehmen dem Kunden angeboten hat, die Ausführung des Geschäfts zu

das

des

Zertifizierungsgesetzes

Altersvorsorgeverträge-Zertifizierungsgesetzes sowie zusätzlich die wesentlichen Anlegerinformationen nacherlaubt, darf das Wertpapierdienstleistungsunternehmen die Geeignetheitserklärung ausnahmsweiseoderunmittelbar nach dem Vertragsschluss zur Verfügung stellen, wenn der Kunde zugestimmt hat, dass ihm die

Kauf

Erstellung eines solchen Vermögensanlagen-Informationsblatts verpflichtet ist,den

9.bei zertifizierten Altersvorsorge- und Basisrentenverträgen im Sinne des Altersvorsorgeverträge-

über

Fernkommunikationsmittels geschlossen, das die vorherige Übermittlung der Geeignetheitserklärung nicht

Informationsblatt nach § 13 des Vermögensanlagengesetzes, soweit der Anbieter der Vermögensanlagen zur

Vereinbarung

abgestimmt wurde. 3Näheres regelt Artikel 54 Absatz 12 der Delegierten Verordnung (EU) 2017/565. 4Wird
dienennen sowie erläutern, wie sie auf die Präferenzen, Anlageziele und die sonstigen Merkmale des Kunden

8.bei Vermögensanlagen im Sinne des § 1 Absatz 2 des Vermögensanlagengesetzes das Vermögensanlagen-(Geeignetheitserklärung) zur Verfügung stellen. 2Die Geeignetheitserklärung muss die erbrachte Beratung

Kapitalanlagegesetzbuchs genannten Zeitraum noch weiter vertrieben werden dürfen, die wesentlichen

Anlegerinformationen, die nach § 137 Absatz 2 des Investmentgesetzes in der bis zum 21. Juli 2013 geltenden

Fassung erstellt worden sind,(4) 1Ein Wertpapierdienstleistungsunternehmen, das Anlageberatung erbringt, muss dem Privatkunden auf
einem dauerhaften Datenträger vor Vertragsschluss eine Erklärung über die Geeignetheit der Empfehlung

werden, gilt Satz 2 für das gesamte verbundene Geschäft entsprechend.

Investmentgesetzes in der bis zum 21. Juli 2013 geltenden Fassung erstellt worden sind,geltenden Fassung, die für den in § 345 Absatz 8 Satz 2 oder § 355 Absatz 2 Satz 10 desAnlageberatung, bei der verbundene Produkte oder Dienstleistungen im Sinne des § 63 Absatz 9 empfohlen

noch weiter vertrieben werden dürfen, die wesentlichen Anlegerinformationen, die nach § 42 Absatz 2 des7.bei ausländischen Investmentvermögen im Sinne des Investmentgesetzes in der bis zum 21. Juli 20132009/65/EG, 2009/138/EG, 2011/61/EU und der Verordnungen (EG) Nr. 1060/2009 und (EU) Nr.
648/2012 (ABl. L 347 vom 28.12.2017, S. 35). 5Erbringt ein Wertpapierdienstleistungsunternehmen eine

6.bei inländischen Investmentvermögen im Sinne des Investmentgesetzes in der bis zum 21. Juli 2013

geltenden Fassung, die für den in § 345 Absatz 6 Satz 1 des Kapitalanlagegesetzbuchs genannten Zeitraum2017 zur Festlegung eines allgemeinen Rahmens für Verbriefungen und zur Schaffung eines spezifischen
Rahmens für einfache, transparente und standardisierte Verbriefung und zur Änderung der Richtlinien

Kapitalanlagegesetzbuchs in deutscher Sprache veröffentlicht worden sind,

Artikel 3 der Verordnung (EU) 2017/2402 des Europäischen Parlaments und des Rates vom 12. Dezember

5.bei EU-OGAW die wesentlichen Anlegerinformationen, die nach § 298 Absatz 1 Satz 2 desKapitalanlagegesetzbuchs,derPflichten regeln die Artikel 54 und 55 der Delegierten Verordnung (EU) 2017/565. 4Näheres zur Geeignetheit

Rahmenvon Verbriefungen und den im Zusammenhang mit der Beurteilung der Geeignetheit geltenden Pflichten regelt

im4.bei EU-AIF und ausländischen AIF die wesentlichen Anlegerinformationen nach § 318 Absatz 5 desGeschäfte

3Näheres zur Geeignetheit und den im Zusammenhang mit der Beurteilung der Geeignetheit geltenden

oder

Kapitalanlagegesetzbuchs, sofern die AIF-Kapitalverwaltungsgesellschaft solche gemäß § 307 Absatz 5 desempfehlen

Kapitalanlagegesetzbuchs erstellt hat,

Wertpapierdienstleistungen

Finanzportfolioverwaltung tätigen, die nach den eingeholten Informationen für den Kunden geeignet sind.

3.bei Anteilen oder Aktien an Spezial-AIF die wesentlichen Anlegerinformationen nach § 166 oder § 270 desundFinanzinstrumente§§ 268 und 270 des Kapitalanlagegesetzbuchs,

193

Abgabenbleibendavon

unberührt.

6Das

in

Wertpapierdienstleistungsunternehmens,

ihrer

Kunden

die
zu

des

handeln,

Pflicht

Selbstauskunft bei der Vermittlung des Vertragsschlusses über eine Vermögensanlage im Sinne desübertragen.

(1) 1Ein Wertpapierdienstleistungsunternehmen hat vor der Vermittlung des Vertragsschlusses über eine
Vermögensanlage im Sinne des § 2a des Vermögensanlagengesetzes von dem Kunden insoweit eine
Selbstauskunft über dessen Vermögen oder dessen Einkommen einzuholen, wie dies erforderlich ist, um prüfen

20

Offenlegung kann in Form einer generischen Beschreibung erfolgen. 4Monetäre Zuwendungen, die im

Zusammenhang mit der Finanzportfolioverwaltung angenommen werden, sind so schnell wie nachvernünftigem Ermessen möglich nach Erhalt und in vollem Umfang an den Kunden auszukehren. 5Vorschriften19§ 2a des Vermögensanlagengesetzes

Interesse

sie

§ 65

bestmöglichen

dasswenn diese Zuwendungen dem Kunden unmissverständlich offengelegt werden, bevor die betreffende

imlassen,Wertpapierdienstleistung oder Wertpapiernebendienstleistung für die Kunden erbracht wird. 3Die

beeinträchtigen,vermuten

3.zu Kriterien dazu, wann geringfügige nichtmonetäre Vorteile im Sinne des Absatzes 7 vorliegen.

nicht

2Das Bundesministerium der Finanzen kann die Ermächtigung durch Rechtsverordnung auf die Bundesanstalt

daher

verhältnismäßig

undfür die Kunden,

2.die hinsichtlich ihres Umfangs, wobei die Gesamthöhe der von einem einzelnen Unternehmen oder einer

einzelnen Unternehmensgruppe gewährten Vorteile zu berücksichtigen ist, und ihrer Art vertretbar undsind

im Sinne des Absatzes 2 Satz 3,
2.zu Art, inhaltlicher Gestaltung, Zeitpunkt und Datenträger der nach Absatz 6 notwendigen Informationen

angenommen werden, wenn es sich um geringfügige nichtmonetäre Vorteile handelt,

Wertpapiernebendienstleistungen zu verbessern undzu Inhalt und Aufbau sowie Art und Weise der Zurverfügungstellung des standardisierten Informationsblattes

handelnder Personen annehmen und behalten. 2Abweichend von Satz 1 dürfen nichtmonetäre Vorteile nur

1.die geeignet sind, die Qualität der für den Kunden erbrachten Wertpapierdienstleistung und

1.im Einvernehmen mit dem Bundesministerium der Justiz und für Verbraucherschutz zu Inhalt und Aufbau
sowie zu Art und Weise der Zurverfügungstellung der Informationsblätter im Sinne des Absatzes 2 Satz 1 undZusammenhang mit der Finanzportfolioverwaltung keine Zuwendungen von Dritten oder für Dritte(10) 1Das Bundesministerium der Finanzen kann durch Rechtsverordnung, die nicht der Zustimmung desFestpreisgeschäfte

Bundesrates bedarf, nähere Bestimmungen erlassensind(7) 1Ein Wertpapierdienstleistungsunternehmen, das Finanzportfolioverwaltung erbringt, darf im

3Ausgenommen

den Artikeln 60 und 62.

ausführen.

Finanzinstrumenten, deren Anbieter oder Emittent das Wertpapierdienstleistungsunternehmen selbst ist.

(Festpreisgeschäft)

5.Art, Inhalt und Zeitpunkt der Berichtspflichten nach Absatz 8, auch in Verbindung mit § 63 Absatz 12, aus

Rechnung

beruhenden Geschäftsabschluss nicht als Geschäft mit dem Kunden zu einem festen oder bestimmbaren Preisfüreigene3.der Erklärung nach Absatz 4 aus Artikel 54 Absatz 12,
4.der Anlageberatung nach Absatz 5 aus Artikel 53,

Pflichten sowie zu Art, Umfang und Kriterien der nach Absatz 3 von den Kunden einzuholenden Informationen
aus den Artikeln 54 und 55,

3.das Bestehen eines eigenen Gewinninteresses oder des Interesses eines mit ihm verbundenen oderwirtschaftlich verflochtenen Emittenten oder Anbieters an dem Geschäftsabschluss.

2.der Geeignetheit nach Absatz 3, den im Zusammenhang mit der Beurteilung der Geeignetheit geltenden

2.das Bestehen einer engen Verbindung oder einer sonstigen wirtschaftlichen Verflechtung zum Anbieter oder

Emittenten sowie

2Ein Wertpapierdienstleistungsunternehmen darf einen auf seiner Unabhängigen Honorar-Anlageberatung

1.Art, Inhalt, Gestaltung und Zeitpunkt der nach den Absätzen 1 und 5, auch in Verbindung mit § 63 Absatz
7, notwendigen Informationen für die Kunden aus den Artikeln 52 und 53,

1.die Tatsache, dass es selbst Anbieter oder Emittent der Finanzinstrumente ist,

2017/565, insbesondere zu

Verflechtung besteht, muss das Wertpapierdienstleistungsunternehmen den Kunden rechtzeitig vor der

Empfehlung und in verständlicher Form informieren überAnlagezielen und den sonstigen Merkmalen des Kunden entspricht.
(9) Nähere Bestimmungen zu den Absätzen 1, 3, 5 und 8 ergeben sich aus der Delegierten Verordnung (EU)(6) 1Bei der Empfehlung von Geschäftsabschlüssen in Finanzinstrumenten, die auf einer Unabhängigen

selbst ist oder zu deren Anbieter oder Emittenten eine enge Verbindung oder sonstige wirtschaftliche§ 63 Absatz 12 insbesondere eine Erklärung darüber enthalten, wie die Anlage den Präferenzen, den

unterrichten. 7Im Übrigen gelten die allgemeinen Anforderungen für die Anlageberatung.

Honorar-Anlageberatung beruhen, deren Anbieter oder Emittent das Wertpapierdienstleistungsunternehmennach Absatz 1 Satz 1 Nummer 3 darüber informiert, dass es die Geeignetheit der empfohlenen
Finanzinstrumente regelmäßig beurteilt, so müssen die regelmäßigen Berichte gegenüber Privatkunden nach

Wertpapierdienstleistungsunternehmen muss Kunden über die ausgekehrten monetären Zuwendungenunterrichten.

und(8) Erbringt ein Wertpapierdienstleistungsunternehmen Finanzportfolioverwaltung oder hat es den Kunden

Steuernauszukehren. 5Vorschriften über die Entrichtung von Steuern und Abgaben bleiben davon unberührt. 6Dasvonschnell wie nach vernünftigem Ermessen möglich, nach Erhalt und in vollem Umfang an den Kunden

Entrichtung

Wertpapierdienstleistungsunternehmen muss den Kunden über die ausgekehrten monetären Zuwendungen

die

über

angenommen werden, wenn das empfohlene Finanzinstrument oder ein in gleicher Weise geeignetes

Finanzinstrument ohne Zuwendung nicht erhältlich ist. 4In diesem Fall sind die monetären Zuwendungen so194

4 Absatz 1 Nummer 37 der Verordnung (EU) Nr. 575/2013 verbundenen Personen und Unternehmen undandererseits seinen Kunden oder zwischen seinen Kunden untereinander zu erkennen und zu vermeiden oderzu regeln; dies umfasst auch solche Interessenkonflikte, die durch die Annahme von Zuwendungen Dritter
sowie

Wertpapierdienstleistungsunternehmens verursacht werden;

erworben werden, 1 000 Euro oder die in Satz 1 Nummer 1 und 2 genannten Beträge nicht übersteigt. 4Die

Sätze 1 und 3 gelten nicht, wenn der Anleger eine Kapitalgesellschaft ist oder eine GmbH & Co. KG, deren

Kommanditisten gleichzeitig Gesellschafter der GmbH oder an der Entscheidungsfindung der GmbH beteiligt

sind, sofern die GmbH & Co. KG kein Investmentvermögen und keine Verwaltungsgesellschaft nach dem

Zugriffs minimieren und verhindern, dass Informationen bekannt werden, so dass die Vertraulichkeit der Daten

21

menschlichen

Beteiligung

bearbeitet

wird.

Ein

22

1. seine Handelssysteme belastbar sind, über ausreichende Kapazitäten verfügen und angemessenen

keinerRisikokontrollen verfügen, die sicherstellen, dassüberhaupt

der Delegierten Verordnung (EU) 2017/565.

odereingeschränkter

Wertpapierdienstleistungsunternehmen, das algorithmischen Handel betreibt, muss über Systeme und(2) Nähere Bestimmungen zu Absatz 1, insbesondere zu der Form und dem Inhalt einer Vereinbarung nach

Absatz 1 Satz 2 und zur Art und Weise der Zustimmung nach § 67 Absatz 4 Satz 2 ergeben sich aus Artikel 71

Auftragsparameter im Sinne des Satzes 1 sind insbesondere Entscheidungen, ob der Auftrag eingeleitet werdensoll, über Zeitpunkt, Preis oder Quantität des Auftrags oder wie der Auftrag nach seiner Einreichung mit

nicht irreführend ist und müssen dabei der Form der geeigneten Gegenpartei und deren Geschäftstätigkeit

Rechnung tragen.

Wertpapierdienstleistungsunternehmen für alle oder für einzelne Geschäfte vereinbart hat, als professioneller

Bearbeitung von Aufträgen ohne die Bestimmung von Auftragsparametern, zur Bestätigung von Aufträgen

Computeralgorithmus die einzelnen Auftragsparameter automatisch bestimmt, ohne dass es sich um ein
System handelt, das nur zur Weiterleitung von Aufträgen zu einem oder mehreren Handelsplätzen, zur

87 Absatz 1 und 2 gebunden. 2Satz 1 ist nicht anwendbar, sofern die geeignete Gegenpartei mit demoder zur Nachhandelsbearbeitung ausgeführter Aufträge verwendet wird (algorithmischer Handel).

Bestimmungen einhalten, wenn es in der Weise Handel mit Finanzinstrumenten betreibt, dass ein

von § 63 Absatz 1, 3 bis 7, 9, 10, § 64 Absatz 3, 5 und 7, § 69 Absatz 1, der §§ 70, 82, 83 Absatz 2 und §Kunde oder als Privatkunde behandelt zu werden. 3Wertpapierdienstleistungsunternehmen müssen in ihrer(2) Ein Wertpapierdienstleistungsunternehmen muss zusätzlich die in diesem Absatz genannten

Wertpapiernebendienstleistungen gegenüber geeigneten Gegenparteien erbringen, sind nicht an die Vorgaben

Beziehung mit geeigneten Gegenparteien auf eine Art und Weise kommunizieren, die redlich, eindeutig undNähere Bestimmungen zur Organisation der Wertpapierdienstleistungsunternehmen enthalten die Artikel 21
bis 26 der Delegierten Verordnung (EU) 2017/565.

Abschlussvermittlung und den Eigenhandel sowie damit in direktem Zusammenhang stehende

jederzeit gewährleistet ist.

(1) 1Wertpapierdienstleistungsunternehmen, die das Finanzkommissionsgeschäft, die Anlage- undGeschäfte mit geeigneten Gegenparteien; Verordnungsermächtigung

bekannt oder infolge grober Fahrlässigkeit unbekannt.

§ 68

4. über solide Sicherheitsmechanismen verfügen, die die Sicherheit und Authentifizierung derKunden nicht zu vertreten, es sei denn, die Unvollständigkeit oder Unrichtigkeit der Kundenangaben ist ihm

Informationsübermittlungswege gewährleisten, das Risiko der Datenverfälschung und des unberechtigten(Vertriebsvorgaben), derart ausgestalten, umsetzen und überwachen, dass Kundeninteressen nicht
beeinträchtigt werden;

Wertpapierdienstleistungsunternehmen die Fehlerhaftigkeit oder Unvollständigkeit der Angaben seines

3. im Rahmen der Vorkehrungen nach Nummer 2 Grundsätze oder Ziele, die den Umsatz, das Volumen oder
den Ertrag der im Rahmen der Anlageberatung empfohlenen Geschäfte unmittelbar oder mittelbar betreffen

Kapitalanlagegesetzbuch ist.

(2) Soweit die in Absatz 1 genannten Informationen auf Angaben des Kunden beruhen, hat dasdesvertraglich gebundenen Vermittler und der mit ihm direkt oder indirekt durch Kontrolle im Sinne des Artikels

wenn es geprüft hat, dass der Gesamtbetrag der Vermögensanlagen desselben Emittenten, die von dem Kunden

Anreizstrukturen

davon zwischen einerseits ihm selbst einschließlich seiner Geschäftsleitung, seiner Mitarbeiter, seiner

Vertragsschluss über eine Vermögensanlage im Sinne des § 2a des Vermögensanlagengesetzes nur vermitteln,sonstige

Erbringung von Wertpapierdienstleistungen und Wertpapiernebendienstleistungen oder einer Kombination

erworben werden, 1 000 Euro nicht überschreitet. 3Ein Wertpapierdienstleistungsunternehmen darf einenoder

2. auf Dauer wirksame Vorkehrungen für angemessene Maßnahmen treffen, um Interessenkonflikte bei der

2Satz 1 gilt nicht, wenn der Gesamtbetrag der Vermögensanlagen desselben Emittenten, die von dem Kunden

Vergütungsstruktur

Wertpapierdienstleistungen und Wertpapiernebendienstleistungen zu gewährleisten;höchstens jedoch 25 000 Euro.

eigene1. angemessene Vorkehrungen treffen, um die Kontinuität und Regelmäßigkeit der

2.den zweifachen Betrag des durchschnittlichen monatlichen Nettoeinkommens des jeweiligen Anlegers,

die§25e des Kreditwesengesetzes einhalten. Darüber hinaus muss es

1.10 000 Euro, sofern der jeweilige Anleger nach seiner Selbstauskunft über ein frei verfügbares Vermögen in

Form von Bankguthaben und Finanzinstrumenten von mindestens 100 000 Euro verfügt, oderdurch

§ 80 Organisationspflichten; Verordnungsermächtigung(1) Ein Wertpapierdienstleistungsunternehmen muss die organisatorischen Pflichten nach § 25a Absatz 1 undzu können, ob der Gesamtbetrag der Vermögensanlagen desselben Emittenten, die von dem Kunden erworben

werden, folgende Beträge nicht übersteigt:

195

Honorar-Anlageberatung in der Hauptniederlassung und in welchen inländischen Zweigniederlassungenangeboten wird.

Zielmarkts, zur Verfügung zu stellen. Vertreibt ein Wertpapierdienstleistungsunternehmen Finanzinstrumente

24

23

allen
und dem Produktfreigabeverfahren nach Absatz 9 Satz 1, einschließlich des nach Absatz 9 Satz 2 bestimmten

hatsowie von Finanzdienstleistungen die Anforderungen nach § 25b des Kreditwesengesetzes einhalten. Die

konzipiert,

Auslagerung darf nicht die Rechtsverhältnisse des Unternehmens zu seinen Kunden und seine Pflichten, die

Finanzinstrumente

Vertriebsunternehmen sämtliche erforderlichen und sachdienlichen Informationen zu dem Finanzinstrument

das

(11)

(6) Ein Wertpapierdienstleistungsunternehmen muss bei einer Auslagerung von Aktivitäten und Prozessen

Wertpapierdienstleistungsunternehmen,

geeignet ist.

oder mehrere Finanzinstrumente an einem einzelnen Handelsplatz oder an verschiedenen Handelsplätzen feste,

zeitgleiche Geld- und Briefkurse vergleichbarer Höhe zu wettbewerbsfähigen Preisen stellt.

Einbeurteilen, ob das Finanzinstrument den Bedürfnissen des nach Absatz 9 Satz 2 bestimmten Zielmarkts

oderweiterhin entspricht und ob die beabsichtigte Vertriebsstrategie zur Erreichung dieses Zielmarkts weiterhin

angebotene

Handelsplätze ist und seine Strategie beim Handel auf eigene Rechnung beinhaltet, dass es in Bezug auf ein

ihm

Einfluss auf das potentielle Risiko für den bestimmten Zielmarkt haben könnten. Zumindest ist regelmäßig zu

vonMaking-Strategie im Sinne des Absatzes 4, wenn es Mitglied oder Teilnehmer eines oder mehrerer

hat(5) Ein Wertpapierdienstleistungsunternehmen, das algorithmischen Handel betreibt, verfolgt eine Market-

Wertpapierdienstleistungsunternehmen

Verpflichtungen nachkommt.

Ein

(10)

Finanzinstrumente regelmäßig zu überprüfen und dabei alle Ereignisse zu berücksichtigen, die wesentlichen

3. über wirksame Systeme und Kontrollen zu verfügen, durch die gewährleistet wird, dass es jederzeit diesenvermarktete

2. einen schriftlichen Vertrag mit dem Handelsplatz zu schließen, in dem zumindest die Verpflichtungen nachdass die beabsichtigte Vertriebsstrategie dem nach Satz 2 bestimmten Zielmarkt entspricht.

Finanzinstrument für Endkunden innerhalb der jeweiligen Kundengattung ein bestimmter Zielmarkt festgelegt
wird. Dabei sind alle einschlägigen Risiken für den Zielmarkt zu bewerten. Darüber hinaus ist sicherzustellen,

verlässlich mit Liquidität versorgt wird,

Nummer 1 festgelegt werden, sofern es nicht den Vorschriften des § 26c des Börsengesetzes unterliegt, undFinanzinstrumente zu unterhalten, zu betreiben und zu überprüfen, bevor das Finanzinstrument an Kundenvermarktet oder vertrieben wird (Produktfreigabeverfahren). Das Verfahren muss sicherstellen, dass für jedes

zu betreiben, abgesehen von außergewöhnlichen Umständen, so dass der Handelsplatz regelmäßig und

Verfahren für die Freigabe jedes einzelnen Finanzinstruments und jeder wesentlichen Anpassung bestehender

Art des konkreten Marktes und der konkreten Merkmale des gehandelten Instruments

1. dieses Market-Making während eines festgelegten Teils der Handelszeiten des Handelsplatzes kontinuierlich

Kunden zugewiesen und an diesen weitergegeben werden.
(9) Ein Wertpapierdienstleistungsunternehmen, das Finanzinstrumente zum Verkauf konzipiert, hat ein(4) Betreibt ein Wertpapierdienstleistungsunternehmen algorithmischen Handel im Sinne des Absatzes 2 unter

Verfolgung einer Market-Making-Strategie, hat es unter Berücksichtigung der Liquidität, des Umfangs und derZuwendungen, die im Zusammenhang mit der Finanzportfolioverwaltung oder Unabhängigen HonorarAnlageberatung von Dritten oder von für Dritte handelnden Personen angenommen werden, dem jeweiligen

aufbewahrt werden. Auf Verlangen der Bundesanstalt sind diese Aufzeichnungen herauszugeben.

Anlageberatung erbringt, muss durch entsprechende Grundsätze sicherstellen, dass alle monetären

Aufzeichnungen insbesondere alle von ihm platzierten Aufträge einschließlich Auftragsstornierungen,ausgeführten Aufträge und Kursnotierungen an Handelsplätzen umfassen und chronologisch geordnet(8) Ein Wertpapierdienstleistungsunternehmen, das Finanzportfolioverwaltung oder Unabhängige Honorar-

Wertpapierdienstleistungsunternehmen eine hochfrequente algorithmische Handelstechnik, müssen diesedasgenannten

Nutzt

Unabhängige Honorar-Anlageberatung erbringt, muss auf seiner Internetseite angeben, ob die Unabhängige

Delegierten Verordnung (EU) 2017/565 betreibt, hat ausreichende Aufzeichnungen zu den in Absatz 2
aufzubewahren.

Interessenkonflikte mit Kundeninteressen entstehen können. Ein Wertpapierdienstleistungsunternehmen, das(3) Ein Wertpapierdienstleistungsunternehmen, das algorithmischen Handel im Sinne des Artikels 18 derJahre

Absatzes 1 Nummer 3 für die Unabhängige Honorar-Anlageberatung so ausgestalten, dass in keinem Falle

algorithmischen Handel betreibt.

fünf

Anlageberatung trennt. Wertpapierdienstleistungsunternehmen müssen Vertriebsvorgaben im Sinne desund den zuständigen Behörden des Handelsplatzes, dessen Mitglied oder Teilnehmer es ist, an, dass es

mindestens

es die Unabhängige Honorar-Anlageberatung organisatorisch, funktional und personell von der übrigen

Das Wertpapierdienstleistungsunternehmen zeigt der Bundesanstalt

ordnungsgemäß überwacht werden.

fürAnlageberatung erbringen, wenn es ausschließlich Unabhängige Honorar-Anlageberatung erbringt oder wenn

Handelssystemen umzugehen, und sicherstellen, dass seine Systeme vollständig geprüft sind undAngelegenheiten(7) Ein Wertpapierdienstleistungsunternehmen darf die Anlageberatung nur dann als Unabhängige Honorar-

nationalen Vorschriften gegen Marktmissbrauch oder die Vorschriften des Handelsplatzes verstößt, mit dem

es verbunden ist. Ein Wertpapierdienstleistungsunternehmen, das algorithmischen Handel betreibt, muss

Auslagerung ergeben sich aus den
Artikeln 30 bis 32 der Delegierten Verordnung (EU) 2017/565.

3. seine Handelssysteme nicht für einen Zweck verwendet werden können, der gegen die europäischen undferner über wirksame Notfallvorkehrungen verfügen, um mit unvorgesehenen Störungen in seinen

Voraussetzungen, unter denen dem Wertpapierdienstleistungsunternehmen eine Erlaubnis nach § 32 desKreditwesengesetzes erteilt worden ist, nicht verändern. Nähere Bestimmungen zu den Anforderungen an die

die Störungen auf dem Markt verursacht oder ein Beitrag zu diesen geleistet werden könnten;

nach diesem Abschnitt gegenüber den Kunden bestehen, verändern. Die Auslagerung darf die

Handelsschwellen und Handelsobergrenzen unterliegen;2. die Übermittlung von fehlerhaften Aufträgen oder eine Funktionsweise des Systems vermieden wird, durch

196

Artikels 26 der Delegierten Verordnung (EU) 2017/565 durch Privatkunden gegenüber dem
Wertpapierdienstleistungsunternehmen erhoben werden,undMitarbeitern

in

der

Anlageberatung,als

Vertriebsbeauftragte,

in

der

für die Berichte an die Geschäftsleitung nach Artikel 25 Absatz 2 der Delegierten Verordnung (EU) 2017/565
betrauen (Compliance-Beauftragter), wenn dieser sachkundig ist und über die für die Tätigkeit erforderliche

Wertpapierdienstleistungsunternehmen muss der Bundesanstalt

26

unverzüglich der Bundesanstalt anzuzeigen.

betrauen, wenn dieser sachkundig ist und über die für die Tätigkeit erforderliche Zuverlässigkeit verfügt. Das25anzeigen, bevor der Mitarbeiter die Tätigkeit nach Satz 1 aufnimmt. Ändern sich die von dem
Wertpapierdienstleistungsunternehmen nach Satz 2 angezeigten Verhältnisse, sind die neuen Verhältnisse(1) Ein Wertpapierdienstleistungsunternehmen darf einen Mitarbeiter nur dann mit der Anlageberatung

Zuverlässigkeit verfügt. Das Wertpapierdienstleistungsunternehmen muss der Bundesanstalt den MitarbeitervonFinanzportfolioverwaltung oder als Compliance-Beauftragte; Verordnungsermächtigung

Einsatz(5) Ein Wertpapierdienstleistungsunternehmen darf einen Mitarbeiter nur dann mit der Verantwortlichkeit für
die Compliance-Funktion im Sinne des Artikels 22 Absatz 2 der Delegierten Verordnung (EU) 2017/565 undErmächtigung durch Rechtsverordnung auf die Bundesanstalt übertragen.

87

nach Satz 2 angezeigten Verhältnisse, sind die neuen Verhältnisse unverzüglich der Bundesanstalt anzuzeigen.

10 sowie den nach Absatz 11 zur Verfügung zu stellenden Informationen und damit zusammenhängenden

Pflichten der Wertpapierdienstleistungsunternehmen erlassen. Das Bundesministerium der Finanzen kann die§

verfügt. Das Wertpapierdienstleistungsunternehmen muss der Bundesanstalt den Mitarbeiter anzeigen, bevor
dieser die Tätigkeit nach Satz 1 aufnimmt. Ändern sich die von dem Wertpapierdienstleistungsunternehmen

Produktfreigabeverfahren und den Produktvertrieb nach Absatz 9 und das Überprüfungsverfahren nach Absatz(Vertriebsbeauftragter), wenn dieser sachkundig ist und über die für die Tätigkeit erforderliche Zuverlässigkeit

monetären oder nicht-monetären Vorteilen (ABl. L 87 vom 31.3.2017, S. 500), in der jeweils geltenden Fassung,und den organisatorischen Anforderungen nach Absatz 1 Satz 2 und Absatz 7, den Anforderungen an dasÜberwachung von Vertriebsvorgaben im Sinne des § 80 Absatz 1 Satz 2 Nummer 3 nur dann betrauen

Entrichtung beziehungsweise Gewährung oder Entgegennahme von Gebühren, Provisionen oder anderenderZuverlässigkeit verfügt.

dann(4) Ein Wertpapierdienstleistungsunternehmen darf einen Mitarbeiter mit der Ausgestaltung, Umsetzung odernur

der Richtlinie 2014/65/EU des Europäischen Parlaments und des Rates im Hinblick auf den Schutz derMitarbeiter

Finanzinstrumente und Gelder von Kunden, Produktüberwachungspflichten und Vorschriften für die

darf

Finanzportfolioverwaltung betrauen, wenn dieser sachkundig ist und über die für die Tätigkeit erforderliche

Wertpapierdienstleistungsunternehmen(3)

zur Umsetzung der Delegierten Richtlinie (EU) 2017/593 der Kommission vom 7. April 2016 zur Ergänzung

Ein

die für die Tätigkeit erforderliche Zuverlässigkeit verfügt.

(14) Das Bundesministerium der Finanzen kann durch Rechtsverordnung, die nicht der Zustimmung desBundesrates bedarf, nähere Bestimmungen zur Anwendung der Delegierten Verordnung (EU) 2017/565 sowie

mit

Wertpapiernebendienstleistungen zu informieren (Vertriebsmitarbeiter), wenn dieser sachkundig ist und übereinen

Finanzinstrumente,

Anforderungen an den Produktüberwachungsprozess nicht erfüllt werden, frühzeitig erkennt.

oder(2) Ein Wertpapierdienstleistungsunternehmen darf einen Mitarbeiter nur dann damit betrauen, Kunden überregelmäßige Überprüfung der Produktfreigabevorkehrungen überwacht und etwaige Risiken, dass

Wertpapierdienstleistungen

Tätigkeit ausübt, anzuzeigen.

Delegierten Verordnung (EU) 2017/565 eingerichtete Compliance-Funktion die Entwicklung und

Einlagen,der Mitarbeiter zugeordnet ist oder für welche er überwiegend oder in der Regel die nach Satz 1 anzuzeigendeÄnderungen geeignete Maßnahmen zu treffen. Es hat sicherzustellen, dass seine gemäß Artikel 22 Absatz 2 derstrukturierte

sonstige Organisationseinheiten hat, die Zweigstelle, Zweigniederlassung oder Organisationseinheit, welcheralsüberprüfen, um sicherzustellen, dass diese belastbar und zweckmäßig sind und zur Umsetzung erforderlicher

wenn

3. sofern das Wertpapierdienstleistungsunternehmen mehrere Zweigstellen, Zweigniederlassungen oderverpflichtet,

gelten.

(13) Das Wertpapierdienstleistungsunternehmen hat seine Produktfreigabevorkehrungen regelmäßig zu

Sorgfalt

Interessenkonflikten

2. der Name des Mitarbeiters, auf Grund dessen Tätigkeit die Beschwerde erhoben wird, sowie,

besonderer

mit

Dienstleistungen ändern, die es als Vertriebsunternehmen anzubieten oder zu empfehlen beabsichtigt.

zuUmgangVertriebsunternehmen ein neues Finanzprodukt anzubieten oder zu empfehlen beabsichtigt oder wenn sich die

istordnungsgemäßen

Wertpapierdienstleistungsunternehmenden
1. jede Beschwerde,

Bundesanstalt, wenn auf Grund der Tätigkeit des Mitarbeiters eine oder mehrere Beschwerden im Sinne desAnforderungen, die für die Offenlegung, für die Bewertung der Eignung und der Angemessenheit, für AnreizeesVerhältnisse, sind die neuen Verhältnisse unverzüglich der Bundesanstalt anzuzeigen. Ferner sind dersicherzustellen, dass die Anforderungen nach diesem Gesetz eingehalten werden. Dies umfasst auch solcheDasaufnimmt. Ändern sich die von dem Wertpapierdienstleistungsunternehmen nach Satz 2 angezeigten

Finanzinstrumente vertreibt, hat geeignete Verfahren aufrechtzuerhalten und Maßnahmen zu treffen, um

fürunmittelbar zuständigen Vertriebsbeauftragten anzeigen, bevor der Mitarbeiter die Tätigkeit nach Satz 1

Wertpapierdienstleistungsunternehmenkonzipierte

anderenbeabsichtigt

einem(12) Ein Wertpapierdienstleistungsunternehmen, das Finanzinstrumente anzubieten oder zu empfehlenvonverfügt, den auf Grund der Organisation des Wertpapierdienstleistungsunternehmens für den Mitarbeiter

Emittenten zu verschaffen und die Merkmale sowie den Zielmarkt des Finanzinstruments zu verstehen.

das

2. sofern das Wertpapierdienstleistungsunternehmen über Vertriebsbeauftragte im Sinne des Absatzes 4

die in Satz 1 genannten Informationen vom konzipierenden Wertpapierdienstleistungsunternehmen oder vomund

1. den Mitarbeiter und,oder empfiehlt es diese, ohne sie zu konzipieren, muss es über angemessene Vorkehrungen verfügen, um sich

197(6) Liegen Tatsachen vor, aus denen sich ergibt, dass ein Mitarbeiter 1. nicht oder nicht mehr die

2. die Sachkunde und die Zuverlässigkeit nach Absatz 1 Satz 1, den Absätzen 2, 3, 4 Satz 1, jeweils auch in

sind,

dass

dem

Verbraucher

eine

Wertpapierdienstleistung

in

Bezug

auf

gedeckte

27

dieselben Konditionen wie dem Immobiliar-Verbraucherdarlehensvertrag zugrunde liegen, erbracht wird, und

Schuldverschreibungen, die zur Besicherung der Finanzierung des Kredits begeben worden sind und denen

geknüpft(10) Die Absätze 1 bis 3 gelten nicht für Immobiliar-Verbraucherdarlehensverträge, die an die Vorbedingung

Bundesanstalt übertragen.

der Finanzen kann die Ermächtigung durch Rechtsverordnung ohne Zustimmung des Bundesrates auf die

Verantwortlichkeit für die Richtigkeit und Aktualität dieser Einträge übertragen wird. Das Bundesministerium

die für das Unternehmen einzurichtenden Einträge in die Datenbank nach Absatz 7 eingeräumt und ihm die

bestimmt werden, dass dem jeweiligen Wertpapierdienstleistungsunternehmen ein schreibender Zugriff auf

einschließlich des jeweiligen Verfahrens regeln. In der Rechtsverordnung nach Satz 1 kann insbesondere

3. den Inhalt der Datenbank nach Absatz 7 und die Dauer der Speicherung der Einträge

Verbindung mit § 96, sowie Absatz 5 Satz 1 sowie

28

以上

Honorar-Anlageberater nach § 93 tritt.

1. den Inhalt, die Art, die Sprache, den Umfang und die Form der Anzeigen nach den Absätzen 1, 4 oder 5,

die Stelle der Erlaubnis nach § 32 des Kreditwesengesetzes die Eintragung in das Register Unabhängiger

Bundesrates bedarf, die näheren Anforderungen an

Mitarbeiter(4) Die Vorschrift des § 43 des Kreditwesengesetzes ist entsprechend anzuwenden mit der Maßgabe, dass andiejenigen(9) Das Bundesministerium der Finanzen kann durch Rechtsverordnung, die nicht der Zustimmung desauf
mitzuteilen.

anzuwenden

des Kreditwesengesetzes oder in mehreren solcher Zweigniederlassungen tätig sind.

nicht

eines

Führung der in Absatz 1 genannten Bezeichnungen befugt ist. Sie hat ihre Entscheidungen dem Registergerichtsind

Wertpapierdienstleistungsunternehmens, die ausschließlich in einer Zweigniederlassung im Sinne des § 24a7(3) Die Bundesanstalt entscheidet in Zweifelsfällen, ob ein Wertpapierdienstleistungsunternehmen zur

bis

(8)

1

Bezeichnung um einen auf ihren Sitzstaat hinweisenden Zusatz ergänzen.

Absatz 6 eine interne Datenbank.

Absätze

Werbezwecken führen, wenn sie zur Führung dieser Bezeichnung in ihrem Sitzstaat berechtigt sind und sie diezugeordneten Beschwerdeanzeigen nach Absatz 1 und die ihre Tätigkeit betreffenden Anordnungen nachDie

1 genannten Bezeichnungen in der Firma, als Zusatz zur Firma, zur Bezeichnung des Geschäftszwecks oder zu(7) Die Bundesanstalt führt über die nach den Absätzen 1, 4 und 5 anzuzeigenden Mitarbeiter sowie die ihnen

eine Bezeichnung, in der diese Wörter enthalten sind, dürfen, soweit durch Gesetz nichts

Wertpapierdienstleistungsunternehmen mit Sitz im Ausland dürfen bei ihrer Tätigkeit im Inland die in Absatzb)Anfechtungsklage gegen Maßnahmen nach Satz 1 haben keine aufschiebende Wirkung.

oder

Zusammenhang führen, der den Anschein ausschließt, dass sie Wertpapierdienstleistungen erbringen.

Honorar-Satz 2 hat ohne Nennung des Namens des betroffenen Mitarbeiters zu erfolgen. Widerspruch und„Unabhängige(2) Absatz 1 gilt nicht für Unternehmen, die die dort genannten Bezeichnungen in einem

verwarnen

Honorar-Anlageberater“,geeignet, den berechtigten Interessen des Unternehmens zu schaden. Die öffentliche Bekanntmachung nach

Mitarbeiter„Unabhängiger

Anlageberater nach § 93 eingetragen sind.

denBezeichnungenSinne des Satzes 1 auf ihrer Internetseite öffentlich bekannt machen, es sei denn, diese Veröffentlichung wäre

und

Die

§ 94 Bezeichnungen zur Unabhängigen Honorar-Anlageberatung

Werbezwecken nur Wertpapierdienstleistungsunternehmen führen, die im Register Unabhängiger

dem

der angezeigten Tätigkeit einzusetzen. Die Bundesanstalt kann unanfechtbar gewordene Anordnungen im

6

Wertpapierdienstleistungsunternehmen für eine Dauer von bis zu zwei Jahren untersagen, den Mitarbeiter in§anderes bestimmt ist, in der Firma, als Zusatz zur Firma, zur Bezeichnung des Geschäftszwecks oder zu

nach

Schreibweise oder

Befugnisse

dem

ihrer

Wertpapierdienstleistungsunternehmen

unbeschadet„Unabhängige Honoraranlageberaterin“, „Unabhängige Honoraranlageberatung“ auch in abweichender

Bundesanstalt

Tätigkeit zu beachten sind, kann die Bundesanstalt unbeschadet ihrer Befugnisse nach § 6 a) dasdie

2. gegen Bestimmungen dieses Abschnittes verstoßen hat, deren Einhaltung bei der Durchführung seinerkannAnlageberaterin“,„Unabhängige Honorar-Anlageberatung“ oder „Unabhängiger Honoraranlageberater“,

erfüllt,(1)1solange dieser die gesetzlichen Anforderungen nicht erfüllt, oderSatzwenn damit das Darlehen ausgezahlt, refinanziert oder abgelöst werden kann.

Wertpapierdienstleistungsunternehmen untersagen, den Mitarbeiter in der angezeigten Tätigkeit einzusetzen,

5

Anforderungen nach Absatz 1 Satz 1, Absatz 2, 3, 4 Satz 1, jeweils auch in Verbindung mit § 96, oder Absatz

198

CESR, 11-13 avenue de Friedland, 75008 Paris, France - Tel +33 (0)1 58 36 43 21, web site: www.cesr.eu

Understanding the definitionof advice under MiFID

Question & Answers

Date: 19 April 2010
Ref.: CESR/10-293

COMMITTEE OF EUROPEAN SECURITIES REGULATORS

IX.

VIII

V.
VI.
VII.

I.
II.
III.
IV.

2

Executive Summary
Introduction
Part I: Does the service being offered constitute a recommendation?
Part 2: Is the recommendation in relation to one or more transactions in financial
instruments?
Part 3a: Is the recommendation presented as suitable?
Part 3b: Is the recommendation based on a consideration of the person’s circumstances?
Part 4: Is the recommendation issued otherwise than exclusively through distribution
channels or to the public?
Part 5a: Is the recommendation made to a person in his capacity as an investor or
potential investor?
Part 5b: Is the recommendation made to a person in his capacity as an agent for aninvestor or potential investor?

Table of contents

資料７

199

Executive Summary

The presentation of a recommendation as suitable for a client or based on the client’s
circumstances, including making recommendations to become a client of a particular firm,
making recommendations which are clearly unsuitable in light of knowledge about the client,definitions of a ‘person’s circumstances’ and when recommendations will be viewed as based on aview of a person’s circumstances.

Perimeter issues around the definition of personal recommendation, including disclaimers to theclient and failing to use known customer information.

Issues around the form of communication, including whether the Internet is always a‘distribution channel’, messages to multiple clients, distinguishing corporate finance andinvestment advice and whether these are mutually exclusive.







3

The provision of personal recommendations and whether other forms of presenting informationsuch as ‘investment research’, filtering, general recommendations, generic advice, presenting
multiple products or access to model investment portfolios could constitute investment advice.

Key subjects covered in this Q&A include:

The main questions for consideration, when determining whether a particular service amounts toinvestment advice, are laid out in ‘Diagram: the five key tests for investment advice’ in the
Introduction (see page 6). This diagram illustrates the five key tests that are set out in MiFID, withissues to consider in relation to each test. CESR wishes to stress that all five of these tests have to be
met for a service to be considered as investment advice.

This set of Questions and Answers reflects CESR’s statement of its policy following its consultation
paper. In parallel to this Q&A, CESR also publishes its Feedback Statement (Ref. CESR/10-294)
responding to comments it received in response to the CP and would recommend that these
documents be read in conjunction.

On 14 October 2009, CESR published a consultation paper (CP) entitled “Understanding thedefinition of advice under MiFID” (Ref. CESR/09-665). In that CP, CESR consulted on Questions andAnswers designed to clarify and illustrate situations where firms will, or will not, be considered asproviding investment advice. Investment advice is an investment service under MiFID, which is why
the distinction is important.

4and the provision of the service in such a way that it is not ‘specifically remunerated’ (Article 2(1)(j)). These exemptions are
not examined in detail in this paper.

1 Some exemptions are provided in MiFID, including exemptions for the ‘incidental’ provision of the service (Article 2(1)(c))

6. MiFID identifies the importance of presentation in determining whether investment advice isbeing given: one of the tests that the Directive sets out is whether a recommendation is presented
as suitable, rather than whether it is actually suitable for the client. CESR believes that it is,therefore, important to take account of whether it would be reasonable to think that a personal
recommendation is being made in determining whether investment advice is being given. So, if a
recommendation is put forward in such a way that a reasonable observer would view it as being
based on a consideration of a client’s circumstances or presented as suitable then – subject to theother four tests being met – this will amount to investment advice.

Considering an investor’s view of whether advice is being given (Test 3)

5. The diagram on page 6 illustrates how the five key tests work together and hence the thoughtprocess that a firm will need to go through to determine whether its services constituteinvestment advice. All five tests shown in the diagram have to be met in order for a service to beconsidered investment advice under MiFID. The following pages of this paper then use
Questions and Answers to clarify and illustrate situations where firms will, or will not, beconsidered as meeting each of the tests and hence providing investment advice. Where theQuestions and Answers describe a situation where a particular test is met, the reader shouldbear in mind that all four of the other tests would also have to be met for the service described tobe considered as advice.

4. According to MiFID, investment advice means the provision of personal recommendations to aclient, either upon his request or at the initiative of the investment firm, in respect of one ormore transactions relating to financial instruments (Article 4(4)). For the purposes of thedefinition of investment advice, that recommendation must be presented as suitable for that
person or must be based on a consideration of the circumstances of that person (Article 52 of the
MiFID Implementing Directive). The Directive also sets out a number of other tests for firms toconsider in determining whether they are providing such personal recommendations, which we
examine and discuss in this paper.

Examining the definition of investment advice

3. This document does not form part of the MiFID review. It is a Level 3 paper designed to further
harmonisation in the interpretation of the EU rules on the definition of investment advice as it
currently stands under MiFID

2. In the light of this distinction, it is important to provide as much clarity as possible about thedefinition of investment advice, to help firms to ascertain whether or not the services that they
provide are subject to the requirements on investment advice.

1. The Markets in Financial Instruments Directive (2004/39/EC), or ‘MiFID’, identifies investment
advice as an investment service, the provision of which, on a professional basis, generally
requires authorisation as an investment firm1. Together, MiFID and the MiFID Implementing
Directive (2006/73/EC) place various requirements on firms when they provide investment
advice that do not apply when providing many other investment services, notably including
requirements to ensure that any personal recommendations made to clients and potential clientsare suitable for them.

II. Introduction

200

5

11. It is taken as given throughout the following Questions and Answers that when a firm isproviding investment advice under MiFID, it will be subject to all of the Directive requirementsthat apply in relation to investment advice (e.g. the suitability requirements in Article 19(4) of
MiFID and Article 35 of the MiFID Implementing Directive), so this point is not reiterated forexamples individually. References to ‘clients’ or ‘investors’ made throughout the rest of thispaper can also be read as applying to potential clients or potential investors.

Assumptions made in preparing this paper

10. In reviewing its training, a key point for a firm to consider will be whether its customer-facing
staff understand that when they provide information to clients, they should not give their own
views or recommendations about the suitability for the client of any particular financial
instrument. By reflecting the firm’s intention not to give advice in training and oversight of staff,
firms can seek to manage the risk of individuals making personal recommendations. It isparticularly difficult for a firm to manage the risk that a client will be given advice in a face-toface situation, but the possibility of giving advice inadvertently also arises in relation to other
distribution mechanisms. Firms that interact with clients on-line, for example, will need to makesure that staff involved in designing and operating web systems understand the nature of theservice that they should, and should not, be providing.

9. If a firm wishes to verify that the service it is providing is not investment advice, it can do so byconsidering whether or not its service meets the five tests illustrated on the next page. A firmthat does not intend to give advice can seek to avoid doing so inadvertently by making sure thatits internal systems and controls, its staff training and its information to clients appropriately
and consistently reflect the nature of the service it is providing. (Firms should bear in mind that
describing a service as non-advised in their documentation will not be sufficient, on its own toensure that the services given do not amount to advice this is reflected in the Questions andAnswers in this paper.)Information for firms that do not wish to provide investment advice

8. Many of the examples used in this paper will be of most relevance to firms dealing with retailclients. This reflects the fact that, in many cases, services to professional clients are likely toinclude the provision of investment research, as well as other general recommendations that do
not amount to investment advice. In practice, firms can often place greater reliance on the abilityof professional clients to understand whether or not they are receiving investment advice.
However, the overall concepts and analyses in this paper will still be of relevance in relation toservices given to professional clients and, in particular, regarding the distinction between
investment advice and corporate finance advice.

Advice given to professional clients

7. Despite the fact that MiFID requires that all information addressed by the investment firm toclients or potential clients shall be fair, clear and not misleading, CESR recognises that a
particular client’s understanding of the nature of the service he is receiving will not always be
accurate. For this reason, whether or not a particular client feels that he is receiving a personal
recommendation will not determine, on its own, whether or not investment advice is actually
being given.

YES

YES

INVESTMENT ADVICE…b) an agent for
an investor or
potential investor?

…a) an investor
or potential
investor?

6

identifying investors and their agentsthe distinction between corporate
finance advice and investment advice

5. Is the recommendation made to aperson in his capacity as one of thefollowing…

YES

assessing recommendations delivered
via the Internet
assessing recommendations given to
multiple clients at once
distributing investment research

YES

YES

4. Is the recommendation issued
otherwise than exclusively throughdistribution channels or to the
public?

…b) based on aconsideration of
the person’s
circumstances?

…a) presented
as suitable?

3. Is the recommendation at least
one of the following…

YES

how a financial instrument might
implicitly be presented as suitable
the impact of disclaimers
what it means to consider a person’s
circumstances

how to distinguish generic advice andgeneral recommendations frominvestment advice
whether recommending a firm or aservice can amount to investment
advice2. Is the recommendation in relation
to one or more transactions infinancial instruments?

YES

the difference between information anda recommendation
whether assisting a client to filter
information amounts to a
recommendation

Examples of issues to consider:

1. Does the service being offeredconstitute a recommendation?

Is it investment advice?

Diagram: the five key tests for investment advice

15

13

11

9

7

Page

201

7

details of directors' dealings in the shares of their own companies.

alerts about the happening of certain events (for example, certain shares reaching a certain
price);

league tables showing the performance of investments of a particular kind against set
published criteria;

a comparison of the benefits and risks of one investment as compared to another;an explanation of the terms and conditions of an investment;

company news or announcements;

listings of share and unit prices;

18. We can also think of situations where the wider context in which information is provided will
determine whether or not advice is given. The following are some examples of objective
information that might be given to a client, without amounting to a personal recommendation:

17. For example, if a person places special emphasis on the advantages of one product over others fora client, in a way that would tend to influence the decision of the recipient to select thatparticular product over others presented, this could amount to a personal recommendation
rather than the mere provision of information.

16. Giving information may amount to giving a recommendation if the circumstances in which theinformation is provided give it the force of a recommendation. While a firm may not intend toprovide a recommendation to a client, it may find that it does so if it allows the information it
provides to become subjective, such that it actually leads the customer to one particular productover others.

When could the provision of information to a client constitute a recommendation?

15. Information, on the other hand, involves statements of fact or figures. In general terms, simply
giving objective information without making any comment or value judgement on its relevance todecisions which an investor may make, is not a recommendation.

8

25. As an example, price comparison websites commonly collect information from clients and about
their circumstances and allow them to filter the information that they view as a result, without
necessarily giving investment advice. The website may enable a client to enter information to
generate a list of investment products for which they are eligible, or that meet criteria they havechosen, without providing a recommendation. In such cases, the ability of the client to maketheir own choices about the features they are looking for, and the absence of apparent judgement
about which features or products they should choose, would make it unlikely that the service
offered would be viewed as investment advice.

24. A critical factor would be whether the process is limited to assisting the person to make his own
choice of product which has particular features which the person regards as important: if this is
the case then it is unlikely that the process will involve a personal recommendation.

any representations made by the questioner at the start of the questioning relating to theservice he is to provide;the context in which the questioning takes place;the stage in the questioning at which the opinion is offered and its significance;
the role played by the questioner who guides a person through the questions;the type of questions and whether they infer the use of opinion or judgment by the firm;
the outcome of the questioning (whether particular products are highlighted, how many ofthem, who provides them, their relationship to the questioner and so on); andwhether the questions and answers have been provided by, and are clearly the responsibilityof, an unconnected third party, and all that the questioner has done is help the person
understand what the questions or options are and how to determine which option applies tohis particular circumstances.

23. Factors that may be relevant in deciding whether the process involves a recommendation may
include:22. The fact that a firm enables a client to filter the information that he receives about different
financial instruments – for example, by choosing from a set of options on a website, or evenfollowing a decision-tree process with a member of staff – does not automatically mean that a
recommendation is being given by the firm that provides the information. But where a firm uses
a mechanism to filter the information that it provides investors, the circumstances of such a caseshould be taken into account in determining whether a recommendation is being made.

Can a firm guide a client through a set of filtering questions about the investment
products it offers without this constituting a recommendation?

21. The question of whether a communication to a client constitutes a recommendation may beclosely related to the question of whether a recommendation is presented as suitable (see Section
3a for related Questions and Answers on presenting a recommendation implicitly).

What is the difference between providing information and providing a recommendation?

14. A recommendation requires an element of opinion on the part of the adviser. In effect, advice
involves a recommendation as to a course of action, which may be presented to be in the interestof the investor.

20. The communication about the instrument reaching the target price, or the one about thedirectors’ dealings, could be viewed as mere information if it were considered in isolation. But, as
this communication should be considered as part of a multiple step recommendation process,providing the information should be regarded as giving a personal recommendation to the client.

a person may offer to provide information on directors' dealings on the basis that, in his
opinion, were directors to buy or sell investors would do well to follow suit.

a person may offer to tell a client when certain shares reach a certain value on the basis of aprior recommendation to purchase or to sell at that price; or

19. Taking the information in the last two bullet points above as examples we can, however, imagine
the following situations where providing a client with the information could involve giving apersonal recommendation:

13. In specifying that a service will only amount to investment advice if it constitutes arecommendation, the Directive draws a distinction between providing advice and simply
providing information. It should be noted that a recommendation may be made on the initiativeof the investment firm or of the investor. The fact that a recommendation is being given does nothave to be made explicit to the investor – and the investor does not have to act upon therecommendation – for it to be regarded as a recommendation

12. Under MiFID, a personal recommendation is a recommendation that is made to a person in his
capacity as an investor or potential investor, or in his capacity as an agent for an investor or
personal investor.

What constitutes a recommendation?

III. Part 1: Does the service being offered constitute a recommendation?

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2 In this context, the client can select the intermediary having regard to the features of the advice service that is going to beprovided. To this extent, MiFID requires that investment firms provide clients before they are bound by any agreement for theprovision of investment services with information about the terms of such agreement (Article 29(1)(a) of the Implementing
Directive).

32. According to MIFID, the definition of recommendations does not necessarily involve the adviser
reviewing a wide range of financial instruments. Advice can also be based, for example, on areview of just a firm’s own products or a restricted list of financial instruments.2

31. Subject to also fulfilling the other four tests described in this paper, a recommendation not tobuy a financial instrument can also constitute the provision of a personal recommendation forthe purposes of MiFID.

30. This test means that, in general, any advice that relates to particular financial instruments –whether or not transactions ultimately go ahead – could be considered as investment advice
under MiFID.

exercising or not exercising any right conferred by such an instrument to buy, sell, subscribe
for, exchange or redeem a financial instrument.

buying, selling, subscribing for, exchanging, redeeming, holding or underwriting a particularfinancial instrument; or

29. MIFID sets out the ‘transactions’ that a recommendation could be in relation to:

What does it mean to make recommendations in relation to transactions in financial
instruments?

IV. Part 2: Is the recommendation in relation to one or more transactions in financial
instruments?

28. The following sections of this paper will clearly also be relevant in determining whether
investment advice is being given when a firm gives clients access to model investment portfolios.
For example, if a website provider collects information about a specific investor's circumstances;uses an element of opinion in translating this into a risk profile and then to identify a particular
set of products; and presents the portfolio using phrases such as "this might be appropriate foryou", it is possible that all the tests described in this paper might be met and the service
provided would amount to investment advice.

27. If we consider a situation where a firm provides, on its website or through another medium, thepossibility for investors to determine their investment profile (e.g. dynamic, conservative etc.)
and for each profile discloses a related model portfolio, composed of different financial
instruments, we can certainly envisage situations in which providing such a service is likely toamount to investment advice. If buying, or subscribing for, the financial instruments identified
in the model portfolio is positioned as the appropriate action for the investor to take, the overall
service might be viewed as a recommendation rather than merely the provision of information.

What is generic advice?

26. Whether or not providing a client with access to a model investment portfolio amounts toinvestment advice will depend on the particular circumstances, just as was described in thequestion about other forms of filtering of information (above). Different factors would need to beassessed, on a case-by-case basis, to determine whether or not investment advice is being given.

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42. Advice looking only at which asset class would be better for an investor would normally qualify
as generic advice rather than as investment advice. If, further to advice regarding an asset class

41. It is possible for a client to ask for and receive information about different types of financial
instruments without advice being given on one or more specific financial instruments. For
example, advice about whether it would be best for a client to invest directly in shares or througha collective investment scheme (CIS) could be given without investment advice being given.

Does a firm give advice when it discusses the merits of different product types for thecustomer?

40. For instance, where a firm giving advice recommends that an investor takes a particular action
in relation to any one of a group of specific financial instruments, which are presented as equallysuitable (e.g. the firm might state that “share A, share B or share C are equally suitable for yourneeds”) this will constitute investment advice.

39. Yes, a recommendation can involve the presentation of several specific financial instrumentsthat are, together, recommended over other possible choices. The fact that more than one
financial instrument is being recommended does not stop the service being offered from being
advice.

Can investment advice involve presenting several alternative financial instruments, rather
than recommending just one?

38. For more details regarding the definition of investment research, financial analysis or otherforms of general recommendation relating to transactions in financial instruments, reference
should be made to Article 24 of the MiFID Implementing Directive.

37. Being addressed to the public in general, a general recommendation is not, by definition, basedon an evaluation of the personal circumstances of a particular person, nor does it appear to bepresented as suitable for that person. Further information about when an instrument is issued
exclusively through distribution channels or to the public can be found in Section 4.

36. A general recommendation is a recommendation about a transaction in a financial instrument ora type of financial instrument which is intended for distribution channels or the public (seeRecital 83 of the MiFID Implementing Directive). General recommendations include investment
research and financial analysis, and are an ancillary service under Section B(5) of Annex I of
MiFID.

What is a general recommendation?

35. See Recital 81 of the MiFID Implementing Directive for further information of the definition ofgeneric advice and the rules applying when generic advice is being provided.

advice on the merits of investing in certain asset classes rather than in others (for example,
bonds rather than shares).

advice on the merits of investing in one geographical zone rather than another (for example,
Japan rather than Europe); or

34. Advice that does not relate a particular investment or investments should be regarded as genericadvice. Examples of generic advice may include:

33. In contrast, generic advice about a type of financial instrument and general recommendations
are not investment advice under the Directive.

If a firm gives investors access to model investment portfolios, which are composed ofdifferent financial instruments that it can sell them, is this investment advice?

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Can a firm avoid providing investment advice using a disclaimer in its communications?

48. Yes, a financial instrument can be presented as suitable for an investor without this actually
being the case. In such a case, before making the recommendation the firm should have obtained
the necessary information regarding the client’s knowledge and experience, his financial
situation and his investment objectives so as to recommend a financial instrument that issuitable for him. While a recommendation of a product that is not suitable for the investor would
constitute a breach of the rules on suitability (in Article 19(4) of MiFID and Article 35 of the
MiFID Implementing Directive) it would not stop the recommendation from being presented as
suitable or constituting investment advice.

Could the presentation of a financial instrument as suitable for an investor constituteadvice even if the firm is aware that it is not suitable for that investor?

47. For example, an investment firm might contact clients that hold units in a particular fund andpresent to them as suitable the idea of selling those assets and purchasing units in anotherparticular fund. In such a context, we could imagine an implicit recommendation being given
through a form of words like “Our research indicates that Fund X is no longer performing as ourclients would wish. We have identified Fund Y as a replacement investment, which can be used
to achieve the same investment outcomes”.

46. As noted earlier, if a person places special emphasis on the advantages of one product overothers for a client, in a way that would tend to influence the decision of the recipient to selectthat particular product over others presented, this could amount to a personal recommendation.
It is not necessary for a firm to tell a client that a recommendation it is making is suitable forhim in order for its recommendation to be viewed as being presented as suitable.

45. Yes. A financial instrument might be presented as suitable for the investor in an explicit or
implicit form. In both cases the firm will be providing investment advice, if the other tests arealso met. For instance, a financial instrument might be explicitly presented as suitable using
words such as “this product would be the best option for you”. Alternatively, the recommendation
could be implicit, but clearly influence the client to take action in relation to a specific financial
instrument over others presented (for example, several products might be presented, with one ofthem highlighted for the client by a phrase such as “people like you tend to buy this product”).

Can a financial instrument be implicitly presented as suitable?

V. Part 3a: Is the recommendation presented as suitable?

44. Recital 60 of the MiFID Implementing Directive notes that advice given by a portfolio manager
to a client to the effect that the client should give or alter a mandate to the portfolio manager
that defines the limits of the portfolio manager’s discretion should be considered arecommendation within the meaning of Article 19(4) of MiFID. This Recital makes clear that
advice in relation to a portfolio management mandate is subject to the requirements on assessing
suitability (although it is not necessarily a personal recommendation).

43. Advice to become the client of a particular investment firm (e.g. a particular portfolio manager),or to use its services in a certain way, would need to relate to one or more specific financial
instruments in order to be considered as investment advice under MiFID.

Is a recommendation to become a client of a particular investment firm investment advice?

being given, the firm also indicates a particular instrument within that asset class this would be
regarded as investment advice.

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56. On certain occasions a firm will be forbidden from using information it holds about clients as aconsequence of the operation of information barriers to manage conflicts of interest. For example,

55. In other cases, it would not be reasonable to expect that a firm will access and use all of theinformation that it may happen to hold about a client’s circumstances. For example, if a client
gave the firm information when purchasing a mortgage, he could not reasonably assume that the
information was being accessed and made use of when he makes use of the execution only service
provided by the firm through its online channel.

54. For example, if a firm has collected information from a client on his investment objectives orfinancial situation, if he returns to the firm through the same channel for a follow-on service, it
could reasonably be expected that this information is being used to create a picture of his needs
and wants to form the basis of a recommendation. Other elements, such as the following, could
lead to consider that it is reasonable to expect that the information previously given is being
used: the contact point with the firm is the same and the nature of the service is similar to thatgiven in the past.

the way that it presents its questions.

the nature of the information it collects; and53. Whether or not a firm will be viewed as providing a recommendation based on a consideration of
person’s circumstances is likely to depend on factors such as:

When will a firm be viewed as basing a recommendation on a consideration of a person’s
circumstances?

52. Information about a person’s circumstances could include both factual information (e.g. theiraddress, income or marital status) and more subjective information about their wants and needs(e.g. their overall risk appetite, short- and long-term investment objectives or their desire forprotection from particular risks). Any such information could be considered as part of a person’s
circumstances.

What do we mean when we talk about a person’s circumstances?

VI. Part 3b: Is the recommendation based on a consideration of the person’s
circumstances?

51. While disclaimers may be of some use to firms seeking to ensure that they do not inadvertently
present financial instruments as suitable for particular clients, they will also need to take othersteps to achieve this. As noted earlier (see paragraphs 9 and 10), a firm that does not intend to
give advice will need to ensure that, for example, its internal systems and controls and staff
training appropriately reflect this.

50. It is important to remember, though, that even if a clear, prominent and understandable
disclaimer is provided stating that no advice or recommendation is being given, a firm could still
be viewed as having presented a recommendation as suitable for the client. For example, if a
firm stated that its product would suit a particular client’s needs, the inclusion of a disclaimer
saying that this was not advice would be unlikely to change the nature of the communication. If
the other tests are also met, the firm would be viewed as providing investment advice.

49. It is important that firms provide clients with appropriate information in a comprehensible form
about their services (see Article 19(3) of the MiFID Implementing Directive) and CESR
recognises that disclaimers can be of some use. For example, if a firm has been asked to provide
an existing client with information, but is aware that the client has received recommendations
from the firm in the past, it might make use of a disclaimer to confirm the nature of the service
being provided when it presents the information.

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63. Publishing a list of "best products" or "funds of the month" would not, in itself, normally be
regarded as investment advice. Assuming that such a communication is not addressed to a

Does publishing a list of "best products" or "funds of the month" on a public page of a
website or in a newspaper count as investment advice?

62. According to Article 52 of the MiFID Implementing Directive, a recommendation is not a
personal recommendation if it is issued exclusively through distribution channels or to the
public.

61. Newspapers, magazines or any other publication addressed to the public, as well as television orradio are examples of distribution channels. A distribution channel is a channel through which
information is, or is likely to become, publicly available i.e. a large number of persons haveaccess to it (see Article 1(7) of Commission Directive 2003/125/EC, to which the MiFID
Implementing Directive refers).

60. A recommendation concerning financial instruments made exclusively through newspapers,
magazines or in any other publication addressed to the public (including a public webpage on theInternet), or during a television or a radio programme should be regarded as a recommendation
made through a distribution channel or to the public. The same would apply to marketing
campaigns, such as those made through posters or folders that can be seen in places accessible tothe public (e.g. on public transport or at a firm's agencies).

What does it mean to make a recommendation exclusively through distribution channels orto the public?

VII. Part 4: Is the recommendation issued otherwise than exclusively throughdistribution channels or to the public?

59. In the same way as was described earlier (see paragraphs 49 to 51) disclaimers may be of someuse in providing clients with information about their services. However, adding a disclaimer to aclient agreement or order noting that information collected will not be used to make a
recommendation will not be sufficient to prevent the firm from being treated as having given a
personal recommendation, if it is clear that the client could reasonably have expected that therecommendation was based on a consideration of his or her circumstances. If the other tests arealso met, in such a situation, the service will amount to investment advice.

58. This situation is perhaps most likely to arise if a firm collects potentially relevant informationfrom a client through one contact point, as part of an established relationship. In this situation,
the firm could be held responsible for giving the impression that it is basing its later
recommendations on information about the person’s circumstances collected earlier.

57. No, not if a firm has accumulated relevant information on a person’s circumstances – either
during a single interview or during the course of an ongoing relationship – and it can reasonably
be expected that this information is being taken into account (as discussed in the question
above). In this case, any recommendation made will be treated as being based on a considerationof the person’s circumstances.

Can a firm avoid being viewed as making a personal recommendation by failing to use
information about a person’s circumstances?

certain information held by a corporate finance team providing investment services related tosecurities offering by the firm’s client will not be able to be used by the sales and trading part of
the firm. Despite the lack of such confidential information, the sales and trading staff of the firm
will be considered to provide investment advice to the client if all the relevant conditions are
satisfied.

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Language: if the language is such that it strongly suggests an instrument, this will have an
impact. Thus, the tone of the message and the way would it could be understood by the client
are important elements when determining if a message amounts to investment advice.

Content of the message: if the message contains a solicitation, a recommendation, an opinion
or a judgment, for example, regarding the advisability of a transaction, this could mean that
it is regarded as investment advice.

Target audience: the way the firm selects the clients to whom the message will be sent canhave an incidence on the qualification of that message as investment advice. For example,
when the internal procedures of a firm specify that a financial instrument may only be soldto a sample of clients selected on the basis of certain factors, such as clients under a certain
age or who hold no similar products, the selection of the target audience will not
automatically mean that the firm is providing investment advice. However, highlighting theparticular personal circumstances that led the individual to be contacted, for example, isvery likely to mean that the product is being presented as suitable for the particularinvestor.

69. In order to assess whether a message sent to several clients amounts to investment advice,different elements should be taken into account: the target audience, the content of the message
and the language used:

68. While many messages that are sent to batches of clients are unlikely to amount to investment
advice, the fact that a recommendation is made to multiple clients would not automatically meanthat it could not be a personal recommendation. Advice can be provided in many ways, including:face to face; orally to a group; by telephone; by correspondence (including email); using a website;or through the provision of an interactive software system.

Can a message sent to several clients, for example through emails or letters, be considered
as investment advice?

67. By way of example, Section 1 of this paper also describes how providing a model portfolio toclient, such as through the Internet, could amount to investment advice.

66. When a recommendation is addressed to a particular person and is presented as suitable for that
person or based on a consideration of the circumstances of that person, CESR believes that it
does not fulfil the conditions to benefit from the exemption under Article 52 of the MiFID
Implementing Directive. This includes situations where a webpage, or indeed e-mailcorrespondence, is used to provide personalised information, rather than to address information
to the public in general.

65. According to Article 52 of the MiFID Implementing Directive, "a recommendation is not a
personal recommendation if it is issued exclusively through distribution channels or to the
public". CESR is of the opinion that this exemption only applies when the recommendation
issued through distribution channels or to the public is addressed to the public in general.

Would a medium such as the Internet always be seen as a distribution channel?

64. Of course, if a list of best products was provided to one or more individual clients, rather thandistributed through a distribution channel or to the public, it is possible that such a
communication could meet the different tests described in this paper and amount to investment
advice.

person as such but rather to the public in general, it would normally not be presented as suitable
for a particular person; be based on a consideration of the circumstances of that person; or,indeed, involve a recommendation. Furthermore, if the information is provided on a public pageof a website or in a newspaper, for example, this can also be considered as a distribution channel(within the meaning of Article 2(1) of the MiFID Implementing Directive).

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76. Whilst investment advice is an investment service the provision of which on a professional basis
generally requires authorisation as an investment firm, “corporate finance advice” is an ancillary
service for which MiFID does not require authorisation. Unlike investment advice, “corporate
finance advice” provided by an investment firm (as for any other ancillary service) is only
subject, as appropriate to certain conduct of business obligations under Article 19 of MiFID. This
includes the general requirement to act honestly, fairly and professionally in accordance with thebest interests of the client.

Compared to investment advice, what is the ancillary service of corporate finance advice?

75. Under MIFID, it is not relevant for the purposes of advice definition whether a client is
specifically paying for the advice or if advice is provided as part of a wider package of investment
services (for which the investment firm might even be remunerated via a third party).

74. The concept of a person acting in his capacity as an investor (or potential investor) will almost
always be perfectly clear, both to the investment firm and to the client. Where an investment
firm makes a recommendation to a person to buy or sell a financial instrument, it should beassumed that the person is an investor or potential investor unless particular circumstances
clearly demonstrate otherwise. Where the primary motivation behind a recommendation is, forexample, to hedge a risk such as the loss in value of the client’s portfolio or the client’s interest
rate exposure (rather than more common investment aims of achieving income growth or capital
accumulation) the client will still be acting in his capacity as an investor.

73. Article 52 of the implementing directive indicates that a personal recommendation may beprovided either to a person acting in his capacity as an investor or potential investor, or to aperson acting in his capacity as an agent for an investor or potential investor. It follows that
where a recommendation is provided to a person acting in another capacity (neither investor nor
agent for an investor), it is not a personal recommendation and consequently does not constituteinvestment advice.

What does it mean to make a recommendation to a person in his capacity as an investor?

VIII. Part 5a: Is the recommendation made to a person in his capacity as an investor
or potential investor?

72. Sending research to a client may not commonly amount to giving investment advice but, as we
illustrated in Section 1 with other examples, information can be provided in such a way that thisamounts to a personal recommendation. For example, if the sales force of a firm emails
investment research to a number of clients and subsequently engages in telephone calls to
discuss the merits of a particular financial instrument that the research identifies for the clientin question, then this will amount to a personal recommendation.

85. Where an undertaking is family-owned, advice on whether to sell shares in the undertaking may
involve the provision of both corporate finance advice and investment advice, perhaps fordifferent members of the family. In this situation, the firm will have to look at the reasons for
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84. In the context of private equity and venture capital, the industrial purpose of the firms providing
these services is purely financial. Where individuals authorised to act on behalf of these firms
seek advice, their primary objective is likely to be mainly entrepreneurial, and also aligned to theindustrial purpose of the private equity or venture capital firms i.e. to generate a return. Thatis, why, where such clients seek advice in this context CESR considers it to be corporate financeadvice.

83. When an undertaking approaches a firm for advice, through an individual authorised to act onbehalf of the undertaking, for instance the Chief Executive Officer or the Chief Finance Officer,
for the purpose of capital raising, a merger or acquisition, the disposal of a subsidiary or amanagement buyout, the advice provided to the client will fall under the corporate finance advice
category, because the primary purpose of soliciting the advice relates to the present or future
strategy of the undertaking.

82. In situations where it is impossible to identify the primary purpose because both a patrimonial
and a strategic/industrial/entrepreneurial purpose are present and neither purpose outweighs
the other in importance, CESR understands that the client would receive investment advice,perhaps simultaneously with corporate finance advice. This is notwithstanding the situations
where a firm (such as a law firm or accounting firm) is providing investment advice in an
incidental manner in the course of another professional activity not covered by MiFID provided
that this activity is regulated and/or the provision of the advice is not remunerated, in
accordance with Articles 2 1(c) and (j) of Level 1 MiFID.

81. Where the client’s primary purpose for seeking advice is in order to generate a financial returnon an investment or to hedge a risk, the client’s objective is patrimonial in nature and the advice
provided would be investment advice. Conversely, where the client’s primary purpose forrequesting the advice is for an industrial, strategic or entrepreneurial purpose rather than toreceive a financial return or hedge a risk, the advice provided would be corporate finance advice.
The context relative to the request for advice may be used to determine the primary purpose forthe request.

80. CESR acknowledges that beyond these two conclusions that result clearly from the provisions of
MiFID, firms may face some uncertainty trying to determine whether or not they are providing
investment advice when providing corporate finance services. To assist in determining the typeof advice to provide, CESR recommends that firms consider the objective pursued by the client
when seeking advice from a firm.

79. It is important to consider that investment advice will be provided only where a recommendation
is made to a person in his capacity as an investor or potential investor (or in his capacity as anagent for an investor or potential investor). It follows from this that advice to an undertaking toissue securities is not investment advice. It is also clear from the MiFID provisions that
corporate finance advice will be provided when advice is given with regard to “capital structure,industrial strategy and related matters”.

78. The only provisions of MiFID capable of assisting investment firms and their clients in drawing
a line between these two categories of advice are the definition of investment advice and theabove description of the ancillary service (in Section B(3) of Annex I of MiFID).

In practice, how should corporate finance advice be distinguished from investment advice?

Does distributing investment research amount to investment advice?

71. Investment research under MiFID is research or other information recommending or suggesting
an investment strategy concerning one or several financial instruments or the issuers offinancial instruments, including any opinion as to the present or future value or price of such
instruments, intended for distribution channels or for the public. From this definition it resultsthat investment research is separate from investment advice and that firms can use distribution
channels to provide their clients with investment research without this amounting to a personal
recommendation.

77. The service often called “corporate finance advice” is described in Section B(3) of Annex I of
MiFID as the provision of “advice to undertakings on capital structure, industrial strategy andrelated matters and advice and services relating to mergers and the purchase of undertakings”.

70. In the sorts of situations described above, messages addressed to clients would be unlikely to beconsidered as issued exclusively through distribution channels or to the public (within themeaning of Article 52 of the MiFID Implementing Directive).

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90. In CESR’s view, the reference in Article 52 to the recommendation being presented as suitable“for that person” or based on a consideration of the circumstances “of that person” should, byinference, be read as meaning for that person (or where the person in question is an agent, forthe person for whom he is the agent)

89. There are circumstances, however, where it will not always be clear that an agency relationshipwithin the meaning of Article 52 of the MiFID Implementing Directive exists. For example,
where an investment firm provides a recommendation to a portfolio manager, it will usually be
the case that the investment firm is not giving investment advice to the portfolio manager’s
client but is simply providing a general recommendation, such as an investment tip. However,there may be cases where a firm such as a portfolio manager does commission advice for a clientfrom a third party – such as from a specialist adviser on a particular subject area – and in doingso acts as an agent. In such cases, it will be important for the firms involved to be clear about thefact that the portfolio manager is acting for a particular client (or a particular group of clients)
and to ensure that the investment firm commissioned possesses the necessary information about
the clients involved.

88. In most cases the concept of a person acting in his capacity as agent for an investor or potential
investor will be perfectly clear, for example where a person holds a power of attorney to act in
the name of his or her spouse or child.

What does it mean to make a recommendation to a person in his capacity as agent for aninvestor?

IX. Part 5b: Is the recommendation made to a person in his capacity as an agent for aninvestor or potential investor?

87. As illustrated above, the provision of “corporate finance advice” and the provision of investment
advice, can, in certain situations, overlap and this may occur with respect to the same client incircumstances where both the strategic and patrimonial purposes are equally important for theclient. However, CESR understands that it is possible for a firm to structure itself as a specialist
corporate finance firm and fall outside of the remit of MiFID. When a firm wishes to do so, it has
to ensure that its documentation, internal structure, organisation, training and personnel arevery clear as to what services the firm can and cannot perform.

Are investment advice and corporate finance advice mutually exclusive?

86. CESR understands that the ‘primary purpose test’ as described above is not definitive, rather it
is a tool that firms can use to help them determine whether they are likely to be providing
investment advice. It is every firm’s responsibility to establish and analyse all relevant factorsthat enable them to assess whether they are providing investment advice.

the client’s request for advice. For instance, one member of the family may be the controllingshareholder and heavily involved in the running of the business and his request for advice on
whether and/or under what conditions to sell his shares is likely to primarily involve a future
decision to continue or not to continue to pursue his strategic or entrepreneurial objective.
Therefore the advice given is likely to be corporate finance advice, provided however that theconsideration for the sale of his shares is cash only and does not include securities. On the other
hand another family member who may or may not be involved in the running of the undertaking
but whose primary concern is the investment in the undertaking may need to decide whether or
not to sell his shares and in this case the purpose of the decision is primarily to generate afinancial return, and therefore the client would be the recipient of investment advice.

3 January 2017 | ESMA71-1154262120-153 EN (rev)Guidelines for the assessment of knowledge and competence

Guidelines

資料８

207

208

What?

2

VI. Annex I – Illustrative examples of the application of certain aspects of theguidelines……………………………………………………………………………………………..11

V.V Publication of information by Competent Authorities…………………………………....10

V.IV Organisational requirements for assessment, maintance and updating of knowledge
and competence…………………………………………………………………………………....9

V.III Criteria for knowledge and competence for staff giving investment advice…………....8

V.II Criteria for knowledge and competence for staff giving information about investment
products, investment services or ancillary services………………………………………….…7

V.I General…………………………………………………………………………………..........6

3. These guidelines apply from 3 January 2018.

When?

3

2. These guidelines apply in relation to the provision of the investment services andactivities listed in Section A, and the ancillary services listed in Section B of Annex
I of MiFID II.

b. Firms.

Guidelines ...................................................................................................................... 6

IV. Compliance and reporting obligations............................................................................. 6V.

1. These guidelines apply to:a. Competent Authorities andReferences, abbreviations and definitions ...................................................................... 3

II.

Who?

I. Scope

III. Purposes ........................................................................................................................ 5

Scope ............................................................................................................................. 3

I.

Table of Contents

209

Directive 2004/39/EC of the European Parliament andof the Council of 21 April 2004 on markets in financial
instruments
amending
Council
Directives
85/611/EEC and 93/6/EEC and Directive 2000/12/EC
of the European Parliament and of the Council andrepealing Council Directive 93/22/EEC.

Directive 2014/65/EU of the European Parliament andof the Council of 15 May 2014 on markets in financial
instruments and amending Directive 2002/92/EC and
Directive 2011/61/EU (recast).

MiFID

MiFID II

Competent Authority

Consultation Paper

European Commission

European Union

European Securities and Markets Authority

Markets in Financial Instruments Directive

CA

CP

EC

EU

ESMA

MiFID

Definitions

Alternative Investment Fund Manager Directive

AIFMD

4

Regulation (EU) No 1095/2010 of the European
Parliament and of the Council of 24 November 2010
establishing an European Supervisory Authority(European Securities and Markets Authority),
amending Decision No 716/2009/EC and repealing
Commission Decision 2009/77/EC.

ESMA Regulation

Abbreviations

Directive 2011/16/EU of the European Parliament andof the Council of 8 June 2011 on Alternative
Investment Fund Manager and amending Directive
2003/41/EC and 2009/65/EC and Regulations (EC)No 1060/2009 and (EU) No 1095/2010.

AIFMD

Legislative references

II. References, abbreviations and definitions‘Knowledge and competence’ means having acquired an appropriate qualification
and appropriate experience to fulfil obligations in Article 24 and 25 MiFID II in orderto provide the relevant services.

i.

5‘Investment products’ means financial instruments and structured deposits as
defined in MiFID II.

h. ‘Appropriate experience’ means that a member of staff has successfully
demonstrated the ability to perform the relevant services through previous work.
This work must have been performed, on a full time equivalent basis, for a minimum
period of 6 months. Beyond this minimum period, the CA can differentiate the periodof experience required, depending on the appropriate qualification attained by staff
and also depending on the relevant services being provided.

g. ‘Appropriate qualification’ means a qualification or other test or training course thatmeets the criteria set out by the guidelines.

f.

e. ‘Giving information’ means directly providing information to clients about financial
instruments, structured deposits, investment services or ancillary services, either
upon the request of the client or at the initiative of the firm, in the context of theprovision by the staff member to the client of any of the services and activities listed
in the section A and B of Annex I of MiFID II.

d. ‘Relevant services’ means providing investment advice or giving information about
financial instruments, structured deposits, investment services or ancillary services
to clients.

c. ‘Staff’ means natural persons (including tied agents) providing relevant services toclients on behalf of the firm.

b. ‘Firms’ means investment firms, as defined in Article 4(1)(1) of MiFID II, credit
institutions (as defined in Article 4(1)(27) of MiFID II) when providing investment
services as well as investment firms and credit institutions when selling or advisingclients in relation to structured deposits, UCITS management companies andexternal Alternative Investment Fund Managers (AIFMs) insofar as they areproviding the investment services of individual portfolio management or non-coreservices and only in connection to the provision of these services (respectively
within the meaning of Article 6(3)(a) and (b) of the UCITS Directive and Article
6(4)(a) and (b) of the AIFMD).

a. Competent authority (or CA) means an authority designated under Article 67 of
MiFID II.

4. Unless otherwise specified, terms used in MiFID II have the same meaning in theseguidelines. In addition, the following definitions apply:

210

j.

6

‘Under supervision’ means providing the relevant services to clients under the
responsibility of a staff member who has both an appropriate qualification andappropriate experience. The staff member can work under supervision for a
maximum period of 4 years except where a shorter period is determined by the CA.

7

8. In complying with these guidelines, ESMA anticipates a corresponding
strengthening of investor protection. Annex I includes a number of illustrative
examples of how a firm might apply the guidelines. These examples do not form
part of the guidelines but instead aim to assist firms in identifying practical examples
of how the requirements in the guidelines can be met.

7. These guidelines establish minimum standards for the assessment of knowledge
and competence for staff providing relevant services. Consequently, CAs canrequire greater levels of knowledge and competence for staff giving advice and/or
for staff giving information.

6. ESMA expects these guidelines to promote greater convergence in the knowledge
and competence of staff providing investment advice or information about financial
instruments, structured deposits, investment services or ancillary services toclients, and competent authorities to assess the adequacy of the compliance withsuch requirements. These guidelines set important standards to assist firms inmeeting their obligations to act in the best interest of their clients and to assist CAs
to adequately assess how firms meet these obligations.

5. The purpose of these guidelines is to specify the criteria for the assessment ofknowledge and competence required under Article 25(1) of MiFID II, in accordancewith Article 25(9) of the same Directive.

III. Purpose

211
812. Firms to which these guidelines apply are not required to report to ESMA whether
they comply with these guidelines.

11. Competent authorities to which these guidelines apply must notify ESMA whether
they comply or intend to comply with the guidelines, stating their reasons for noncompliance, within two months of the date of publication by ESMA to
KCguidelines1886@esma.europa.eu. In the absence of a response by thisdeadline, competent authorities will be considered as non-compliant. A template for
notifications is available from the ESMA website.

Reporting requirements

10. Competent authorities to whom the guidelines apply should comply by incorporatingthem into their supervisory practices, including where particular guidelines are
directed primarily at financial market participants.

9d. understand how financial markets function and how they affect the value and pricing
of investment products on which they provide information to clients;c. understand the characteristics and scope of investment services or ancillary
services;b. understand the total amount of costs and charges to be incurred by the client in thecontext of transactions in an investment product, or investment services or ancillary
services;a. understand the key characteristics, risk and features of those investment products
available through the firm, including any general tax implications and costs to be
incurred by the client in the context of transactions. Particular care should be taken
when giving information with respect to products characterised by higher levels ofcomplexity;

17. Firms should ensure that staff giving information about investment products,
investment services or ancillary services that are available through the firm havethe necessary knowledge and competence to:

V.II Criteria for knowledge and competence for staff giving information about
investment products, investment services or ancillary services

16. The compliance function should assess and review compliance with theseguidelines. This review should be included in the report to the management bodyon the implementation and effectiveness of the overall control environment forinvestment services and activities.

15. Firms should ensure that staff know, understand and apply firm’s internal policies
and procedures designed to ensure compliance with MiFID II. In order to ensure a
proportionate application of knowledge and competence requirements, firms should
ensure that staff have the necessary levels of knowledge and competence to fulfil
their obligations, reflecting the scope and degree of the relevant services provided.

14. Firms should ensure that staff providing relevant services possess the necessary
knowledge and competence to meet relevant regulatory and legal requirements andbusiness ethics standards.

13. The level and intensity of knowledge and competence expected for those providing
investment advice should be of a higher standard than those that only giveinformation on investment products and services.

V.I General

Status of the guidelines

9. This document contains guidelines issued under Article 16 of the ESMA Regulation
and required under Article 25(9) of MiFID II. In accordance with Article 16(3) of the
ESMA Regulation, competent authorities and financial market participants must
make every effort to comply with the guidelines.

V. Guidelines

IV. Compliance and reporting obligations

212

understand specific market structures for the type investment products offered orrecommended to clients and where relevant their trading venues or the existenceof any secondary markets;j.

have a basic knowledge of valuation principles for the type of investment products
in relation to which the information is provided.

j.

1

http://www.esma.europa.eu/system/files/2012-387.pdf

10d. understand how the type of investment product provided by the firm may not besuitable for the client, having assessed the relevant information provided by theclient against potential changes that may have occurred since the relevant
information was gathered;c. fulfil the obligations required by firms in relation the suitability requirements
including the obligations as set out in the Guidelines on certain aspects of the MiFID
suitability requirements1;

b. understand the total costs and charges to be incurred by the client in the context ofthe type of investment product being offered or recommended and the costs related
to the provision of the advice and any other related services being provided;a. understand the key characteristics, risk and features of the investment products
being offered or recommended, including any general tax implications to be
incurred by the client in the context of transactions. Particular care should be taken
when providing advice with respect to products characterised by higher levels ofcomplexity;

18. Firms should ensure that staff giving investment advice have the necessary
knowledge and competence to:understand the fundamentals of managing a portfolio, including being able tounderstand the implications of diversification regarding individual investment
alternatives.

11b. carry out an internal or external review, on at least an annual basis, of staff
members’ development and experience needs, assess regulatory developments
and take action necessary to comply with these requirements. This review should
also ensure that staff possess an appropriate qualification and maintain and update
their knowledge and competence by undertaking continuous professionala. ensure that staff providing relevant services to clients are assessed through thesuccessful completion of an appropriate qualification and having gained appropriate
experience in the provision of relevant services to clients;

20. Firms should:

19. Firms should set out the responsibilities of staff and ensure that, where relevant, in
accordance with the services provided by the firm and its internal organisation,
there is a clear distinction in the description of responsibilities between the roles ofgiving advice and giving information.

V.IV Organisational requirements for assessment, maintenance and updating of
knowledge and competencel.

k. have a basic knowledge of valuation principles for the type of investment products
offered or recommended to clients;

assess data relevant to the type investment products offered or recommended toclients such as Key Investor Information Documents, prospectuses, financial
statements, or financial data;i.

V.III Criteria for knowledge and competence for staff giving investment advice

h. understand issues relating to market abuse and anti-money laundering;understand specific market structures for the investment products on which they
provide information to clients and, where relevant, their trading venues or the
existence of any secondary markets;

i.

g. understand the difference between past performance and future performance
scenarios as well as the limits of predictive forecasting;h. assess data relevant to the investment products on which they provide information
to clients such as Key Investor Information Documents, prospectuses, financial
statements, or financial data;g. understand issues relating to market abuse and anti-money laundering;understand the impact of economic figures, national/regional/global events onmarkets and on the value of investment products being offered or recommended toclients;f.

f.

understand the difference between past performance and future performance
scenarios as well as the limits of predictive forecasting;e. understand how financial markets function and how they affect the value and pricing
investment products offered or recommended to clients;

e. understand the impact of economic figures, national/regional/global events onmarkets and on the value of investment products on which they provide information;

213

ensure that the supervision provided is tailored to the services to be provided bythat staff member and cover the requirements of these guidelines relevant to thoseservices;

12

22. CAs should also publish: (i) information on the period of time required to gain
appropriate experience; (ii) the maximum period of time under which a staff member

21. When a list of the specific appropriate qualifications that meet the criteria of theguidelines is not published by the CA or other national bodies identified in theMember State, the CA must publish the criteria of these guidelines as well as thecharacteristics that an appropriate qualification needs to meet in order to comply
with those criteria.

V.V Publication of information by Competent Authorities

h. ensure that the staff member, who has not acquired the necessary knowledge orcompetence in the provision of the relevant services, cannot provide those relevant
services under supervision for a period exceeding 4 years (or shorter if required by
the CA).

g. ensure that the supervisor takes responsibility for the provision of the relevant
services when the staff member under supervision is providing relevant services toa client, as if the supervisor is providing the relevant services to the client, including
signing-off the suitability report where advice is being provided;f.

e. ensure that, in situations under letter d., the staff member supervising other staff
has the necessary knowledge and competence required by these guidelines andthe necessary skills and resources to act as a competent supervisor;

d. ensure that when a member of staff has not acquired the necessary knowledge andcompetence in the provision of the relevant services, this staff member cannot
provide the relevant services. However, where this member of staff has notacquired the appropriate qualification or the appropriate experience to provide therelevant services or both, this staff member can only provide the relevant services
under supervision. The level and intensity of supervision should reflect the relevant
qualification and experience of the staff member being supervised and this could
include, where appropriate, supervision during clients meeting and other forms ofcommunication such as telephone calls and e-mails;c. ensure that they submit to their CA, on request, records concerning knowledge andcompetence of staff providing relevant services to clients. These records shallcontain information that enables the CA to assess and verify compliance with theseguidelines;

development or training for the appropriate qualification as well as specific training
required in advance of any new investment products being offered by the firm;

13

23. Information in paragraph 21 and 22 shall be published on the website of the CA.

lacking appropriate qualification or appropriate experience is allowed to work under
supervision; and (iii) whether the review of staff member’s appropriate qualification
should be carried out by the firm or an external body.

214

2

http://www.esma.europa.eu/system/files/10_293.pdf

14includes verification questions demonstrating that staff has necessary knowledge andcompetence.

may involve training in the form of courses, seminars, independent studies or learning;and15

Firms verify the relevance of continuous on-ongoing development being provided to staff
providing relevant services.

x

Examples relating to part V.I, V.II and V.III:

A firm provides regular mandatory training to staff in the features and characteristics, including
potential risks, of the products offered by the firm. This comprises training about products newly
offered by the firm.

xContinuous or on-going professional development is required in order for staff to hold the“appropriate qualification”. This ongoing assessment will contain updated material and will test
staff on their knowledge of, for example, regulatory changes, new products and services
available on the market. This ongoing assessment:

The firm adopts a code of ethics to set forth the standards of business conduct and behaviour
necessary for the proper provision of relevant services and obtain written acknowledgementsfrom staff that they have read, understood and complied with it.

General example relating to part V.I:

A firm provides regular mandatory training to staff in the area of MiFID conduct of business,and organisational requirements.

Firms communicate publicly, in a way that is consistent and meaningful to clients, their criteria
for demonstrating how staff comply with these guidelines.

ability to compare selected products with regards to terms and risks, to be able to selectthe product best suited to the client profile.

x

General example relating to part V.I:

ability to explain the risks and rewards of a particular product or strategy to the client;x

The firm documents staff roles and responsibilities and evaluates their performance against
key set criteria contained in the description of responsibilities.

employees who perform back-office functions and do not have direct contact with theclients.

x

ability to ask appropriate questions to the client to understand her/his investment
objectives, financial situation and knowledge and experience;x

Firm should consider that regarding the distinction between staff providing information andstaff providing investment advice, that the Q&A issued by CESR2 be taken into consideration.

employees who only hand over information such as KIID at the client’s request without
giving any additional information with regards to its content or providing any follow up
investment services to those clients; andx

A firm regularly monitors that relevant staff giving advice demonstrate:

Examples relating to part V.IV

employees distributing brochures and leaflets to clients without giving additional
information with regards to its content or providing any follow up investment services
to those clients;x

A firm regularly monitors the suitability assessments provided by staff to assess whether thestaff member has considered all aspects of the suitability requirements, against the specificdetails of the investment product.

Examples relating to part V.III and V.IV

A firm ensures staff are familiar with the situations as to when a firm may pay or receive an
inducement and the relevant legal requirements regulating inducements.

A firm ensures staff are familiar with the situations in which conflicts of interest arise and how
to apply the rules regarding the management of conflicts of interest.

Examples relating to the scope of the guidelines

employees only pointing out where clients can find information;x

The following examples set out instances where a staff member would not fall within the scopeof the guidelines:

Examples relating to the scope of the guidelines

Illustrative examples of the application of certain aspects of the guidelines

VI. Annex I

of 25 April 2016

COMMISSION DELEGATED REGULATION (EU) 2017/565

REGULATIONS(Non-legislative acts)

II

Official Journal of the European Union

L 87/1215

Directive 2014/65/EU empowers the Commission to adopt a number of delegated acts. It is important that all
the detailed supplementing rules regarding the authorisation, ongoing operation, market transparency andintegrity, which are inextricably-linked aspects inherent to the taking up and pursuit of the services and activities
covered by Directive 2014/65/EU, begin to apply at the same time as Directive 2014/65/EU so that the newrequirements can operate effectively. To ensure coherence and to facilitate a comprehensive view and compact
access to the provisions by persons subject to those obligations as well as by investors, it is desirable to include
the delegated acts related to the above-mentioned rules in this Regulation.

It is necessary to further specify the criteria to determine under what circumstances contracts in relation towholesale energy products must be physically settled for the purposes of the limitation of scope set out in
Section C(6) of Annex I to Directive 2014/65/EU. In order to ensure that the scope of this exemption is limited
to avoid loopholes it is necessary that such contracts require that both buyer and seller should have proportionate
arrangements in place to make or receive delivery of the underlying commodity upon the expiry of the contract.
In order to avoid loopholes in case of balancing agreements with the Transmission System Operator in the areas

(2)

(3)

(1) OJ L 173, 12.6.2014, p. 349.

Directive 2014/65/EU establishes the framework for a regulatory regime for financial markets in the Union,
governing operating conditions relating to the performance by investment firms of investment services and,
where appropriate, ancillary services and investment activities; organisational requirements for investment firms
performing such services and activities, for regulated markets and data reporting services providers; reporting
requirements in respect of transactions in financial instruments; position limits and position management
controls in commodity derivatives; transparency requirements in respect of transactions in financial instruments.

(1)

Whereas:Having regard to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets infinancial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (1), and in particular Article 2(3),the second subparagraph of Article 4(1)(2), and Articles 4(2), 16(12), 23(4), 24(13), 25(8), 27(9), 28(3), 30(5), 31(4),32(4), 33(8), 52(4), 54(4), 58(6), 64(7), 65(7) and 79(8) thereof,

Having regard to the Treaty on the Functioning of the European Union,(Text with EEA relevance)

supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards
organisational requirements and operating conditions for investment firms and defined terms forthe purposes of that Directive

EN

THE EUROPEAN COMMISSION,

31.3.2017

L 87/231.3.2017

The settlement period for a spot contract is generally accepted in most main currencies as taking place within
2 days or less, but where this is not market practice it is necessary to make provision to allow settlement to takeplace in accordance with normal market practice. In such cases, physical settlement does not require the use of
paper money and can include electronic settlement.

Foreign exchange contracts may also be used for the purpose of effecting payment and those contracts should
not be considered financial instruments provided they are not traded on a trading venue. Therefore it isappropriate to consider as spot contracts those foreign exchange contracts that are used to effect payment for
financial instruments where the settlement period for those contracts is more than 2 trading days and less than
5 trading days. It is also appropriate to consider as means of payments those foreign exchange contracts that areentered into for the purpose of achieving certainty about the level of payments for goods, services and real
investment. This will result in excluding from the definition of financial instruments foreign exchange contracts
entered into by non-financial firms receiving payments in foreign currency for exports of identifiable goods andservices and non-financial firms making payments in foreign currency to import specific goods and services.

(9)

(10)

(1) Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market
integrity and transparency (OJ L 326, 8.12.2011, p. 1).

In order to ensure the uniform application of Directive 2014/65/EU, it is necessary to clarify the definitions laid
down in Section C(4) of Annex I to Directive 2014/65/EU for other derivative contracts relating to currencies
and to clarify that spot contracts relating to currencies are not other derivative instruments for the purposes ofSection C(4) of Annex I to Directive 2014/65/EU.

Directive 2014/65/EU establishes the general framework for a regulatory regime for financial markets in theUnion, setting out in Section C of Annex I the list of financial instruments covered. Section C(4) of Annex I to
Directive 2014/65/EU includes financial instruments relating to a currency which are therefore under the scopeof this Directive.

(7)

(8)

In order to provide clarity on the definitions of contracts relating to underlying variables set out in Section C(10)of Directive 2014/65/EU, criteria should be provided relating to their terms and underlying variables in thosecontracts. The inclusion of actuarial statistics in the list of underlyings should not be understood as extending thescope of those contracts to insurance and reinsurance.

A derivative contract should only be considered to be a financial instrument under Section C(7) of Annex I to
Directive 2014/65/EU if it relates to a commodity and meets a set of criteria for determining whether a contract
should be considered as having the characteristics of other derivative financial instruments and as not being forcommercial purposes. This should include contracts which are standardised and traded on venues, or contracts
equivalent thereof where all the terms of such contracts are equivalent to contracts traded on venues. In this case,terms of these contracts should also be understood to include provisions such as quality of the commodity orplace of delivery.

In order to clarify when a contract in relation to wholesale energy product must be physically settled, it isnecessary to further specify when certain circumstances such as force majeure or bona fide inability to settle
provisions are present, and which should not alter the characterisation of those contracts as ‘must be physicallysettled’. It is important to also clarify how oil and coal energy derivatives should be understood for the purposesof Section C(6) of Annex I to Directive 2014/65/EU. In this context, contracts related to oil shale should not be
understood to be coal energy derivatives.

(6)

(5)

(4)

Official Journal of the European Unionof electricity and gas, such balancing arrangements should only be considered as a proportionate arrangement if
the parties to the arrangement have the obligation to physically deliver electricity or gas. Contracts should alsoestablish clear obligations for physical delivery which cannot be offset whilst recognising that forms ofoperational netting as defined in Regulation (EU) No 1227/2011 of the European Parliament and of theCouncil (1) or national law should not considered as offsetting. Contracts which must be physically settled shouldbe permitted to deliver in a variety of methods however all methods should involve a form of transfer of right ofan ownership nature of the relevant underlying commodity or a relevant quantity thereof.

EN

資料９

216

Non deliverable forwards are contracts for the difference between an exchange rate agreed before and the actual
spot rate at maturity and therefore should not be considered to be spot contracts, regardless of their settlement
period.

A contract for the exchange of one currency against another currency should be understood as relating toa direct and unconditional exchange of those currencies. In the case of a contract with multiple exchanges, eachexchange should be considered separately. However an option or a swap on a currency should not be considereda contract for the sale or exchange of a currency and therefore could not constitute either a spot contract ormeans of payment regardless of the duration of the swap or option and regardless of whether it is traded ona trading venue or not.

Advice about financial instruments addressed to the general public should not be considered as a personal
recommendation for the purposes of the definition of ‘investment advice’ in Directive 2014/65/EU. In view ofthe growing number of intermediaries providing personal recommendations through the use of distribution
channels, it should be clarified that a recommendation issued, even exclusively, through distribution channels,
such as internet, could qualify as a personal recommendation. Therefore, situations in which, for instance, email
correspondence is used to provide personal recommendations to a specific person, rather than to address
information to the public in general, may amount to investment advice.

Generic advice about a type of financial instrument is not considered investment advice for the purposes of
Directive 2014/65/EU. However, if an investment firm provides generic advice to a client about a type offinancial instrument which it presents as suitable for, or based on a consideration of the circumstances of, thatclient, and that advice is not in fact suitable for the client, or is not based on a consideration of his circumstances,
the firm is likely to be acting in contravention of Article 24(1) or (3) of Directive 2014/65/EU In particular,a firm which gives a client such advice would be likely to contravene the requirement of Article 24(1) to act
honestly, fairly and professionally in accordance with the best interests of its clients. Similarly or alternatively,
such advice would be likely to contravene the requirement of Article 24(3) that information addressed by a firm
to a client should be fair, clear and not misleading.

Acts carried out by an investment firm that are preparatory to the provision of an investment service or carryingout an investment activity should be considered as an integral part of that service or activity. This would include,for example, the provision of generic advice by an investment firm to clients or potential clients prior to or in
the course of the provision of investment advice or any other investment service or activity.

The provision of a general recommendation about a transaction in a financial instrument or a type of financial
instrument constitutes the provision of an ancillary service within Section B(5) of Annex I to Directive
2014/65/EU, and consequently Directive 2014/65/EU and its protections apply to the provision of thatrecommendation.

In order to ensure the objective and effective application of the definition of systematic internalisers in the Unionin accordance with Article 4(1)(20) of Directive 2014/65/EU, further specifications should be provided on theapplicable pre-set limits for the purposes of what constitutes frequent systematic and substantial over the counter(OTC) trading. Pre-set limits should be set at an appropriate level to ensure that OTC trading of such a size that it
had a material effect on price formation is within scope while at the same time excluding OTC trading of sucha small size that it would be disproportionate to require the obligation to comply with the requirements
applicable to systematic internalisers.

Pursuant to Directive 2014/65/EU, a systematic internaliser should not be allowed to bring together third party
buying and selling interests in functionally the same way as a trading venue. A systematic internaliser should notconsist of an internal matching system which executes client orders on a multilateral basis, an activity which

(13)

(14)

(15)

(16)

(17)

(18)

(19)

L 87/3(12)

Official Journal of the European Union

Payment netting is essential to the effective and efficient operation of currency settlement systems and therefore
the classification of a foreign currency contract as a spot transaction should not require that each foreign
currency spot contract is settled independently.

EN

(11)

31.3.2017

L 87/4

Official Journal of the European Union

31.3.2017

Algorithmic trading should encompass smart order routers (SORs) where such devices use algorithms for
optimisation of order execution processes that determine parameters of the order other than the venue or venues
where the order should be submitted. Algorithmic trading should not encompass automated order routers (AOR)
where, although using algorithms, such devices only determine the trading venue or venues where the ordershould be submitted without changing any other parameter of the order.

(22)

Since the use of high frequency algorithmic trading technique is predominantly common in liquid instruments,
only instruments for which there is a liquid market should be included in the calculation of high intraday
message rate. Also, given that high frequency algorithmic trading technique is a subset of algorithmic trading,messages introduced for the purpose of trading that fulfil the criteria in Article 17(4) of Directive 2014/65/EU
should be included in the calculation of intraday message rates. In order not to capture trading activity other thanhigh frequency algorithmic trading techniques, having regard to the characteristics of such trading as set out inrecital 61 of Directive 2014/65/EU, in particular that such trading is typically done by traders using their own
capital to implement more traditional trading strategies such as market making or arbitrage through the use ofsophisticated technology, only messages introduced for the purposes of dealing on own account, and not those
introduced for the purposes of receiving and transmitting orders or executing orders of behalf of clients, should
be included in the calculation of high intraday message rates. However, messages introduced through othertechniques than those relying on trading on own account should be included in the calculation of high intraday
message rate where, viewed as a whole and taking into account all circumstances, the execution of the technique
is structured in such a way as to avoid the execution taking place on own account, such as through thetransmission of orders between entities within the same group. In order to take into account, when determining
what constitutes high message intra-day rates, the identity of the client ultimately behind the activity, messages
which were originated by clients of DEA providers should be excluded from the calculation of high intraday
message rate in relation to such providers.

The definition of direct electronic access should be further specified. The definition of direct electronic accessshould not encompass any other activity beyond the provision of direct market access and sponsored access.
Therefore, arrangements where client orders are intermediated through electronic means by members or
participants of a trading venue such as online brokerage and arrangements where clients have direct electronic
access to a trading venue should be distinguished.

(24)

(25)

High frequency algorithmic trading technique in accordance with Article 4(1)(40) of Directive 2014/65/EU,
which is a subset of algorithmic trading, should be further specified through the establishment of criteria todefine high message intraday rates which constitutes orders quotes or modifications or cancellations thereof.
Using absolute quantitative thresholds on the basis of messaging rates provides legal certainty by allowing firms
and competent authorities to assess the individual trading activity of firms. The level and scope of thesethresholds should be sufficiently broad to cover trading which constitute high frequency trading technique,including those in relation to single instruments and multiple instruments.

Algorithmic trading in accordance with Article 4(1)(39) of Directive 2014/65/EU should include arrangements
where the system makes decisions, other than only determining the trading venue or venues on which the ordershould be submitted, at any stage of the trading processes including at the stage of initiating, generating, routing
or executing orders. Therefore, it should be clarified that algorithmic trading, which encompasses trading with noor limited human intervention, should refer not only to the automatic generation of orders but also to the
optimisation of order-execution processes by automated means.

(21)

(23)

For reasons of clarity and legal certainty and to ensure a uniform application, it is appropriate to provide supple­
mentary provisions in relation to the definitions in relation to algorithmic trading, high frequency algorithmic
trading techniques and direct electronic access. In automated trading, various technical arrangements are
deployed. It is essential to clarify how those arrangements are to be categorised in relation to the definitions ofalgorithmic trading and direct electronic access. The trading processes based on direct electronic access are notmutually exclusive to those involving algorithmic trading or its sub-segment high frequency algorithmic trading
technique. The trading of a person having direct electronic access may therefore also fall under the algorithmic
trading including the high frequency algorithmic trading technique definition.

(20)

requires authorisation as a multilateral trading facility (MTF). An internal matching system in this context isa system for matching client orders which results in the investment firm undertaking matched principaltransactions on a regular and not occasional basis.

EN

217

The rules for the implementation of the regime governing operating conditions for the performance ofinvestment and ancillary services and investment activities should reflect the aim underlying that regime. They
should be designed to ensure a high level of investor protection to be applied in a uniform manner through theintroduction of clear standards and requirements governing the relationship between an investment firm and its
client. On the other hand, as regards investor protection, and in particular the provision of investors withinformation or the seeking of information from investors, the retail or professional nature of the client or
potential client concerned should be taken into account.

In order to ensure the uniform application of the various relevant provisions of Directive 2014/65/EU, it isnecessary to establish a harmonised set of organisational requirements and operating conditions for investment
firms.

Investment firms vary widely in their size, their structure and the nature of their business. A regulatory regime
should be adapted to that diversity while imposing certain fundamental regulatory requirements which areappropriate for all firms. Regulated entities should comply with their high level obligations and design and adopt
measures that are best suited to their particular nature and circumstances.

It is appropriate to set out common criteria for assessing whether an investment service is provided by a person
in an incidental manner in the course of a professional activity, in order to ensure a harmonised and strict
implementation of the exemption granted by Directive 2014/65/EU. The exemption should only apply if theinvestment service has an intrinsic connection to the main area of the professional activity and is subordinatedthereto.

The organisational requirements established under Directive 2014/65/EU should be without prejudice to systems
established by national law for the registration or monitoring by competent authorities or firms of individuals
working within investment firms.

(31)

(32)

(33)

(34)

(35)

It is necessary to specify concrete organisational requirements and procedures for investment firms performing
such services or activities. In particular, rigorous procedures should be provided for with regard to matters suchas compliance, risk management, complaints handling, personal transactions, outsourcing and the identification,
management and disclosure of conflicts of interest.

(29)

The organisational requirements and conditions for authorisation for investment firms should be set out in theform of a set of rules that ensures the uniform application of the relevant provisions of Directive 2014/65/EU.
This is necessary in order to ensure that investment firms have equal access on equivalent terms to all markets in
the Union and to eliminate obstacles, linked to authorisation procedures, to cross-border activities in the field ofinvestment services.

The rules for the implementation of the regime governing organisational requirements for investment firms
performing investment services and, where appropriate, ancillary services and investment activities on
a professional basis, for regulated markets, and data reporting services providers should be consistent with theaim of Directive 2014/65/EU. They should be designed to ensure a high level of integrity, competence andsoundness among investment firms and entities that operate regulated markets, MTFs or OTFs, and to be appliedin a uniform manner.

(28)

(30)

Arrangements where the client of a member or participant of a trading venue, including the client of a directclients of organised trading facilities (OTFs), submit their orders through arrangements for optimisation of order
execution processes that determine parameters of the order other than the venue or venues where the ordershould be submitted through SORs embedded into the provider's infrastructure and not on the client's
infrastructure should be excluded from the scope of direct electronic access since the client of the provider does
not have control over the time of submission of the order and its lifetime. The characterisation of directelectronic access when deploying smart order routers should therefore be dependent on whether the smart orderrouter is embedded in the clients' systems and not in that of the provider.

L 87/5(27)

Official Journal of the European Union

In case of order intermediation, submitters of orders do not have sufficient control over the parameters of thearrangement for market access and should therefore not fall within scope of direct electronic access. Therefore,
arrangements that allow clients to transmit orders to an investment firm in an electronic format, such as online
brokerage, should be not be considered direct electronic access provided that clients do not have the ability todetermine the fraction of a second of order entry and the life time of orders within that time frame.

EN

(26)

31.3.2017

L 87/631.3.2017

A definition of remuneration should be introduced in order to ensure the efficient and consistent application of
the conflicts of interest and conduct of business requirements in the area of remuneration and should include allforms of financial or non-financial benefits or payments provided directly or indirectly by firms to relevant
persons in the provision of investment or ancillary services to clients, such as cash, shares, options, cancellationsof loans to relevant persons at dismissal, pension contributions, remuneration by third parties for instancethrough carried interest models, wage increases or promotions, health insurance, discounts or special allowances,
generous expense accounts or seminars in exotic destinations.

In order to ensure that clients' interests are not impaired, investment firms should design and implement
remuneration policies to all persons who could have an impact on the service provided or corporate behaviour ofthe firm, including persons who are front-office staff, sales force staff or other staff indirectly involved in theprovision of investment or ancillary services. Persons overseeing the sales forces, such as line managers, who may
be incentivised to pressure sales staff, or financial analysts whose literature may be used by sales staff to enticeclients to make investment decisions or persons involved in complaints-handling or in product design anddevelopment should also be included in the scope of relevant persons concerned by remuneration rules. Relevant
persons should also include tied agents. When determining the remuneration for tied agents, firms should takethe tied agents' special status and the respective national specificities into consideration. However, in such cases,
firms' remuneration policies and practices should still define appropriate criteria to be used to assess theperformance of relevant persons, including qualitative criteria encouraging the relevant persons to act in the bestinterests of the client.

(40)

(41)

(1) Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to
the processing of personal data and on the free movement of such data (OJ L 281, 23.11.1995, p. 31).
(2) Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data andthe protection of privacy in the electronic communications sector (OJ L 201, 31.7.2002, p. 37).
3( ) Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals withregard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (OJ L 8,
12.1.2001, p. 1).

Where successive personal transactions are carried out on behalf of a person in accordance with priorinstructions given by that person, obligations relating to personal transactions should not apply separately to

Investment firms are required to collect and maintain information relating to clients and services provided toclients. Where those requirements involve the collection and processing of personal data, the respect of the rightto the protection of personal data in accordance with Directive 95/46/EC of the European Parliament and of theCouncil (1) and Directive 2002/58/EC of the European Parliament and of the Council (2) which govern theprocessing of personal data carried out in application of this Directive should be ensured. Processing of personal
data by the European Securities and Markets Authority (ESMA) in the application of this Regulation is subject toRegulation (EC) No 45/2001 of the European Parliament and of the Council (3).

(39)

(42)

Clients or potential clients should be enabled to express their dissatisfaction with investment services provided byinvestment firms in the interests of investor protection as well as strengthening investment firms' compliancewith their obligations. Clients' or potential clients' complaints should be handled effectively and in an
independent manner by a complaints management function. In line with the principle of proportionality, thatfunction could be carried out by the compliance function.

The fact that risk management and compliance functions are performed by the same person does not necessarily
jeopardise the independent functioning of each function. The conditions that persons involved in the compliancefunction should not also be involved in the performance of the functions that they monitor, and that the methodof determining the remuneration of such persons should not be likely to compromise their objectivity, may not
be proportionate in the case of small investment firms. However, they would only be disproportionate for larger
firms in exceptional circumstances.

For the purposes of requiring an investment firm to establish, implement and maintain an adequate risk
management policy, the risks relating to the firm's activities, processes and systems should include the risks
associated with the outsourcing of critical or important functions. Those risks should include those associatedwith the firm's relationship with the service provider, and the potential risks posed where the outsourced
functions of multiple investment firms or other regulated entities are concentrated within a limited number ofservice providers.

Official Journal of the European Union

(38)

(37)

(36)

EN

218

Official Journal of the European Union

L 87/7The outsourcing of investment services or activities or critical and important functions is capable of constituting
a material change of the conditions for the authorisation of the investment firm, as referred to in Article 21(2) ofDirective 2014/65/EU. If such outsourcing arrangements are to be put in place after the investment firm has
obtained an authorisation according to Chapter I of Title II of Directive 2014/65/EU, those arrangements should
be notified to the competent authority where required by Article 21(2) of that Directive.

The circumstances which should be treated as giving rise to a conflict of interest should cover cases where there
is a conflict between the interests of the firm or certain persons connected to the firm or the firm's group andthe duty the firm owes to a client; or between the differing interests of two or more of its clients, to each ofwhom the firm owes a duty. It is not enough that the firm may gain a benefit if there is not also a possible
disadvantage to a client, or that one client to whom the firm owes a duty may make a gain or avoid a loss
without there being a concomitant possible loss to another such client.

Conflicts of interest should be regulated only where an investment service or ancillary service is provided by aninvestment firm. The status of the client to whom the service is provided — as either retail, professional or
eligible counterparty — should be irrelevant for that purpose.

In complying with its obligation to draw up a conflict of interest policy under Directive 2014/65/EU which
identifies circumstances which constitute or may give rise to a conflict of interest, the investment firm should
pay special attention to the activities of investment research and advice, proprietary trading, portfolio
management and corporate finance business, including underwriting or selling in an offering of securities andadvising on mergers and acquisitions. In particular, such special attention is appropriate where the firm ora person directly or indirectly linked by control to the firm performs a combination of two or more of those
activities.

Investment firms should aim to identify and prevent or manage the conflicts of interest arising in relation totheir various business lines and their group's activities under a comprehensive conflicts of interest policy. Whiledisclosure of specific conflicts of interest is required by Article 23(2) of Directive 2014/65/EU, it should bea measure of last resort to be used only where the organisational and administrative arrangements established by
the investment firm to prevent or manage its conflicts of interest in accordance with Article 23(1) of Directive
2014/65/EU are not sufficient to ensure, with reasonable confidence, that the risks of damage to the interests ofthe client are prevented. Over-reliance on disclosure without adequate consideration as to how conflicts may
appropriately be prevented or managed should not be permitted. The disclosure of conflicts of interest by aninvestment firm should not exempt it from the obligation to maintain and operate the effective organisational
and administrative arrangements required under Article 16(3) of Directive 2014/65/EU.

Firms should always comply with the inducements rules under Article 24 of Directive 2014/65/EU, including
when providing placing services. In particular, fees received by investment firms placing the financial instruments
issued to its investment clients should comply with these provisions and laddering and spinning should beconsidered as abusive practices.

Investment research should be a sub-category of the type of information defined as a recommendation inRegulation (EU) No 596/2014 of the European Parliament and of the Council (1) (market abuse).

(44)

(45)

(46)

(47)

(48)

(49)

(50)

(1) Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse
Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives
2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1).

Competent authorities should not make the authorisation to provide investment services or activities subject toa general prohibition on the outsourcing of one or more critical or important functions. Investment firms shouldbe allowed to outsource such functions if the outsourcing arrangements established by the firm comply withcertain conditions.

each such successive transaction if those instructions remain in force and unchanged. Similarly, those obligations
should not apply to the termination or withdrawal of such instructions, provided that any financial instruments
which had previously been acquired pursuant to the instructions are not disposed of at the same time as the
instructions terminate or are withdrawn. However, those obligations should apply in relation to a personaltransaction, or the commencement of successive personal transactions, carried out on behalf of the same person
if those instructions are changed or if new instructions are issued.

EN

(43)

31.3.2017

L 87/8Investment firms engaged in underwriting or placing activities should have appropriate arrangements in place toensure that the pricing process, including book-building, is not detrimental to the issuer's interests.
The placing process involves the exercise of judgement by an investment firm as to the allocation of an issue, andis based on the particular facts and circumstances of the arrangements, which raises conflicts of interest
concerns. The firm should have in place effective organisational requirements to ensure that allocations made aspart of the placing process do not result in the firm's interest being placed ahead of the interests of the issuer
client, or the interests of one investment client over those of another investment client. In particular, firms
should clearly set out the process for developing allocation recommendations in an allocation policy.
Requirements imposed by this Regulation, including those relating to personal transactions, to dealing withknowledge of investment research and to the production or dissemination of investment research, should apply
without prejudice to requirements of Directive 2014/65/EU and Regulation (EU) No 596/2014 and theirrespective implementing measures.

(58)

(59)

(60)

(1) Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament andof the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations andthe rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (see page 500 of this
Official Journal).

Given the specificities of underwriting and placing services and the potential for conflicts of interest to arise inrelation to such services, more detailed and tailored requirements should be specified in this Regulation. In
particular, such requirements should ensure that the underwriting and placing process is managed in a way
which respects the interests of different actors. Investment firms should ensure that their own interests orinterests of their other clients do not improperly influence the quality of services provided to the issuer client.
Such arrangements should be explained to that client, along with other relevant information about the offering
process, before the firm accepts to undertake the offering.

The concept of dissemination of investment research to clients or the public should not include dissemination
exclusively to persons within the group of the investment firm. Current recommendations should be considered
to be those recommendations contained in investment research which have not been withdrawn and which havenot lapsed. The substantial alteration of investment research produced by a third party should be governed by thesame requirements as the production of research.

(55)

(57)

Fees, commissions, monetary or non-monetary benefits received by the firm providing investment research fromany third party should only be acceptable when they are provided in accordance with requirements specified in
Article 24(9) of Directive 2014/65/EU and Article 13 of Commission Delegated Directive (EU) 2017/593 (1).

(54)

Financial analysts should not engage in activities other than the preparation of investment research where
engaging in such activities are inconsistent with the maintenance of that person's objectivity. These include
participating in investment banking activities such as corporate finance business and underwriting, participatingin ‘pitches’ for new business or ‘road shows’ for new issues of financial instruments; or being otherwise involvedin the preparation of issuer marketing.

Exceptional circumstances in which financial analysts and other persons connected with the investment firm who
are involved in the production of investment research may, with prior written approval, undertake personaltransactions in instruments to which the research relates should include those circumstances where, for personalreasons relating to financial hardship, the financial analyst or other person is required to liquidate a position.

(53)

(56)

Persons whose responsibilities or business interests may reasonably be considered to conflict with the interests ofthe persons to whom investment research is disseminated should include corporate finance personnel andpersons involved in sales and trading on behalf of clients or the firm.

(52)

31.3.2017

The measures and arrangements adopted by an investment firm to manage the conflicts of interests that mightarise from the production and dissemination of material that is presented as investment research should beappropriate to protect the objectivity and independence of financial analysts and of the investment research they
produce. Those measures and arrangements should ensure that financial analysts enjoy an adequate degree of
independence from the interests of persons whose responsibilities or business interests may reasonably beconsidered to conflict with the interests of the persons to whom the investment research is disseminated.

Official Journal of the European Union

(51)

EN

219

Information requirements should be established which take account of the status of a client as either retail,professional or eligible counterparty. An objective of Directive 2014/65/EU is to ensure a proportionate balance
between investor protection and the disclosure obligations which apply to investment firms. To this end, it isappropriate to establish less stringent specific information requirements with respect to professional clients thanto retail clients.

Investment firms should provide clients or potential clients with the necessary information on the nature offinancial instruments and the risks associated with investing in them so that their clients are properly informed
The level of detail of the information to be provided may vary according to whether the client is a retail client ora professional client and the nature and risk profile of the financial instruments that are being offered, but should
always include any essential elements. Member States may specify the precise terms, or the contents, of thedescription of risks required under this Regulation, taking into account the information requirements set out inRegulation (EU) No 1286/2014 of the European Parliament and of the Council (1).

The conditions with which information addressed by investment firms to clients and potential clients mustcomply in order to be fair, clear and not misleading should apply to communications intended for retail orprofessional clients in a way that is appropriate and proportionate, taking into account, for example, the meansof communication, and the information that the communication is intended to convey to the clients or potential
clients. In particular, it would not be appropriate to apply such conditions to marketing communications which
consist only of one or more of the following: the name of the firm, a logo or other image associated with thefirm, a contact point, a reference to the types of investment services provided by the firm.

In order to improve the consistency of information received by investors, investment firms should ensure that the
information provided to each client is consistently presented in the same language throughout all forms of
information and marketing material provided to that client. However, this should not imply a requirement forfirms to translate prospectuses, prepared in accordance with Directive 2003/71/EC of the European Parliamentand of the Council (2) or Directive 2009/65/EC of the European Parliament and of the Council (3), provided toclients.

In order to provide a fair and balanced presentation of benefits and risks, investment firms should always givea clear and prominent indication of any relevant risks, including drawbacks and weaknesses, when referencing
any potential benefits of a service or financial instrument.

Information should be considered to be misleading if it has a tendency to mislead the person or persons towhom it is addressed or by whom it is likely to be received, regardless of whether the person who provides theinformation considers or intends it to be misleading.

In cases where an investment firm is required to provide information to a client before the provision of a service,each transaction in respect of the same type of financial instrument should not be considered as the provision ofa new or different service.

Detailed information on whether investment advice is provided on an independent basis, on the broad or
restricted analysis of different types of instruments and on the selection process used should help clients assess
the scope of the advice provided. Sufficient details on the number of financial instruments analysed by the firms

(63)

(64)

(65)

(66)

(67)

(68)

(69)

(70)

(1) Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for
packaged retail and insurance-based investment products (PRIIPs) (OJ L 352, 9.12.2014, p. 1).
(2) Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published whensecurities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ L 345, 31.12.2003, p. 64).
3( ) Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations andadministrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009,p. 32).

Nothing in this Regulation requires competent authorities to approve the content and form of marketing
communications. However, neither does it prevent them from doing so, insofar as any such pre-approval is based
only on compliance with the obligation in Directive 2014/65/EU that information to clients or potential clients,
including marketing communications, should be fair, clear and not misleading.

L 87/9(62)

Official Journal of the European Union

This Regulation sets out requirements regarding information addressed to clients or potential clients, including
marketing communications, in order to ensure that such information be fair, clear and not misleading inaccordance with Article 24(3) of Directive 2014/65/EU.

EN

(61)

31.3.2017

Official Journal of the European Union

31.3.2017

Where investment firms have not marketed or recommended a financial instrument or are not required under
Union law to provide clients with information about costs of a financial instrument, they may not be in theposition to take into account all the costs associated with that financial instrument. Even in these residual
instances, investment firms should inform clients, on an ex-ante basis, about all costs and charges associated to

In accordance with the overarching obligation to act in accordance with the best interest of clients and taking
into account the obligations resulting from specific Union legislation regulating certain financial instruments (inparticular, units in collective investment undertakings and packaged retail and insurance-based investment
products (PRIIPs) investment firms should disclose and aggregate all costs and charges, including the costs of thefinancial instrument, in all cases where investment firms are obliged to provide the client with information about
the costs of a financial instrument in accordance with Union legislation.

(76)

(77)

Taking into account the overarching obligation to act in accordance with the best interest of clients and theimportance of informing clients, on an ex-ante basis, of all costs and charges to be incurred, the reference tofinancial instruments recommended or marketed should include in particular investment firms providing
investment advice or portfolio management services, firms providing general recommendation concerning
financial instruments or promoting certain financial instruments in the provision of investment and ancillary
services to clients. This would for instance be the case for investment firms that have entered into distribution orplacement agreements with a product manufacturer or issuer.

(75)

The provision by an investment firm to a client of a copy of a prospectus that has been drawn up and publishedin accordance with Directive 2003/71/EC should not be treated as the provision by the firm of information toa client for the purposes of the operating conditions under Directive 2014/65/EU which relate to the quality andcontents of such information, if the firm is not responsible under that Directive for the information given in theprospectus.

(73)

Directive 2014/65/EU strengthens investment firms' obligations to disclose information on all costs and charges
and extends these obligations to relationships with professional clients and eligible counterparties. In order toensure that all categories of clients benefit from such increased transparency on costs and charges, investment
firms should be allowed, in certain situations, when providing investment services to professional clients or
eligible counterparties, to agree with these clients to limit the detailed requirements set out in this Regulation.
This however should never lead to disapplying the obligations imposed on investment firms pursuant to
Article 24(4) of Directive 2014/65/EU. In this respect, investment firms should inform professional clients about
all costs and charges as set out in this Regulation, when the services of investment advice or portfolio
management are provided or when, irrespective of the investment service provided, the financial instruments
concerned embed a derivative. Investment firms should also inform eligible counterparties about all costs andcharges as set out in this Regulation when, irrespective of the investment service provided, the financial
instrument concerned embeds a derivative and intends to be distributed to their clients. However, in other cases,
when providing investment services to professional clients or eligible counterparties, investment firms may agree,
for instance, at the request of the client concerned, not to provide the illustration showing the cumulative effectof costs on return or an indication of the currency involved and the applicable conversion rates and costs where
any part of the total costs and charges is expressed in foreign currency.

Enabling the same adviser to provide both independent and non-independent advice could create confusion forthe client. In order to ensure clients' understanding of the nature and basis of investment advice provided, certain
organisational requirements should also be established.

(72)

(74)

The scope of the advice given by investment firms on an independent basis could range from broad and generalto specialist and specific. In order to ensure that the scope of the advice allows for a fair and appropriatecomparison between different financial instruments, investment advisers specialising in certain categories offinancial instruments and focusing on criteria that are not based on the technical structure of the instrument perse, such as ‘green’ or ‘ethical’ investments, should comply with certain conditions if they present themselves as
independent advisers.

should be provided to clients. The number and variety of financial instruments to be considered, other than theones provided by the investment firm or entities close to the firm, should be proportionate to the scope of theadvice to be given, client preferences and needs. However, irrespective of the scope of services offered, allassessments should be based on an adequate number of financial instruments available on the market to allow anappropriate consideration of what the market offers as alternatives.

EN

(71)

L 87/10

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Official Journal of the European Union

L 87/11

In order to ensure clients' awareness of all costs and charges to be incurred as well as evaluation of suchinformation and comparison with different financial instruments and investment services, investment firms
should provide clients with clear and comprehensible information on all costs and charges in good time before
the provision of services. Ex-ante information about the costs related to the financial instrument or ancillary
service can be provided based on an assumed investment amount. However, the costs and charges disclosed
should represent the costs the client would actually incur based on that assumed investment amount. For
example, if an investment firm offers a range of ongoing services with different charges associated with eachservice, the firm should disclose the costs associated with the service the client subscribed to. For ex-post
disclosures, information related to costs and charges should reflect the client's actual investment amount at thetime the disclosure is produced.

In order to ensure investors receive information about all costs and charges pursuant to Article 24(4) of Directive
2014/65/EU, the underlying market risk should be understood as relating only to movements in the value ofcapital invested caused directly by movements in the value of underlying assets. Transactions costs and ongoing
charges on financial instruments should therefore also be included in the required aggregation of costs andcharges and should be estimated using reasonable assumptions, accompanied by an explanation that such
estimations are based on assumptions and may deviate from costs and charges that will actually be incurred.
Following the same objective of full disclosure, practices where there is ‘netting’ of costs should not be excluded
from the obligation to provide information on costs and charges. The costs and charges disclosure isunderpinned by the principle that every difference between the price of a position for the firm and the respective
price for the client should be disclosed, including mark-ups and mark-downs.

While investment firms should aggregate all costs and charges in accordance with Article 24(4) of Directive
2014/65/EU and provide clients with the overall costs expressed both as a monetary amount and as a percentage,investment firms should, in addition, be allowed to provide clients or prospective clients with separate figurescomprising aggregated initial costs and charges, aggregated on-going costs and charges and aggregated exit costs.

Investment firms distributing financial instruments, in relation to which information on costs and charges isinsufficient, should additionally inform their clients about those costs as well as all the other costs and associatedcharges relating to the provision of investment services in relation to those financial instruments in order tosafeguard clients' rights to full disclosure of costs and charges. This would be the case for investment firms
distributing units in collective investment undertakings for which transaction costs have not been provided by forexample units in UCITS management company. In such cases, the investment firms should liaise with UCITS
management companies to obtain the relevant information.

In order to improve transparency for clients on the associated costs of their investments and the performance of
their investments against the relevant costs and charges over time, periodic ex-post disclosure should also be
provided where the investment firms have or have had an ongoing relationship with the client during the year.
Ex-post disclosure on all the relevant costs and charges should be provided on a personalised basis. The ex-post
periodic disclosure may be made by building on existing reporting obligations, such as obligations for firms
providing execution of orders other than portfolio management, portfolio management or holding client financial
instruments or funds.

The information which an investment firm is required to give to clients concerning costs and associated charges
includes information about the arrangements for payment or performance of the agreement for the provision of
investment services and any other agreement relating to a financial instrument that is being offered. For thispurpose, arrangements for payment will generally be relevant where a financial instrument contract is terminatedby cash settlement. Arrangements for performance will generally be relevant where, upon termination, a financial
instrument requires the delivery of shares, bonds, a warrant, bullion or another instrument or commodity.

(79)

(80)

(81)

(82)

(83)

the investment service and the price of acquiring the relevant financial instrument. Furthermore, investment
firms should comply with any other obligations to provide appropriate information about the risks of therelevant financial instrument in accordance with Article 24(4)(b) of Directive 2014/65/EU or to provide clients,
on an ex-post basis, with adequate reports on the services provided in accordance with Article 25(6) of Directive
2014/65/EU, including cost elements.

EN

(78)

31.3.2017(1) Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments andamending Regulation (EU) No 648/2012 (OJ L 173, 12.6.2014, p. 84).
(2) Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (market
abuse directive) (OJ L 173, 12.6.2014, p. 179).

In light of the importance of reports and periodic communications for all clients, and the extension of
Article 25(6) of Directive 2014/65/EU to the relationship to eligible counterparties, the reporting requirements
set in this Regulation should apply to all categories of clients. Taking into account the nature of the interactions
with eligible counterparties, investment firms should be allowed to enter into agreements determining the specificcontent and timing of reporting different from the ones applicable for retail and professional clients.

In order to provide legal certainty and enable clients to better understand the nature of the services provided,
investment firms that provide investment or ancillary services to clients should enter into a written basic
agreement with the client, setting out the essential rights and obligations of the firm and the client.

(90)

(93)

A recommendation or request made, or advice given, by a portfolio manager to a client to the effect that theclient should give or alter a mandate to the portfolio manager that defines the limits of the portfolio manager's
discretion should be considered a recommendation as referred to in of Article 25(2) of Directive 2014/65/EU.

(89)

The records an investment firm is required to keep should be adapted to the type of business and the range ofinvestment services and activities performed, provided that the record-keeping obligations set out in Directive
2014/65/EU, Regulation (EU) No 600/2014 of the European Parliament and of the Council (1), Regulation (EU)No 596/2014, Directive 2014/57/EU of the European Parliament and of the Council (2) and this Regulation are
fulfilled and that competent authorities are able to fulfil their supervisory tasks and perform enforcement actions
in view of ensuring both investor protection and market integrity.

For the purposes of Article 25(2) of Directive 2014/65/EU, a transaction may be unsuitable for the client or
potential client due to the risks of the associated financial instruments, the type of transaction, the characteristicsof the order or the frequency of the trading. A series of transactions, each of which are suitable when viewed inisolation may be unsuitable if the recommendation or the decisions to trade are made with a frequency that is
not in the best interests of the client. In the case of portfolio management, a transaction might also be unsuitable
if it would result in an unsuitable portfolio.

(88)

(92)

In accordance with the suitability assessment requirement under Article 25(2) of Directive 2014/65/EU, it should
also be clarified that investment firms should undertake a suitability assessment not only in relation torecommendations to buy a financial instrument are made but for all decisions whether to trade including
whether or not to buy, hold or sell an investment.

(87)

This Regulation should not require competent authorities to approve the content of the basic agreement between
an investment firm and its clients. Nor should it prevent them from doing so, insofar as any such approval isbased only on the firm's compliance with its obligations under Directive 2014/65/EU to act honestly, fairly andprofessionally in accordance with the best interests of its clients, and to establish a record that sets out the rights
and obligations of investment firms and their clients, and the other terms on which firms will provide services totheir clients.

In order to take market developments into account and ensure the same level of investor protection, it should beclarified that investment firms should remain responsible for undertaking suitability assessments where
investment advice or portfolio management services are provided in whole or in part through an automated orsemi-automated system.

(86)

(91)

Investment firms should include in the suitability report and draw clients' attention to information on whether
the recommended services or instruments are likely to require the retail client to seek a periodic review of theirarrangements. This includes situations where a client is likely to need to seek advice to bring a portfolio ofinvestments back in line with the original recommended allocation where there is a probability that the portfolio
could deviate from the target asset allocation.

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It is necessary to introduce different requirements for the application of the suitability assessment set out in
Article 25(2) of Directive 2014/65/EU and the appropriateness assessment set out in Article 25(3) of that
Directive. These tests are different in scope with regards to the investment services to which they relate, and havedifferent functions and characteristics.

EN

(84)

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When establishing its execution policy in accordance with Article 27(4) of Directive 2014/65/EU, an investment
firm should determine the relative importance of the factors mentioned in Article 27(1) of that Directive, or atleast establish the process by which it determines the relative importance of these factors, so that it can deliver
the best possible result to its clients. In order to give effect to that policy, an investment firm should select theexecution venues that enable it to obtain on a consistent basis the best possible result for the execution of client
orders. In order to comply with the legal obligation of best execution, investment firms, when applying thecriteria for best execution for professional clients, will typically not use the same execution venues for securities
financing transactions (SFTs) and other transactions. This is because the SFTs are used as a source of funding
subject to a commitment that the borrower will return equivalent securities on a future date and the terms of
SFTs are typically defined bilaterally between the counterparties ahead of the execution. Therefore, the choice ofexecution venues for SFTs is more limited than in the case of other transactions, given that it depends on theparticular terms defined in advance between the counterparties and on whether there is a specific demand on
those execution venues for the financial instruments involved. As a result, the order execution policy establishedby investment firms should take into account the particular characteristics of SFTs and it should list separately
execution venues used for SFTs. An investment firm should apply its execution policy to each client order that it
executes with a view to obtaining the best possible result for the client in accordance with that policy.

(99)(106) This Regulation should not require a duplication of effort as to best execution between an investment firm which
provides the service of reception and transmission of order or portfolio management and any investment firm towhich that investment firm transmits its orders for execution.

(105) The provisions of this Regulation as to execution policy should be without prejudice to the general obligation of
an investment firm under Article 27(7) of Directive 2014/65/EU to monitor the effectiveness of its order
execution arrangements and policy and assess the venues in its execution policy on a regular basis.

(104) The obligation to deliver the best possible result when executing client orders applies in relation to all types offinancial instruments. However, given the differences in market structures or the structure of financial
instruments, it may be difficult to identify and apply a uniform standard of and procedure for best execution thatwould be valid and effective for all classes of instrument. Best execution obligations should therefore be appliedin a manner that takes into account the different circumstances associated with the execution of orders related toparticular types of financial instruments. For example, transactions involving a customised OTC financial
instrument that involve a unique contractual relationship tailored to the circumstances of the client and theinvestment firm may not be comparable for best execution purposes with transactions involving shares traded on
centralised execution venues. As best execution obligations apply to all financial instruments, irrespective ofwhether they are traded on trading venues or OTC, investment firms should gather relevant market data in orderto check whether the OTC price offered for a client is fair and delivers on best execution obligation.

(108) Investment firms executing orders should be able to include a single execution venue in their policy only where
they are able to show that this allows them to obtain best execution for their clients on a consistent basis.
Investment firms should select a single execution venue only where they can reasonably expect that the selected
execution venue will enable them to obtain results for clients that are at least as good as the results that they

For the purposes of the provisions on reporting to clients, a reference to the nature of the order should beunderstood as referring to orders to subscribe for securities, or to exercise an option, or similar client order.

(98)(103) Dealing on own account with clients by an investment firm should be considered as the execution of client
orders, and therefore subject to the requirements under Directive 2014/65/EU and this Regulation and, inparticular, those obligations in relation to best execution. However, if an investment firm provides a quote toa client and that quote would meet the investment firm's obligations under Article 27(1) of Directive
2014/65/EU if the firm executed that quote at the time the quote was provided, then the firm should meet thosesame obligations if it executes its quote after the client accepts it, provided that, taking into account the changing
market conditions and the time elapsed between the offer and acceptance of the quote, the quote is not
manifestly out of date.

(101) For the purposes of ensuring that an investment firm obtains the best possible result for the client when
executing a retail client order in the absence of specific client instructions, the firm should take into consideration
all factors that will allow it to deliver the best possible result in terms of the total consideration, representing theprice of the financial instrument and the costs related to execution. Speed, likelihood of execution and settlement,

For the purposes of the provisions on reporting to clients, a reference to the type of the order should beunderstood as referring to its status as a limit order, market order, or other specific type of order.

(97)

31.3.2017(107) The best execution obligation under Directive 2014/65/EU requires investment firms to take all sufficient steps to
obtain the best possible result for their clients. The quality of execution, which includes aspects such as the speed
and likelihood of execution such as fill rate) and the availability and incidence of price improvement, is an
important factor in the delivery of best execution. Availability, comparability and consolidation of data related to
execution quality provided by the various execution venues is crucial in enabling investment firms and investors
to identify those execution venues that deliver the highest quality of execution for their clients. In order to obtain
best execution result for a client, investment firms should compare and analyse relevant data including that madepublic in accordance with Article 27(3) of Directive 2014/65/EU and respective implementing measures.

For the purposes of the reporting obligations in respect of portfolio management, a contingent liability
transaction should involve any actual or potential liability for the client that exceeds the cost of acquiring the
instrument.

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the size and nature of the order, market impact and any other implicit transaction costs may be given precedence
over the immediate price and cost consideration only insofar as they are instrumental in delivering the best
possible result in terms of the total consideration to the retail client.

EN(102) When an investment firm executes an order following specific instructions from the client, it should be treated ashaving satisfied its best execution obligations only in respect of the part or aspect of the order to which the client
instructions relate. The fact that the client has given specific instructions which cover one part or aspect of theorder should not be treated as releasing the investment firm from its best execution obligations in respect of any
other parts or aspects of the client order that are not covered by such instructions. An investment firm should
not induce a client to instruct it to execute an order in a particular way, by expressly indicating or implicitly
suggesting the content of the instruction to the client, when the firm ought reasonably to know that an
instruction to that effect is likely to prevent it from obtaining the best possible result for that client. However,this should not prevent a firm inviting a client to choose between two or more specified trading venues, provided
that those venues are consistent with the execution policy of the firm.

L 87/14(100) In order to ensure that investment firms who transmit or place clients' orders with other entities for execution
act in the best interest of their clients in accordance with Article 24(1) of Directive 2014/65/EU and with
Article 24(4) of Directive 2014/65/EU to provide appropriate information to clients on the firm and its services,
investment firms should provide clients with appropriate information on the top five entities for each class offinancial instruments to which they transmit or place clients' orders and provide clients with information on theexecution quality, in accordance with Article 27(6) of Directive 2014/65/EU and respective implementing
measures. Investment firms transmitting or placing orders with other entities for execution may select a single
entity for execution only where they are able to show that this allows them to obtain the best possible result for
their clients on a consistent basis and where they can reasonably expect that the selected entity will enable themto obtain results for clients that are at least as good as the results that they reasonably could expect from using
alternative entities for execution. This reasonable expectation should be supported by relevant data published inaccordance with Article 27 of Directive 2014/65/EU or by internal analysis conducted by these investment firms.

Clients should be informed of the performance of their portfolio and depreciations of their initial investments. In
the case of portfolio management, this trigger should be set at the depreciation of 10 %, and thereafter atmultiples of 10 %, of the overall value of the overall portfolio and should not apply to individual holdings.

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In cases where an investment firm providing portfolio management services is required to provide clients or
potential clients with information on the types of financial instruments that may be included in the client
portfolio and the types of transactions that may be carried out in such instruments, such information should
state separately whether the investment firm will be mandated to invest in financial instruments not admitted to
trading on a regulated market, in derivatives, or in illiquid or highly volatile instruments; or to undertake shortsales, purchases with borrowed funds, securities financing transactions, or any transactions involving margin
payments, deposit of collateral or foreign exchange risk.

EN

(94)

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L 87/15

reasonably could expect from using alternative execution venues. This reasonable expectation must be supported
by relevant data published in accordance with Article 27 of Directive 2014/65/EU or by other internal analyses
conducts by the firms.

EN(1) Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency
requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending
Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).

(115) Since the rules on dissemination of information about issuers on regulated markets under Directive 2004/109/EC
would be too burdensome for issuers on SME growth markets, it is appropriate that the website of the operatorof the SME growth market becomes the point of convergence for investors seeking information on the issuers
traded on that venue. A publication on the website of the operator of the SME growth market can also be
effected by providing a direct link to the website of the issuer in case the information is published there, if thelink goes directly to the relevant part of the website of the issuer where the regulatory information can be easilyfound by investors.

(114) The publication by issuers of annual and half-yearly financial reports represents an appropriate minimum
standard of transparency which is coherent with the prevailing best practice in existing markets focusing on
SMEs. As to the content of financial reports, the operator of an SME growth market should be free to prescribe
the use of International Financial Reporting Standards or financial reporting standards permitted by local laws
and regulations, or both, by issuers whose financial instruments are traded on its venue. Deadlines for publishing
financial reports should be less onerous than those prescribed by Directive 2004/109/EC of the European
Parliament and of the Council (1) as less stringent timeframes appear better suited to the needs and circumstancesof SMEs.

(113) With regard to the content of the admission document which an issuer is required to produce upon initialadmission to trading of its securities on an SME growth market, where the requirement to publish a prospectus
pursuant to Directive 2003/71/EC does not apply, it is appropriate that competent authorities retain discretion toassess whether the rules set out by the operator of the SME growth market achieve the proper information of
investors. While full responsibility for the information featured in the admission document should lie with theissuer, it should be for the operator of an SME growth market to define how the admission document should beappropriately reviewed. This should not necessarily involve a formal approval by the competent authority or theoperator.

(112) Given the diversity in operating models of existing MTFs with a focus on SMEs in the Union, and to ensure thesuccess of the new category of SME growth market, it is appropriate to grant SME growth markets anappropriate degree of flexibility in evaluating the appropriateness of issuers for admission on their venue. In any
case, an SME growth market should not have rules that impose greater burdens on issuers than those applicable
to issuers on regulated markets.

(111) When assessing whether a market fulfils the requirement laid down in point (a) of Article 33(3) of Directive
2014/65/EU that at least 50 % of the issuers admitted to trading on that market are small and medium-size
enterprises (SMEs), a flexible approach should be taken by competent authorities with regard to markets with noprevious operating history, newly created SMEs whose financial instruments have been admitted to trading forless than three years and issuers exclusively of non-equity financial instruments.

(110) Without prejudice to Regulation (EU) No 596/2014, for the purposes of the provisions of this Regulation
concerning client order handling, client orders should not be treated as otherwise comparable if they are received
by different media and it would not be practicable for them to be treated sequentially. Any use by an investment
firm of information relating to a pending client order in order to deal on own account in the financial
instruments to which the client order relates, or in related financial instruments, should be considered a misuseof that information. However, the mere fact that market makers or bodies authorised to act as counterparties
confine themselves to pursuing their legitimate business of buying and selling financial instruments, or that
persons authorised to execute orders on behalf of third parties confine themselves to carrying out an order
dutifully, should not in itself be deemed to constitute a misuse of information.

(109) The reallocation of transactions should be considered as detrimental to a client if, as an effect of that reallocation,
unfair precedence is given to the investment firm or to any particular client.

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Official Journal of the European Union

31.3.2017(123) In order to ensure that market data is provided on a reasonable commercial basis in a uniform manner in theUnion, this Regulation specifies the conditions that APAs and CTPs must fulfil. These conditions are based on theobjective to ensure that the obligation to provide market data on a reasonable commercial basis is sufficiently
clear to allow for an effective and uniform application whilst taking into account different operating models andcosts structures of data providers.

(122) In order to provide transparency to market stakeholders whilst preventing market abuse and preserving confiden­
tiality of the identities of position holders, the publication of aggregate weekly position reports on positions
referred to in Article 58(1)(a) of Directive 2014/65/EU should only apply to contracts that are traded by a certain
number of persons, above certain sizes as specified in this Regulation.

(121) The list of signals of insider dealing and market manipulation should be neither exhaustive nor determinative of
market abuse or attempts of market abuse, as each of the signals may not necessarily constitute market abuse or
attempts of market abuse per se. Transactions or orders to trade meeting one or more signals may be conducted
for legitimate reasons or in compliance with the rules of the trading venue.

(120) With regard to conduct that may indicate abusive behaviour within the scope of Regulation (EU) No 596/2014, it
is also appropriate to set up a non-exhaustive list of signals of insider dealing and market manipulation whichshould be taken into account by the operator of a trading venue when examining transactions or orders to tradein order to determine whether the obligation to inform the relevant national competent authority applies, as set
out in Articles 31(2) and 54(2) of Directive 2014/65/EU. For that purpose, reference to ‘order to trade’ should
encompass all types of orders, including initial orders, modifications, updates and cancellations of orders,irrespective of whether or not they have been executed and irrespective of the means used to access the trading
venue.

(119) It is appropriate to set up a non-exhaustive list of high-level circumstances where significant infringements of therules of a trading venue, disorderly trading conditions or system disruptions in relation to a financial instrument
may be assumed, thus triggering the obligation for the operators of trading venues to immediately inform theircompetent authorities as set out in Articles 31(2) and 54(2) of Directive 2014/65/EU. For that purpose, reference
to the ‘rules of a trading venue’ should be understood in a broad sense and should comprise all rules, rulings,
orders as well as general terms and conditions of contractual agreements between the trading venue and its
participants which contain the conditions for trading and admission to the trading venue.

(118) Articles 31(2) and 54(2) of Directive 2014/65/EU respectively require investment firms and market operators
operating an MTF or an OTF, and market operators of regulated markets to immediately inform their national
competent authorities under certain circumstances. This requirement is intended to ensure that national
competent authorities can fulfil their regulatory tasks and are informed in a timely manner about relevant
incidents which may have a negative impact on the functioning and integrity of the markets. The information
received from operators of trading venues should enable national competent authorities to identify and assess therisks for the markets and their participants as well as to react efficiently and to take action if necessary.

(117) To ensure the necessary level of convergence, it is appropriate to specify a list of circumstances constituting
significant damage to investors' interests and the orderly functioning of the market which could be the basis ofa decision by a national competent authority, a market operator operating a regulated market or an investment
firm or a market operator operating an MTF or an OTF not to demand the suspension or removal of a financial
instrument from trading, or not to follow a notification thereto. It is appropriate for such a list to be
non-exhaustive as it will thus provide national competent authorities with a framework for the exercise of theirjudgement and will leave them a necessary degree of flexibility in the assessment of individual cases.

(116) It is necessary to further specify when a suspension or a removal from trading of a financial instrument is likely
to cause significant damages to the investor's interest or to the orderly functioning of the market. Convergence inthat field is necessary to ensure that market participants in a Member State where trading in financial instruments
has been suspended or financial instruments have been removed are not disadvantaged in comparison to market
participants in another Member State, where trading is still ongoing.

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L 87/17(1) Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European
Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission
Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

(131) In order to allow competent authorities and investment firms to adapt to the new requirements contained in thisRegulation so that they can be applied in an efficient and effective manner, the starting date of application of thisRegulation should be aligned with the entry into application date of Directive 2014/65/EU,(130) ESMA, established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (1) has been
consulted for technical advice.

(129) This Regulation respects the fundamental rights and observes the principles recognised in the Charter ofFundamental Rights of the European Union (Charter). Accordingly, this Regulation should be interpreted andapplied in accordance with those rights and principles in particular the right to protection of personal data, thefreedom to conduct business, the right to consumer protection, the right to effective remedy and to a fair trial.
Any processing of personal data under this Regulation should respect fundamental rights, including the right torespect for private and family life and the right to protection of personal data under Articles 7 and 8 of theCharter of Fundamental Rights of the European Union and must be in compliance with the Directive 95/46/EC
and Regulation (EC) No 45/2001.

(128) It is appropriate to set the criteria for determining when the operations of a regulated market, an MTF or an OTF
are of substantial importance in a host Member State so as to avoid creating an obligation on a trading venue todeal with or be made subject to the supervision of more than one competent authority where this would not benecessary according to Directive 2014/65/EU. For MTFs and OTFs, it is appropriate that only MTFs and OTFs
with a significant market share be considered as being of substantial importance, so that not any relocation or
acquisition of an economically insignificant MTF or OTF automatically triggers the establishment of thecooperation arrangements set out in Article 79(2) of Directive 2014/65/EU.

(127) In order to allow for data users and competent authorities to effectively assess whether market data is provided
on a reasonable commercial basis, it is necessary that all the essential conditions for its provision are disclosed tothe public. Data providers should therefore disclose information about their fees and the content of the market
data As well as the cost accounting methodologies used to determine their costs without having to disclose theiractual costs.

(126) To allow data users to obtain market data without having to buy other services, market data should be offeredunbundled from other services. To avoid that data users are charged more than once for the same market datawhen buying data from different market data distributors, market data should be offered on a per user basis
unless doing so would be disproportionate to the cost of such way of offering that data in respect of the scale
and the scope of the market data provided by the APA and the CTP.

(125) Market data should be provided on a non-discriminatory basis, which requires that the same price and otherterms and conditions should be offered to all customers who are in the same category according to publishedobjective criteria.

(124) To ensure that fees for market data are set at a reasonable level, the fulfilment of the obligation to provide market
data on a reasonable commercial basis requires that prices be based on a reasonable relationship to the cost of
producing and disseminating that data. Therefore, without prejudice to the application of competition rules, data
providers should determine their fees on the basis of their costs whilst being allowed to obtain a reasonablemargin, based on factors such as the operating profit margin, the return on costs, the return on operating assets
and the return on capital. Where data providers incur joint costs for data provision and the provision of otherservices, costs of data provision may include an appropriate share of costs arising from any other relevant service
provided. Since specifying the exact cost is very complex, cost allocation and cost apportionment methodologies
should be specified instead, leaving the specification of those costs to the discretion of market data providers.

31.3.2017
EN

Subject-matter and scope

Article 1

SCOPE AND DEFINITIONSCHAPTER I

Official Journal of the European Union

31.3.2017(1) Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers andamending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (OJ L 174, 1.7.2011,p. 1).
(2) Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities
financing transactions and of reuse and amending Regulation (EU) No 648/2012 (OJ L 337, 23.12.2015, p. 1).

(6) ‘commodity’ means any goods of a fungible nature that are capable of being delivered, including metals and theirores and alloys, agricultural products, and energy such as electricity.

(5) ‘remuneration’ means all forms of payments or financial or non-financial benefits provided directly or indirectly byfirms to relevant persons in the provision of investment or ancillary services to clients;(4) ‘securities financing transaction’ means security financing transaction as defined in Article 3(11) of Regulation (EU)2015/2365 of the European Parliament and of the Council (2).

(c) any other relative of the relevant person who has shared the same household as that person for at least one
year on the date of the personal transaction concerned;(b) a dependent child or stepchild of the relevant person;(a) the spouse of the relevant person or any partner of that person considered by national law as equivalent toa spouse;(3a) ‘person with whom a relevant person has a family relationship’ means any of the following:(3) ‘outsourcing’ means an arrangement of any form between an investment firm and a service provider by which that
service provider performs a process, a service or an activity which would otherwise be undertaken by theinvestment firm itself;(2) ‘financial analyst’ means a relevant person who produces the substance of investment research;(d) a natural person who is directly involved in the provision of services to the investment firm or to its tied agent
under an outsourcing arrangement for the purpose of the provision by the firm of investment services andactivities;(c) an employee of the firm or of a tied agent of the firm, as well as any other natural person whose services areplaced at the disposal and under the control of the firm or a tied agent of the firm and who is involved in theprovision by the firm of investment services and activities;(b) a director, partner or equivalent, or manager of any tied agent of the firm;(a) a director, partner or equivalent, manager or tied agent of the firm;(1) ‘relevant person’ in relation to an investment firm, means any of the following:

For the purposes of this Regulation, the following definitions shall apply:

Definitions

Article 2

2.
References to investment firms shall encompass credit institutions and references to financial instruments shallencompass structured deposits in relation to all the requirements referred to in Article 1(3) and 1(4) of Directive
2014/65/EU and their implementing provisions as set out under this Regulation.

1.
Chapter II, and Sections 1 to 4, Articles 59(4) and 60 and Sections 6 and 8 of Chapter III and, to the extent they
relate to those provisions, Chapter I and Section 9 of Chapter III and Chapter IV of this Regulation shall apply to
management companies in accordance with Article 6(4) of Directive 2009/65/EC and Article 6(6) of Directive
2011/61/EU of the European Parliament and of the Council (1).

HAS ADOPTED THIS REGULATION:

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31.3.2017(c) it does not allow either party to replace physical delivery with cash settlement;(b) it establishes unconditional, unrestricted and enforceable obligations of the parties to the contract to deliver and takedelivery of the underlying commodity;

L 87/20(a) it contains provisions which ensure that parties to the contract have proportionate arrangements in place to be able
to make or take delivery of the underlying commodity; a balancing agreement with the Transmission System
Operator in the area of electricity and gas shall be considered a proportionate arrangement where the parties to theagreement have to ensure physical delivery of electricity or gas.

1.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU, a wholesale energy product must be
physically settled where all the following conditions are satisfied:(Article 4(1)(2) of Directive 2014/65/EU)

Wholesale energy products that must be physically settled

Article 5(c) the person providing the professional activity does not market or otherwise promote his ability to provide
investment services, except where these are disclosed to clients as being accessory to the main professional activity.

(b) the provision of investment services to the clients of the main professional activity does not aim to providea systematic source of income to the person providing the professional activity; and(a) a close and factual connection exists between the professional activity and the provision of the investment service tothe same client, such that the investment service can be regarded as accessory to the main professional activity;

For the purpose of the exemption in point (c) of Article 2(1) of Directive 2014/65/EU, an investment service shall bedeemed to be provided in an incidental manner in the course of a professional activity where the following conditions
are satisfied:(Article 2(1) of Directive 2014/65/EU)(1) Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market
in electricity and repealing Directive 2003/54/EC (OJ L 211, 14.8.2009, p. 55).

1.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU, energy derivative contracts relating to oilshall be contracts with mineral oil, of any description and petroleum gases, whether in liquid or vapour form, including
products, components and derivatives of oil and oil transport fuels, including those with biofuel additives, as anunderlying.

(Article 4(1)(2) of Directive 2014/65/EU)

Energy derivative contracts relating to oil and coal and wholesale energy products

Article 6(c) other methods of bringing about the transfer of rights of an ownership nature in relation to the relevant quantity ofgoods without physically delivering them, including notification, scheduling or nomination to the operator of anenergy supply network, that entitles the recipient to the relevant quantity of the goods.

(b) delivery of a document giving rights of an ownership nature to the relevant commodities or the relevant quantity of
the commodities concerned;(a) physical delivery of the relevant commodities themselves;

7.
The delivery methods for the contracts being considered as ‘physically settled’ within the meaning of Section C(6)of Annex I to Directive 2014/65/EU shall include at least:

6.
The existence of default clauses providing that a party is entitled to financial compensation in the case of non- or
defective performance of the contract shall not prevent the contract from being considered as ‘physically settled’ within
the meaning of Section C(6) of Annex I to Directive 2014/65/EU.

Article 4

Provision of investment service in an incidental manner

5.
The existence of force majeure or bona fide inability to settle provisions shall not prevent a contract from being
considered as ‘physically settled’ for the purposes of Section C(6) of Annex I to Directive 2014/65/EU.

4.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU bona fide inability to settle shall include any
event or set of circumstances, not qualifying as force majeure as referred to in paragraph 3, which are objectively andexpressly defined in the contract terms, for one or both parties to the contract, acting in good faith, not to fulfil theircontractual obligations.

3.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU, force majeure shall include any exceptional
event or a set of circumstances which are outside the control of the parties to the contract, which the parties to thecontract could not have reasonably foreseen or avoided by the exercise of appropriate and reasonable due diligence andwhich prevent one or both parties to the contract from fulfilling their contractual obligations.

2.
Operational netting shall be understood as any nomination of quantities of power and gas to be fed intoa gridwork upon being so required by the rules or requests of a Transmission System Operator as defined in Article 2(4)of Directive 2009/72/EC of the European Parliament and of the Council (1) for an entity performing an equivalentfunction to a Transmission System Operator at the national level. Any nomination of quantities based on operational
netting shall not be at the discretion of the parties to the contract.

3.
For the purposes of this Article, the provision of information by means of electronic communications shall betreated as appropriate to the context in which the business between the firm and the client is, or is to be, carried onwhere there is evidence that the client has regular access to the internet. The provision by the client of an e-mail address
for the purposes of the carrying on of that business shall be treated as such evidence.

(e) the information must be accessible continuously by means of that website for such period of time as the client may
reasonably need to inspect it.

(d) the information must be up to date;(c) the client must be notified electronically of the address of the website, and the place on the website where theinformation may be accessed;(b) the client must specifically consent to the provision of that information in that form;(a) the provision of that information in that medium is appropriate to the context in which the business between thefirm and the client is, or is to be, carried on;

2.
Where, pursuant to Article 46, 47, 48, 49, 50 or 66(3) of this Regulation, an investment firm provides
information to a client by means of a website and that information is not addressed personally to the client, investment
firms shall ensure that the following conditions are satisfied:(b) the person to whom the information is to be provided, when offered the choice between information on paper or inthat other durable medium, specifically chooses the provision of the information in that other medium.

For the purposes of point (d), operational netting in power and gas markets shall not be considered as offsetting of
obligations under a contract against obligations from other contracts.

L 87/19(a) the provision of that information in that medium is appropriate to the context in which the business between thefirm and the client is, or is to be, carried on; andConditions applying to the provision of information

Article 3

Official Journal of the European Union(d) the obligations under the contract cannot be offset against obligations from other contracts between the parties
concerned, without prejudice to the rights of the parties to the contract, to net their cash payment obligations.

EN

1.
Where, for the purposes of this Regulation, information is required to be provided in a durable medium as definedin Article 4(1) point 62 of Directive 2014/65/EU investment firms shall have the right to provide that information ina durable medium other than on paper only if:

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L 87/21EN

Official Journal of the European Union

31.3.2017(1) Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending
Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing
Council Directive 93/22/EEC (OJ L 145, 30.4.2004, p. 1).

(c) the conditions laid down in paragraph 1 are satisfied in relation to that contract.

(b) it is traded on a regulated market, an MTF, an OTF, or a third country trading venue that performs a similarfunction to a regulated market, MTF or an OTF;(a) it is settled in cash or may be settled in cash at the option of one or more of the parties, otherwise than by reasonof a default or other termination event;3.
For the purposes of Section C(10) of Annex I to Directive 2004/39/EC of the European Parliament and of theCouncil (1), a derivative contract relating to an underlying referred to in that Section or in Article 8 of this Regulation
shall be considered to have the characteristics of other derivative financial instruments where one of the following
conditions is satisfied:

A contract shall not be considered a spot contract where, irrespective of its explicit terms, there is an understanding
between the parties to the contract that delivery of the underlying is to be postponed and not to be performed within
the period referred to in paragraph 2.

(b) the period generally accepted in the market for that commodity, asset or right as the standard delivery period.

(a) 2 trading days;

2.
A spot contract for the purposes of paragraph 1 shall be a contract for the sale of a commodity, asset or right,
under the terms of which delivery is scheduled to be made within the longer of the following periods:(b) it is standardised so that the price, the lot, the delivery date and other terms are determined principally by reference
to regularly published prices, standard lots or standard delivery dates.

(iii) it is equivalent to a contract traded on a regulated market, MTF, an OTF or such a third country trading venue,
with regards to the price, the lot, the delivery date and other contractual terms;(ii) it is expressly stated to be traded on, or is subject to the rules of, a regulated market, an MTF, an OTF or sucha third country trading venue;

Article 9(1) Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas
emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32).

(a) to buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular financial instrument;

That recommendation shall be presented as suitable for that person, or shall be based on a consideration of the circum­
stances of that person, and shall constitute a recommendation to take one of the following sets of steps:

For the purposes of the definition of ‘investment advice’ in Article 4(1)(4) of Directive 2014/65/EU, a personal
recommendation shall be considered a recommendation that is made to a person in his capacity as an investor or
potential investor, or in his capacity as an agent for an investor or potential investor.

(Article 4(1)(4) of Directive 2014/65/EU)

Investment advice(h) an index or measure based on actuarial statistics.

(g) an index or measure related to the price or value of, or volume of transactions in any asset, right, service orobligation;(f) any other asset or right of a fungible nature, other than a right to receive a service, that is capable of beingtransferred;(e) a geological, environmental or other physical variable, except if the contract is relating to any units recognised forcompliance with the requirements of Directive 2003/87/EC of the European Parliament and of the Council (1);(d) an allowance, credit, permit, right or similar asset which is directly linked to the supply, distribution or consumptionof energy derived from renewable resources, except where the contract is already within the scope of Section C of
Annex I to Directive 2014/65/EU;(c) transmission or transportation capacity relating to commodities, whether cable, pipeline or other means with the
exception of transmission rights related to electricity transmission cross zonal capacities when they are, on the
primary market, entered into with or by a transmission system operator or any persons acting as service providers
on their behalf and in order to allocate the transmission capacity;(b) commodity storage capacity;(a) telecommunications bandwidth;

it is traded on a third country trading venue that performs a similar function to a regulated market, an MTF or
an OTF;(a) it meets one of the following criteria:(i)

In addition to derivative contracts expressly referred to in Section C(10) of Annex I to Directive 2014/65/EU,
a derivative contract shall be subject to the provisions in that Section where it meets the criteria set out in that Section
and in Article 7(3) of this Regulation and it relates to any of the following:(Article 4(1)(2) of Directive 2014/65/EU)

Derivatives under Section C(10) of Annex I to Directive 2014/65/EU

Article 8(b) it is necessary to keep in balance the supplies and uses of energy at a given time, including the case when thereserve capacity contracted by an electricity transmission system operator as defined in Article 2(4) of Directive
2009/72/EC is being transferred from one prequalified balancing service provider to another prequalified balancing
service provider with the consent of the relevant transmission system operator.

(a) it is entered into with or by an operator or administrator of an energy transmission grid, energy balancing
mechanism or pipeline network,4.
A contract shall be considered to be for commercial purposes for the purposes of Section C(7) of Annex I to
Directive 2014/65/EU, and as not having the characteristics of other derivative financial instruments for the purposes ofSections C(7) and (10) of that Annex, where the following conditions are both met:

L 87/221.
For the purposes of Section C(7) of Annex I to Directive 2014/65/EU, a contract which is not a spot contract inaccordance with paragraph 2 and which is not for commercial purposes as laid down in paragraph 4 shall be considered
as having the characteristics of other derivative financial instruments where it satisfies the following conditions:(Article 4(1)(2) of Directive 2014/65/EU)

Other derivative financial instruments

Article 73.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU derivative contracts that have the character­istics of wholesale energy products as defined in Article 2(4) of Regulation (EU) No 1227/2011 shall be derivatives withelectricity or natural gas as an underlying, in accordance with points (b) and (d) of Article 2(4) of that Regulation.

2.
For the purposes of Section C(6) of Annex I to Directive 2014/65/EU, energy derivative contracts relating to coalshall be contracts with coal, defined as a black or dark-brown combustible mineral substance consisting of carbonised
vegetable matter, used as a fuel, as an underlying.

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L 87/23

must be settled physically otherwise than by reason of a default or other termination event;EN(Article 4(1)(17) of Directive 2014/65/EU)

Money-market instruments

Article 11

Official Journal of the European Union

31.3.2017(1) Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties
and trade repositories (OJ L 201, 27.7.2012, p. 1).

(b) the standard delivery period for the exchange of those currencies references the jurisdiction of that third currency.

(a) the exchange of those currencies involves converting them through that third currency for the purposes of liquidity;

4.
For the purposes of paragraph 2, a trading day shall mean any day of normal trading in the jurisdiction of boththe currencies that are exchanged pursuant to the contract for the exchange of those currencies and in the jurisdictionof a third currency where any of the following conditions are met:

3.
The major currencies for the purposes of paragraph 2 shall only include the US dollar, Euro, Japanese yen, Poundsterling, Australian dollar, Swiss franc, Canadian dollar, Hong Kong dollar, Swedish krona, New Zealand dollar,
Singapore dollar, Norwegian krone, Mexican peso, Croatian kuna, Bulgarian lev, Czech koruna, Danish krone, Hungarian
forint, Polish złoty and Romanian leu.

A contract shall not be considered a spot contract where, irrespective of its explicit terms, there is an understanding
between the parties to the contract that delivery of the currency is to be postponed and not to be performed within the
period set out in the first subparagraph.

(c) where the contract for the exchange of those currencies is used for the main purpose of the sale or purchase ofa transferable security or a unit in a collective investment undertaking, the period generally accepted in the market
for the settlement of that transferable security or a unit in a collective investment undertaking as the standard
delivery period or 5 trading days, whichever is shorter.

(i) the number of OTC transactions carried out by it on own account when executing client orders is equal to or
larger than 2,5 % of the total number of transactions in the relevant bond executed in the Union on any trading
venue or OTC during the same period;(a) on a frequent and systematic basis in a bond for which there is a liquid market as defined in Article 2(1)(17)(a) ofRegulation (EU) No 600/2014 where during the past 6 months:

An investment firm shall be considered to be a systematic internaliser in accordance with Article 4(1)(20) of Directive
2014/65/EU in respect of all bonds belonging to a class of bonds issued by the same entity or by any entity within thesame group where, in relation to any such bond, it internalises according to the following criteria:(Article 4(1)(20) of Directive 2014/65/EU)

Systematic internalisers for bonds

Article 13(ii) 0,4 % of the total turnover in that financial instrument executed in the Union on a trading venue or OTC.

(i) 15 % of the total turnover in that financial instrument executed by the investment firm on own account or on
behalf of clients and executed on a trading venue or OTC;(c) on a substantial basis in the financial instrument where the size of OTC trading carried out by it on own accountwhen executing client orders is, during the past 6 months, equal to or larger than either:(b) on a frequent and systematic basis in the financial instrument for which there is not a liquid market as defined in
Article 2(1)(17)(b) of Regulation (EU) No 600/2014 where during the past 6 months the OTC transactions carriedout by it on own account when executing client orders takes place on average on a daily basis;(ii) the OTC transactions carried out by it on own account when executing client orders in the relevant financial
instrument take place on average on a daily basis;(a) 2 trading days in respect of any pair of the major currencies set out in paragraph 3;(b) for any pair of currencies where at least one currency is not a major currency, the longer of 2 trading days or theperiod generally accepted in the market for that currency pair as the standard delivery period;(i) the number of OTC transactions carried out by it on own account when executing client orders is equal to or
larger than 0,4 % of the total number of transactions in the relevant financial instrument executed in the Union
on any trading venue or OTC during the same period;(a) on a frequent and systematic basis in the financial instrument for which there is a liquid market as defined in
Article 2(1)(17)(b) of Regulation (EU) No 600/2014 where during the past 6 months:

An investment firm shall be considered to be a systematic internaliser in accordance with Article 4(1)(20) of Directive
2014/65/EU in respect of each share, depositary receipt, exchange traded fund (ETF), certificate and other similar
financial instrument where it internalises according to the following criteria:(Article 4(1)(20) of Directive 2014/65/EU)

Systematic internalisers for shares, depositary receipts, ETFs, certificates and other similar
financial instruments

Article 12(c) they have a maturity at issuance of 397 days or less.

(b) they are not derivatives;(a) they have a value that can be determined at any time;

Money-market instruments in accordance with Article 4(1)(17) of Directive 2014/65/EU, shall include treasury bills,
certificates of deposits, commercial papers and other instruments with substantively equivalent features where they havethe following characteristics:

L 87/24

2.
A spot contract for the purposes of paragraph 1 shall be a contract for the exchange of one currency against
another currency, under the terms of which delivery is scheduled to be made within the longer of the following periods:(iv) is not traded on a trading venue.

(iii) is entered into in order to facilitate payment for identifiable goods, services or direct investment; and(ii) is entered into by at least a person which is not a financial counterparty within the meaning of Article 2(8) of
Regulation (EU) No 648/2012 of the European Parliament and of the Council (1);(i)(b) a means of payment that:(a) a spot contract within the meaning of paragraph 2 of this Article,

1.
For the purposes of Section C(4) of Annex I to Directive 2014/65/EU, other derivative contracts relating toa currency shall not be a financial instrument where the contract is one of the following:

Characteristics of other derivative contracts relating to currencies

Article 10

A recommendation shall not be considered a personal recommendation if it is issued exclusively to the public.

(b) to exercise or not to exercise any right conferred by a particular financial instrument to buy, sell, subscribe for,exchange, or redeem a financial instrument.

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31.3.2017(ii) the OTC transactions carried out by it on own account when executing client orders in this type of emission
allowances take place on average once a week;(b) on a frequent and systematic basis in a structured finance product for which there is not a liquid market as definedin Article 2(1)(17)(a) of Regulation (EU) No 600/2014 where during the past 6 months the OTC transactions carriedout by it on own account when executing client orders take place on average once a week;

The conditions set out in Articles 12 to 16 shall be assessed on a quarterly basis on the basis of data from the past
6 months. The assessment period shall start on the first working day of the months of January, April, July and October.

(Article 4(1)(20) of Directive 2014/65/EU)(a) on a frequent and systematic basis in a derivative for which there is a liquid market as defined in Article 2(1)(17)(a)of Regulation (EU) No 600/2014 where during the past 6 months:(i) the number of OTC transactions carried out by it on own account when executing client orders is equal to or
larger than 2,5 % of the total number of transactions in the relevant class of derivatives executed in the Union
on any trading venue or OTC during the same period;

Relevant assessment periods

An investment firm shall be considered to be a systematic internaliser in accordance with Article 4(1)(20) of Directive
2014/65/EU in respect of all derivatives belonging to a class of derivatives where, in relation to any such derivative, itinternalises according to the following criteria:

Article 17(ii) 2,25 % of the total turnover in that type of emission allowance executed in the Union on a trading venue or
OTC.

Systematic internalisers for derivatives(Article 4(1)(20) of Directive 2014/65/EU)(i) 30 % of the total turnover in that type of emission allowances executed by the investment firm on own accountor on behalf of clients and executed on a trading venue or OTC;(c) on a substantial basis in an emission allowance where the size of OTC trading carried out by it on own accountwhen executing client orders is, during the past 6 months, equal to or larger than any of the following:

Article 15(ii) 2,25 % of the total turnover in that structured finance product executed in the Union on a trading venue orOTC.

(i) 30 % of the total turnover in that structured finance product executed by the investment firm on own accountor on behalf of clients and executed on a trading venue or OTC;(b) on a frequent and systematic basis in an emission allowance for which there is not a liquid market as defined in
Article 2(1)(17)(a) of Regulation (EU) No 600/2014 where during the past 6 months the OTC transactions carriedout by it on own account in the relevant type of emission allowances when executing client orders takes place on
average once a week;(i) the number of OTC transactions carried out by it on own account when executing client orders is equal to or
larger than 4 % of the total number of transactions in the relevant type of emission allowances executed in theUnion on any trading venue or OTC during the same period;(ii) the OTC transactions carried out by it on own account when executing client orders in the relevant financial
instrument take place on average once a week;(c) on a substantial basis in a structured finance product where the size of OTC trading carried out by it on own
account when executing client orders is, during the past 6 months, equal to or larger than any of the following:(a) on a frequent and systematic basis in an emission allowance for which there is a liquid market as defined in
Article 2(1)(17)(a) of Regulation (EU) No 600/2014 where during the past 6 months:

An investment firm shall be considered to be a systematic internaliser in accordance with Article 4(1)(20) of Directive
2014/65/EU in respect of emission allowances where, in relation to any such instrument, it internalises according to thefollowing criteria:(Article 4(1)(20) of Directive 2014/65/EU)

Systematic internalisers for emission allowances

Article 16(ii) 1 % of the total turnover in that class of derivatives executed in the Union on a trading venue or OTC.

(i) 25 % of the total turnover in that class of derivatives executed by the investment firm on own account or on
behalf of clients and executed on a trading venue or OTC; or(c) on a substantial basis in a derivative where the size of OTC trading carried out by it on own account when
executing client orders is, during the past 6 months, equal to or larger than any of the following:(i) the number of OTC transactions carried out by it on own account when executing client orders is equal to or
larger than 4 % of the total number of transactions in the relevant structured finance product executed in theUnion on any trading venue or OTC during the same period;(a) on a frequent and systematic basis in a structured finance product for which there is a liquid market as defined in
Article 2(1)(17)(a) of Regulation (EU) No 600/2014 where during the past 6 months:

An investment firm shall be considered to be a systematic internaliser in accordance with Article 4(1)(20) of Directive
2014/65/EU in respect of all structured finance products belonging to a class of structured finance products issued by
the same entity or by any entity within the same group where, in relation to any such structured finance product, itinternalises according to the following criteria:(Article 4(1)(20) of Directive 2014/65/EU)

Systematic internalisers for structured finance products

Article 14(ii) 1 % of the total turnover in that bond executed in the Union on a trading venue or OTC.

(i) 25 % of the total turnover in that bond executed by the investment firm on own account or on behalf of clientsand executed on a trading venue or OTC;(c) on a substantial basis in a bond where the size of OTC trading carried out by it on own account when executing
client orders is, during the past 6 months, equal to or larger than any of the following:(b) on a frequent and systematic basis in a derivative for which there is not a liquid market as defined in
Article 2(1)(17)(a) of Regulation (EU) No 600/2014 where during the past 6 months the OTC transactions carriedout by it on own account in the relevant class of derivative when executing client orders takes place on average oncea week;L 87/25(b) on a frequent and systematic basis in a bond for which there is not a liquid market as defined in Article 2(1)(17)(a)of Regulation (EU) No 600/2014 where during the past 6 months the OTC transactions carried out by it on own
account when executing client orders take place on average once a week;

Official Journal of the European Union(ii) the OTC transactions carried out by it on own account when executing client orders in this class of derivatives
take place on average once a week;EN(ii) the OTC transactions carried out by it on own account when executing client orders in the relevant financial
instrument take place on average once a week;

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L 87/27(Article 16(2) to (10) of Directive 2014/65/EU)(Article 4(1)(39) of Directive 2014/65/EU)

For the purposes of further specifying the definition of algorithmic trading in accordance with Article 4(1)(39) of
Directive 2014/65/EU, a system shall be considered as having no or limited human intervention where, for any order orquote generation process or any process to optimise order-execution, an automated system makes decisions at any of
the stages of initiating, generating, routing or executing orders or quotes according to pre-determined parameters.

31.3.2017(Article 16(2) of Directive 2014/65/EU)
1.
Investment firms shall establish, implement and maintain adequate policies and procedures designed to detect any
risk of failure by the firm to comply with its obligations under Directive 2014/65/EU, as well as the associated risks, andput in place adequate measures and procedures designed to minimise such risk and to enable the competent authorities
to exercise their powers effectively under that Directive.

2.
A person shall be considered not capable of such direct electronic order transmission where it takes place througharrangements for optimisation of order execution processes that determine the parameters of the order other than thevenue or venues where the order should be submitted, unless these arrangements are embedded into the clients' systems
and not into those of the member or participant of a regulated market or of an MTF or a client of an OTF.

Compliance

Article 225.
Investment firms shall monitor and, on a regular basis, evaluate the adequacy and effectiveness of their systems,
internal control mechanisms and arrangements established in accordance with paragraphs 1 to 4, and take appropriate
measures to address any deficiencies.

4.
Investment firms shall establish, implement and maintain accounting policies and procedures that enable them, at
the request of the competent authority, to deliver in a timely manner to the competent authority financial reports whichreflect a true and fair view of their financial position and which comply with all applicable accounting standards andrules.

3.
Investment firms shall establish, implement and maintain an adequate business continuity policy aimed atensuring, in the case of an interruption to their systems and procedures, the preservation of essential data and functions,and the maintenance of investment services and activities, or, where that is not possible, the timely recovery of suchdata and functions and the timely resumption of their investment services and activities.

2.
Investment firms shall establish, implement and maintain systems and procedures that are adequate to safeguard
the security, integrity and confidentiality of information, taking into account the nature of the information in question.

When complying with the requirements set out in the this paragraph, investment firms shall take into account thenature, scale and complexity of the business of the firm, and the nature and range of investment services and activities
undertaken in the course of that business.

(g) ensure that the performance of multiple functions by their relevant persons does not and is not likely to prevent
those persons from discharging any particular function soundly, honestly, and professionally.

(f) maintain adequate and orderly records of their business and internal organisation;(e) establish, implement and maintain effective internal reporting and communication of information at all relevant
levels of the investment firm;

1.
A person shall be considered not capable of electronically transmitting orders relating to a financial instrument
directly to a trading venue in accordance with Article 4(1)(41) of Directive 2014/65/EU where that person cannot
exercise discretion regarding the exact fraction of a second of order entry and the lifetime of the order within that
timeframe.

(Article 4(1)(41) of Directive 2014/65/EU)

Direct electronic access

Article 20

5.
For the purposes of paragraph 1, trading venues shall make available to the firms concerned, on request, estimatesof the average number of messages per second on a monthly basis two weeks after the end of each calendar month,
thereby taking into account all messages submitted during the preceding 12 months.

4.
For the purposes of paragraph 1, for the calculation of high message intraday rate in relation to DEA providers,messages submitted by their DEA clients shall be excluded from the calculations.

3.
For the purposes of paragraph 1, messages introduced for the purpose of dealing on own account shall be
included in the calculation. Messages introduced through other trading techniques than those relying on dealing on own
account shall be included in the calculation where the firm's execution technique is structured in such a way as to avoid
that the execution takes place on own account.

2.
For the purposes of paragraph 1, messages concerning financial instruments for which there is a liquid market inaccordance with Article 2(1)(17) of Regulation (EU) No 600/2014 shall be included in the calculation. Messages
introduced for the purpose of trading that fulfil the criteria in Article 17(4) of Directive 2014/65/EU shall be included in
the calculation.

(b) at least 4 messages per second with respect to all financial instruments traded on a trading venue.

(a) at least 2 messages per second with respect to any single financial instrument traded on a trading venue;

1.
A high message intraday rate in accordance with Article 4(1)(40) of Directive 2014/65/EU shall consist of thesubmission on average of any of the following:(d) employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities
allocated to them;(c) establish, implement and maintain adequate internal control mechanisms designed to secure compliance withdecisions and procedures at all levels of the investment firm;High frequency algorithmic trading technique(Article 4(1)(40) of Directive 2014/65/EU)(b) ensure that their relevant persons are aware of the procedures which must be followed for the proper discharge of
their responsibilities;

Article 19(a) establish, implement and maintain decision-making procedures and an organisational structure which clearly and in
documented manner specifies reporting lines and allocates functions and responsibilities;

Investment firms shall comply with the following organisational requirements:

General organisational requirements

Article 21

SECTION 1

ORGANISATIONAL REQUIREMENTS

CHAPTER II

Official Journal of the European Union

Algorithmic tradingEN

Organisation

1.

L 87/28

Article 18

Newly issued instruments shall only be considered in the assessment when historical data covers a period of at least
three months in the case of shares, depositary receipts, ETFs, certificates and other similar financial instruments, and six
weeks in the case of bonds, structured finance products and derivatives.

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L 87/29

Investment firms shall take the following actions relating to risk management:(a) establish, implement and maintain adequate risk management policies and procedures which identify the risks
relating to the firm's activities, processes and systems, and where appropriate, set the level of risk tolerated by the
firm;

1.

(Article 16(5) of Directive 2014/65/EU)

Risk management

Article 23

4.
An investment firm shall not be required to comply with point (d) or point (e) of paragraph 3 where it is able todemonstrate that in view of the nature, scale and complexity of its business, and the nature and range of investment
services and activities, the requirements under point (d) or (e) are not proportionate and that its compliance function
continues to be effective. In that case, the investment firm shall assess whether the effectiveness of the compliancefunction is compromised. The assessment shall be reviewed on a regular basis.

(e) the method of determining the remuneration of the relevant persons involved in the compliance function does notcompromise their objectivity and is not likely to do so.

(d) the relevant persons involved in the compliance function are not involved in the performance of services or
activities they monitor;(c) the compliance function reports on an ad-hoc basis directly to the management body where it detects a significant
risk of failure by the firm to comply with its obligations under Directive 2014/65/EU;(b) a compliance officer is appointed and replaced by the management body and is responsible for the compliancefunction and for any reporting as to compliance required by Directive 2014/65/EU and Article 25(2) of thisRegulation;(a) the compliance function has the necessary authority, resources, expertise and access to all relevant information;

3.
In order to enable the compliance function referred to in paragraph 2 to discharge its responsibilities properly andindependently, investment firms shall ensure that the following conditions are satisfied:

In order to comply with points (a) and (b) of this paragraph, the compliance function shall conduct an assessment on
the basis of which it shall establish a risk-based monitoring programme that takes into consideration all areas of theinvestment firm's investment services, activities and any relevant ancillary services, including relevant information
gathered in relation to the monitoring of complaints handling. The monitoring programme shall establish priorities
determined by the compliance risk assessment ensuring that compliance risk is comprehensively monitored.

(d) to monitor the operations of the complaints-handling process and consider complaints as a source of relevant
information in the context of its general monitoring responsibilities.

(c) to report to the management body, on at least an annual basis, on the implementation and effectiveness of theoverall control environment for investment services and activities, on the risks that have been identified and on thecomplaints-handling reporting as well as remedies undertaken or to be undertaken;(b) to advise and assist the relevant persons responsible for carrying out investment services and activities to comply
with the firm's obligations under Directive 2014/65/EU;(a) to monitor on a permanent basis and to assess, on a regular basis, the adequacy and effectiveness of the measures,
policies and procedures put in place in accordance with the first subparagraph of paragraph 1, and the actions taken
to address any deficiencies in the firm's compliance with its obligations;

2.
Investment firms shall establish and maintain a permanent and effective compliance function which operates
independently and which has the following responsibilities:

Investment firms shall take into account the nature, scale and complexity of the business of the firm, and the nature andrange of investment services and activities undertaken in the course of that business.

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31.3.2017

the adequacy and effectiveness of the investment firm's risk management policies and procedures;

2.
Investment firms shall ensure that their senior management receive on a frequent basis, and at least annually,
written reports on the matters covered by Articles 22, 23 and 24 indicating in particular whether the appropriate
remedial measures have been taken in the event of any deficiencies.

The allocation of significant functions among senior managers shall clearly establish who is responsible for overseeing
and maintaining the firm's organisational requirements. Records of the allocation of significant functions shall be kept
up-to-date.

1.
Investment firms shall, when allocating functions internally, ensure that senior management, and, whereapplicable, the supervisory function, are responsible for ensuring that the firm complies with its obligations underDirective 2014/65/EU. In particular, senior management and, where applicable, the supervisory function shall be
required to assess and periodically review the effectiveness of the policies, arrangements and procedures put in place tocomply with the obligations under Directive 2014/65/EU and to take appropriate measures to address any deficiencies.

(Article 16(2) of Directive 2014/65/EU)

Responsibility of senior management

Article 25(c) report in relation to internal audit matters in accordance with Article 25(2).

(b) issue recommendations based on the result of work carried out in accordance with point (a) and verify compliancewith those recommendations;(a) establish, implement and maintain an audit plan to examine and evaluate the adequacy and effectiveness of theinvestment firm's systems, internal control mechanisms and arrangements;

Investment firms shall, where appropriate and proportionate in view of the nature, scale and complexity of theirbusiness and the nature and range of investment services and activities undertaken in the course of that business,
establish and maintain an internal audit function which is separate and independent from the other functions andactivities of the investment firm and which has the following responsibilities:(Article 16(5) of Directive 2014/65/EU)

Internal audit

Article 24

Where an investment firm does not establish and maintain a risk management function under the first sub-paragraph, it
shall be able to demonstrate upon request that the policies and procedures which it is has adopted in accordance withparagraph 1 satisfy the requirements therein.

(b) provision of reports and advice to senior management in accordance with Article 25(2).

(a) implementation of the policy and procedures referred to in paragraph 1;

2.
Investment firms shall, where appropriate and proportionate in view of the nature, scale and complexity of theirbusiness and the nature and range of the investment services and activities undertaken in the course of that business,
establish and maintain a risk management function that operates independently and carries out the following tasks:(iii) the adequacy and effectiveness of measures taken to address any deficiencies in those policies, procedures,arrangements, processes and mechanisms, including failures by the relevant persons to comply with sucharrangements, processes and mechanisms or follow such policies and procedures.

(ii) the level of compliance by the investment firm and its relevant persons with the arrangements, processes andmechanisms adopted in accordance with point (b);(i)(c) monitor the following:(b) adopt effective arrangements, processes and mechanisms to manage the risks relating to the firm's activities,
processes and systems, in light of that level of risk tolerance;

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L 87/31
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Official Journal of the European Union

2.
Investment firms shall publish the details of the process to be followed when handling a complaint. Such details
shall include information about the complaints management policy and the contact details of the complaints
management function. The information shall be provided to clients or potential clients, on request, or when
acknowledging a complaint. Investment firms shall enable clients and potential clients to submit complaints free ofcharge.

the relevant person;(1) Directive 2013/11/EU of the European Parliament and the Council of 21 May 2013 on alternative dispute resolution for consumer
disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013,
p. 63).

Remuneration policies and practices shall be designed in such a way so as not to create a conflict of interest or incentivethat may lead relevant persons to favour their own interests or the firm's interests to the potential detriment of any
client.

1.
Investment firms shall define and implement remuneration policies and practices under appropriate internal
procedures taking into account the interests of all the clients of the firm, with a view to ensuring that clients are treatedfairly and their interests are not impaired by the remuneration practices adopted by the firm in the short, medium orlong term.

(Articles 16, 23 and 24 of Directive 2014/65/EU)

Remuneration policies and practices

Article 27

3.
Investment firms shall ensure that relevant persons do not advise or recommend, other than in the proper courseof employment or contract for services, any other person to enter into a transaction in financial instruments which, if itwere a personal transaction of the relevant person, would be covered by paragraph 2 or Article 37(2)(a) or (b) or
Article 67(3).

(c) it conflicts or is likely to conflict with an obligation of the investment firm under Directive 2014/65/EU.

(b) it involves the misuse or improper disclosure of that confidential information;(a) that person is prohibited from entering into it under Regulation (EU) No 596/2014;

2.
Investment firms shall ensure that relevant persons do not enter into a personal transaction which meets at least
one of the following criteria:

1.
Investment firms shall establish, implement and maintain adequate arrangements aimed at preventing the activities
set out in paragraphs 2, 3 and 4 in the case of any relevant person who is involved in activities that may give rise toa conflict of interest, or who has access to inside information within the meaning of Article 7(1) of Regulation (EU)No 596/2014 or to other confidential information relating to clients or transactions with or for clients by virtue of anactivity carried out by him on behalf of the firm.

(Article 16(2) of Directive 2014/65/EU)

Article 29
Personal transactions

7.
Investment firms' compliance function shall analyse complaints and complaints-handling data to ensure that they
identify and address any risks or issues.

(iii) a person in respect of whom the relevant person has a direct or indirect material interest in the outcome of the
trade, other than obtaining a fee or commission for the execution of the trade.

(ii) any person with whom he has a family relationship, or with whom he has close links;(i)(b) the trade is carried out for the account of any of the following persons:(a) the relevant person is acting outside the scope of the activities he carries out in his professional capacity;

6.
Investment firms shall provide information on complaints and complaints-handling to the relevant competentauthorities and, where applicable under national law, to an alternative dispute resolution (ADR) entity.

5.
Investment firms shall communicate the firm's position on the complaint to clients or potential clients and informthe clients or potential clients about their options, including that they may be able to refer the complaint to analternative dispute resolution entity, as defined in Article 4(h) of Directive 2013/11/EU of the European Parliament andthe Council (1) on consumer ADR or that the client may be able to take civil action.

4.
When handling a complaint, investment firms shall communicate with clients or potential clients clearly, in plain
language that is easy to understand and shall reply to the complaint without undue delay.

For the purposes of Article 29 and Article 37, a personal transaction shall be a trade in a financial instrument effectedby or on behalf of a relevant person, where at least one of the following criteria are met:

(Article 16(2) of Directive 2014/65/EU)

Article 28

A balance between fixed and variable components of remuneration shall be maintained at all times, so that the
remuneration structure does not favour the interests of the investment firm or its relevant persons against the interestsof any client.

4.
Remuneration and similar incentives shall not be solely or predominantly based on quantitative commercial
criteria, and shall take fully into account appropriate qualitative criteria reflecting compliance with the applicableregulations, the fair treatment of clients and the quality of services provided to clients.

3.
The management body of the investment firm shall approve, after taking advice from the compliance function, thefirm's remuneration policy. The senior management of the investment firm shall be responsible for the day-to-day
implementation of the remuneration policy and the monitoring of compliance risks related to the policy.

Scope of personal transactions

3.
Investment firms shall establish a complaints management function responsible for the investigation of complaints.
This function may be carried out by the compliance function.

31.3.2017

2.
Investment firms shall ensure that their remuneration policies and practices apply to all relevant persons with an
impact, directly or indirectly, on investment and ancillary services provided by the investment firm or on its corporate
behaviour, regardless of the type of clients, to the extent that the remuneration of such persons and similar incentives
may create a conflict of interest that encourages them to act against the interests of any of the firm's clients.

L 87/32

The complaints management policy shall provide clear, accurate and up-to-date information about the complaintshandling process. This policy shall be endorsed by the firm's management body.

1.
Investment firms shall establish, implement and maintain effective and transparent complaints management
policies and procedures for the prompt handling of clients' or potential clients' complaints. Investment firms shall keepa record of the complaints received and the measures taken for their resolution.

(Article 16(2) of Directive 2014/65/EU)

Complaints handling

Article 26

4.
For the purposes of this Article, the supervisory function shall be the function within an investment firm
responsible for the supervision of its senior management.

3.
Investment firms shall ensure that where there is a supervisory function, it receives written reports on the matters
covered by Articles 22, 23 and 24 on a regular basis.

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EN

Article 31

Official Journal of the European Union

The arrangements required under paragraph 1 shall be designed to ensure that:(b) the purchase of standardised services, including market information services and the provision of price feeds.

(a) the provision to the firm of advisory services, and other services which do not form part of the investment businessof the firm, including the provision of legal advice to the firm, the training of personnel of the firm, billing services
and the security of the firm's premises and personnel;2.
Without prejudice to the status of any other function, the following functions shall not be considered as critical orimportant for the purposes of paragraph 1:

1.
For the purposes of the first subparagraph of Article 16(5) of Directive 2014/65/EU, an operational function shallbe regarded as critical or important where a defect or failure in its performance would materially impair the continuing
compliance of an investment firm with the conditions and obligations of its authorisation or its other obligations underDirective 2014/65/EU, or its financial performance, or the soundness or the continuity of its investment services andactivities.

(Article 16(2) and first subparagraph of Article 16(5) of Directive 2014/65/EU)

Scope of critical and important operational functions

Article 30

Outsourcing(i) the investment firm, its auditors and the relevant competent authorities have effective access to data related to theoutsourced functions, as well as to the relevant business premises of the service provider, where necessary for the
purpose of effective oversight in accordance with this article, and the competent authorities are able to exercise
those rights of access;(h) the service provider cooperates with the competent authorities of the investment firm in connection with theoutsourced functions;(g) the investment firm is able to terminate the arrangement for outsourcing where necessary, with immediate effectwhen this is in the interests of its clients, without detriment to the continuity and quality of its provision of services
to clients;(f) the service provider has disclosed to the investment firm any development that may have a material impact on its
ability to carry out the outsourced functions effectively and in compliance with applicable laws and regulatory
requirements;(e) the investment firm effectively supervises the outsourced functions or services and manage the risks associated withthe outsourcing and to this end the firm retains the necessary expertise and resources to supervise the outsourced
functions effectively and manage those risks;(d) appropriate action is taken where it appears that the service provider may not be carrying out the functions
effectively or in compliance with applicable laws and regulatory requirements;(c) the service provider properly supervises the carrying out of the outsourced functions, and adequately manage therisks associated with the outsourcing;(b) the service provider carries out the outsourced services effectively and in compliance with applicable law andregulatory requirements, and to this end the firm has established methods and procedures for assessing the standardof performance of the service provider and for reviewing on an ongoing basis the services provided by the service
provider;(b) personal transactions in undertakings for collective investments in transferable securities (UCITS) or AIFs that are
subject to supervision under the law of a Member State which requires an equivalent level of risk spreading in theirassets, where the relevant person and any other person for whose account the transactions are effected are not
involved in the management of that undertaking.

SECTION 2(a) the service provider has the ability, capacity, sufficient resources, appropriate organisational structure supporting theperformance of the outsourced functions, and any authorisation required by law to perform the outsourced
functions, reliably and professionally;

2.
Investment firms shall exercise due skill, care and diligence when entering into, managing or terminating any
arrangement for the outsourcing to a service provider of critical or important operational functions and shall take thenecessary steps to ensure that the following conditions are satisfied:(a) personal transactions effected under a discretionary portfolio management service where there is no prior communi­
cation in connection with the transaction between the portfolio manager and the relevant person or other person
for whose account the transaction is executed;

Paragraphs 1 to 5 shall not apply to the following personal transactions:(d) none of the other conditions subject to which the firm's authorisation was granted is removed or modified.

In the case of outsourcing arrangements, the investment firm shall ensure that the firm to which the activity is
outsourced maintains a record of personal transactions entered into by any relevant person and provides that
information to the investment firm promptly on request.

6.

(c) the conditions with which the investment firm must comply in order to be authorised in accordance with Article 5
of Directive 2014/65/EU, and to remain so, are not undermined;(b) the relationship and obligations of the investment firm towards its clients under the terms of Directive 2014/65/EU
is not altered;(a) the outsourcing does not result in the delegation by senior management of its responsibility;

1.
Investment firms outsourcing critical or important operational functions shall remain fully responsible fordischarging all of their obligations under Directive 2014/65/EU and shall comply with the following conditions:31.3.2017(c) a record is kept of the personal transaction notified to the firm or identified by it, including any authorisation or
prohibition in connection with such a transaction.

(b) the firm is informed promptly of any personal transaction entered into by a relevant person, either by notification ofthat transaction or by other procedures enabling the firm to identify such transactions;(a) each relevant person covered by paragraphs 1, 2, 3 and 4 is aware of the restrictions on personal transactions, andof the measures established by the investment firm in connection with personal transactions and disclosure, in
accordance with paragraphs 1, 2,3 and 4.

5.

(b) to advise or procure another person to enter into such a transaction.

(Article 16(2) and of Article 16(5) first subparagraph of Directive 2014/65/EU)

L 87/33

Outsourcing critical or important operational functions

Official Journal of the European Union(a) to enter into a transaction in financial instruments which, if it were a personal transaction of the relevant person,
would be covered by paragraphs 2 or 3 or Article 37(2)(a) or (b) or Article 67(3);EN

4.
Without prejudice to Article 10(1) of Regulation (EU) No 596/2014, investment firms shall ensure that relevant
persons do not disclose, other than in the normal course of his employment or contract for services, any information or
opinion to any other person where the relevant person knows, or reasonably ought to know, that as a result of that
disclosure that other person will or would be likely to take either of the following steps:

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EN

Official Journal of the European Union

L 87/35
EN(Articles 16(3) and 23 of Directive 2014/65/EU)

Conflicts of interest potentially detrimental to a client

Article 33

Conflicts of interest

SECTION 3

Official Journal of the European Union

31.3.2017(a) it must identify, with reference to the specific investment services and activities and ancillary services carried out by
or on behalf of the investment firm, the circumstances which constitute or may give rise to a conflict of interest
entailing a risk of damage to the interests of one or more clients;(b) obtain access to the documents relevant for the performance of their supervisory duties maintained in the third
country;

For the purposes of paragraph 2(b), the procedures to be followed and measures to be adopted shall include at least
those items in the following list that are necessary for the firm to ensure the requisite degree of independence:(a) effective procedures to prevent or control the exchange of information between relevant persons engaged in
activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of
one or more clients;

Competent authorities shall update cooperation agreements concluded before the date of entry into application of thisRegulation within six months from that date.

3.
The procedures and measures referred to in paragraph 2(b) shall be designed to ensure that relevant persons
engaged in different business activities involving a conflict of interest of the kind specified in paragraph 2(a) carry on
those activities at a level of independence appropriate to the size and activities of the investment firm and of the groupto which it belongs, and to the risk of damage to the interests of clients.

(b) it must specify procedures to be followed and measures to be adopted in order to prevent or manage such conflicts.

3.
Competent authorities shall publish on their website a list of the supervisory authorities in third countries withwhich they have a cooperation agreement referred to in point (b) of paragraph 1.

(d) cooperate with regard to enforcement, in accordance with the national and international law applicable to thesupervisory authority of the third country and the competent authorities in the Union in cases of breach of therequirements of Directive 2014/65/EU and its implementing measures and relevant national law.

(c) receive information from the supervisory authority in the third country as soon as possible for the purpose ofinvestigating apparent breaches of the requirements of Directive 2014/65/EU and its implementing measures andRegulation (EU) No 600/2014;2.

(a) obtain on request the information necessary to carry out their supervisory tasks pursuant to Directive 2014/65/EU
and Regulation (EU) No 600/2014;

The conflicts of interest policy established in accordance with paragraph 1 shall include the following content:

Where the firm is a member of a group, the policy shall also take into account any circumstances, of which the firm isor should be aware, which may give rise to a conflict of interest arising as a result of the structure and businessactivities of other members of the group.

1.
Investment firms shall establish, implement and maintain an effective conflicts of interest policy set out in writing
and appropriate to the size and organisation of the firm and the nature, scale and complexity of its business.

(Articles 16(3) and 23 of Directive 2014/65/EU)

Conflicts of interest policy

Article 34(e) the firm or that person receives or will receive from a person other than the client an inducement in relation toa service provided to the client, in the form of monetary or non-monetary benefits or services.

(d) the firm or that person carries on the same business as the client;(c) the firm or that person has a financial or other incentive to favour the interest of another client or group of clientsover the interests of the client;(b) the firm or that person has an interest in the outcome of a service provided to the client or of a transaction carriedout on behalf of the client, which is distinct from the client's interest in that outcome;(a) the firm or that person is likely to make a financial gain, or avoid a financial loss, at the expense of the client;

For the purposes of identifying the types of conflict of interest that arise in the course of providing investment andancillary services or a combination thereof and whose existence may damage the interests of a client, investment firms
shall take into account, by way of minimum criteria, whether the investment firm or a relevant person, or a person
directly or indirectly linked by control to the firm, is in any of the following situations, whether as a result of providing
investment or ancillary services or investment activities or otherwise:

L 87/36

2.
The cooperation agreement referred to in point (b) of paragraph 1 shall ensure that the competent authorities of
the investment firm are able, at least, to:(b) there is an appropriate cooperation agreement between the competent authority of the investment firm and thesupervisory authority of the service provider.

(a) the service provider is authorised or registered in its home country to provide that service and is effectively
supervised by a competent authority in that third country;1.
In addition to the requirements set out in Article 31, where an investment firm outsources functions related to theinvestment service of portfolio management provided to clients to a service provider located in a third country, thatinvestment firm ensures that the following conditions are satisfied:(Article 16(2) and first subparagraph of Article 16(5) of Directive 2014/65/EU)

Service providers located in third countries

Article 32

5.
Investment firms shall make available on request to the competent authority all information necessary to enable
the authority to supervise the compliance of the performance of the outsourced functions with the requirements of
Directive 2014/65/EU and its implementing measures.

4.
Where the investment firm and the service provider are members of the same group, the investment firm may, forthe purposes of complying with this Article and Article 32, take into account the extent to which the firm controls theservice provider or has the ability to influence its actions.

3.
The respective rights and obligations of the investment firms and of the service provider shall be clearly allocatedand set out in a written agreement. In particular, the investment firm shall keep its instruction and termination rights, its
rights of information, and its right to inspections and access to books and premises. The agreement shall ensure that
outsourcing by the service provider only takes place with the consent, in writing, of the investment firm.

(l) the investment firm has ensured that the continuity and quality of the outsourced functions or services aremaintained also in the event of termination of the outsourcing either by transferring the outsourced functions orservices to another third party or by performing them itself.

(k) the investment firm and the service provider have established, implemented and maintained a contingency plan fordisaster recovery and periodic testing of backup facilities, where that is necessary having regard to the function,
service or activity that has been outsourced;(j) the service provider protects any confidential information relating to the investment firm and its clients;

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EN

Official Journal of the European Union

31.3.2017(d) the investment firms themselves, financial analysts, and other relevant persons involved in the production of theinvestment research do not accept inducements from those with a material interest in the subject-matter of theinvestment research;(e) the investment firms themselves, financial analysts, and other relevant persons involved in the production of theinvestment research do not promise issuers favourable research coverage;(a) the research or information is labelled or described as investment research or in similar terms, or is otherwise
presented as an objective or independent explanation of the matters contained in the recommendation;(c) a physical separation exists between the financial analysts involved in the production of investment research andother relevant persons whose responsibilities or business interests may conflict with the interests of the persons towhom the investment research is disseminated or, when considered not appropriate to the size and organisation of
the firm as well as the nature, scale and complexity of its business, the establishment and implementation of
appropriate alternative information barriers;(b) in circumstances not covered by point (a), financial analysts and any other relevant persons involved in the
production of investment research do not undertake personal transactions in financial instruments to which theinvestment research relates, or in any related financial instruments, contrary to current recommendations, except in
exceptional circumstances and with the prior approval of a member of the firm's legal or compliance function;(a) financial analysts and other relevant persons do not undertake personal transactions or trade, other than as market
makers acting in good faith and in the ordinary course of market making or in the execution of an unsolicited client
order, on behalf of any other person, including the investment firm, in financial instruments to which investment
research relates, or in any related financial instruments, with knowledge of the likely timing or content of thatinvestment research which is not publicly available or available to clients and cannot readily be inferred frominformation that is so available, until the recipients of the investment research have had a reasonable opportunity to
act on it;

2.
Investment firms referred to in the first subparagraph of paragraph 1 shall have in place arrangements designed toensure that the following conditions are satisfied:

The obligations in the first subparagraph shall also apply in relation to recommendations referred to in Article 36(2).

1.
Investment firms which produce, or arrange for the production of, investment research that is intended or likely tobe subsequently disseminated to clients of the firm or to the public, under their own responsibility or that of a memberof their group, shall ensure the implementation of all the measures set out in Article 34(3) in relation to the financial
analysts involved in the production of the investment research and other relevant persons whose responsibilities orbusiness interests may conflict with the interests of the persons to whom the investment research is disseminated.

(Article 16(3) of Directive 2014/65/EU)

Additional organisational requirements in relation to investment research or marketing communi­
cations

Article 37

Additionally, firms shall ensure that any such recommendation contains a clear and prominent statement that (or, in thecase of an oral recommendation, to the effect that) it has not been prepared in accordance with legal requirements
designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing
ahead of the dissemination of investment research.

1.
For the purposes of Article 37 investment research shall be research or other information recommending orsuggesting an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuersof financial instruments, including any opinion as to the present or future value or price of such instruments, intended
for distribution channels or for the public, and in relation to which the following conditions are met:

(Article 24(3) of Directive 2014/65/EU)

Investment research and marketing communications

Article 36

Senior management shall receive on a frequent basis, and at least annually, written reports on situations referred to inthis Article.

Investment firms shall keep and regularly update a record of the kinds of investment or ancillary service or investment
activity carried out by or on behalf of the firm in which a conflict of interest entailing a risk of damage to the interestsof one or more clients has arisen or, in the case of an ongoing service or activity, may arise.

(Article 16(6) of Directive 2014/65/EU)

Record of services or activities giving rise to detrimental conflict of interest

Article 35

5.
Investment firms shall assess and periodically review, on an at least annual basis, the conflicts of interest policy
established in accordance with paragraphs 1 to 4 and shall take all appropriate measures to address any deficiencies.
Over-reliance on disclosure of conflicts of interest shall be considered a deficiency in the investment firm's conflicts ofinterest policy.

The disclosure shall clearly state that the organisational and administrative arrangements established by the investment
firm to prevent or manage that conflict are not sufficient to ensure, with reasonable confidence, that the risks of damage
to the interests of the client will be prevented. The disclosure shall include specific description of the conflicts of interest
that arise in the provision of investment and/or ancillary services, taking into account the nature of the client to whom
the disclosure is being made. The description shall explain the general nature and sources of conflicts of interest, as wellas the risks to the client that arise as a result of the conflicts of interest and the steps undertaken to mitigate these risks,
in sufficient detail to enable that client to take an informed decision with respect to the investment or ancillary service
in the context of which the conflicts of interest arise.

4.
Investment firms shall ensure that disclosure to clients, pursuant to Article 23(2) of Directive 2014/65/EU, isa measure of last resort that shall be used only where the effective organisational and administrative arrangements
established by the investment firm to prevent or manage its conflicts of interest in accordance with Article 23 of
Directive 2014/65/EU are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests ofthe client will be prevented.

(e) measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate
investment or ancillary services or activities where such involvement may impair the proper management ofconflicts of interest.

(d) measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant
person carries out investment or ancillary services or activities;

2.
A recommendation of the type covered by point (35) of Article 3(1) of Regulation (EU) No 596/2014 that does
not meet the conditions set out in paragraph 1 shall be treated as a marketing communication for the purposes of
Directive 2014/65/EU and investment firms that produce or disseminate that recommendation shall ensure that it isclearly identified as such.

L 87/37(c) the removal of any direct link between the remuneration of relevant persons principally engaged in one activity andthe remuneration of, or revenues generated by, different relevant persons principally engaged in another activity,
where a conflict of interest may arise in relation to those activities;

Official Journal of the European Union(b) if the recommendation in question were made by an investment firm to a client, it would not constitute theprovision of investment advice for the purposes of Directive 2014/65/EU.

EN(b) the separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or
providing services to, clients whose interests may conflict, or who otherwise represent different interests that may
conflict, including those of the firm;

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L 87/39
Article 39

Official Journal of the European Union(a) that the pricing of the offer does not promote the interests of other clients or firm's own interests, in a way that
may conflict with the issuer client's interests; and(b) the prevention or management of a situation where persons responsible for providing services to the firm's
investment clients are directly involved in decisions about corporate finance advice on pricing to the issuer client.

(a) the person that produces the investment research is not a member of the group to which the investment firm
belongs;(b) the investment firm does not substantially alter the recommendations within the investment research;

Additional requirements in relation to placing(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

Additional general requirements in relation to underwriting or placing(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

4.
Investment firms shall establish, implement and maintain an allocation policy that sets out the process fordeveloping allocation recommendations. The allocation policy shall be provided to the issuer client before agreeing toundertake any placing services. The policy shall set out relevant information that is available at that stage, about the
proposed allocation methodology for the issue.
5.
Investment firms shall involve the issuer client in discussions about the placing process in order for the firm to beable to understand and take into account the client's interests and objectives. The investment firm shall obtain the issuer
client's agreement to its proposed allocation per type of client for the transaction in accordance with the allocation
policy.

3.
Investment firms providing execution and research services as well as carrying out underwriting and placing
activities shall ensure adequate controls are in place to manage any potential conflicts of interest between these activities
and between their different clients receiving those services.

(c) an allocation that is expressly or implicitly conditional on the receipt of future orders or the purchase of any otherservice from the investment firm by an investment client, or any entity of which the investor is a corporate officer.

(b) an allocation made to a senior executive or a corporate officer of an existing or potential issuer client, in considera­tion for the future or past award of corporate finance business (‘spinning’);(a) an allocation made to incentivise the payment of disproportionately high fees for unrelated services provided by theinvestment firm (‘laddering’), such as disproportionately high fees or commissions paid by an investment client, or
disproportionately high volumes of business at normal levels of commission provided by the investment client as
a compensation for receiving an allocation of the issue;

3.
Investment firms shall not accept any third-party payments or benefits unless such payments or benefits comply
with the inducements requirements laid down in Article 24 of Directive 2014/65/EU. In particular, the following
practices shall be considered not compliant with those requirements and shall therefore be considered not acceptable:

2.
Investment firms shall establish, implement and maintain effective internal arrangements to prevent or manage
conflicts of interests that arise where persons responsible for providing services to the firm's investment clients are
directly involved in decisions about recommendations to the issuer client on allocation.

2.
Investment firms shall have in place a centralised process to identify all underwriting and placing operations of thefirm and record such information, including the date on which the firm was informed of potential underwriting andplacing operations. Firms shall identify all potential conflicts of interest arising from other activities of the investment
firm, or group, and implement appropriate management procedures. In cases where an investment firm cannot manage
a conflict of interest by way of implementing appropriate procedures, the investment firm shall not engage in theoperation.

(f) firm's arrangements to prevent or manage conflicts of interest that may arise where the firm places the relevant
financial instruments with its investment clients or with its own proprietary book.

(e) the job titles and departments of the relevant individuals involved in the provision of corporate finance advice on
the price and allotment of financial instruments; and(d) details of the targeted investors, to whom the firm intends to offer the financial instruments;(c) the timing and the process with regard to the corporate finance advice on placing of the offering;(b) the timing and the process with regard to the corporate finance advice on pricing of the offer;(a) the various financing alternatives available with the firm, and an indication of the amount of transaction fees
associated with each alternative;

1.
Investment firms placing financial instruments shall establish, implement and maintain effective arrangements toprevent recommendations on placing from being inappropriately influenced by any existing or future relationships.

Article 40

Article 381.
Investment firms which provide advice on corporate finance strategy, as set out in Section B(3) of Annex I, andprovide the service of underwriting or placing of financial instruments, shall, before accepting a mandate to manage theoffering, have arrangements in place to inform the issuer client of the following:

2.
Investment firms shall provide clients with information about how the recommendation as to the price of theoffering and the timings involved is determined. In particular, the firm shall inform and engage with the issuer client
about any hedging or stabilisation strategies it intends to undertake with respect to the offering, including how thesestrategies may impact the issuer clients' interests. During the offering process, firms shall also take all reasonable steps tokeep the issuer client informed about developments with respect to the pricing of the issue.

(d) the investment firm verifies that the producer of the research is subject to requirements equivalent to therequirements under this Regulation in relation to the production of that research, or has established a policy setting
such requirements.

(c) the investment firm does not present the investment research as having been produced by it;

1.
Investment firms shall have in place systems, controls and procedures to identify and prevent or manage conflictsof interest that arise in relation to possible under-pricing or over-pricing of an issue or involvement of relevant parties
in the process. In particular, investment firms shall as a minimum requirement establish, implement and maintaininternal arrangements to ensure both of the following:

31.3.2017

3.
Investment firms which disseminate investment research produced by another person to the public or to clientsshall be exempt from complying with paragraph 1 if the following criteria are met:

Additional requirements in relation to pricing of offerings in relation to issuance of financial
instruments

EN(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

L 87/40

For the purposes of this paragraph, ‘related financial instrument’ shall be any financial instrument the price of which is
closely affected by price movements in another financial instrument which is the subject of investment research, andincludes a derivative on that other financial instrument.

(f) before the dissemination of investment research issuers, relevant persons other than financial analysts, and any otherpersons are not permitted to review a draft of the investment research for the purpose of verifying the accuracy offactual statements made in that research, or for any purpose other than verifying compliance with the firm's legal
obligations, where the draft includes a recommendation or a target price.

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Official Journal of the European Union(1) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit
institutions and investment firms and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).
(2) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions andthe prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives
2006/48/EC and 2006/49/EC (OJ L 176, 27.6.2013, p. 338).
(3) Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery andresolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC,
2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU)No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190).
(4) Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ L 173,
12.6.2014, p. 149).

2.
Where the arrangements taken to manage conflicts of interest prove insufficient to ensure that the risk of damage
to the issuer client would be prevented, investment firms shall disclose to the issuer client the specific conflicts ofinterest that have arisen in relation to their, or group entities', activities in a capacity of credit provider, and theiractivities related to the securities offering.

1.
Where any previous lending or credit to the issuer client by an investment firm, or an entity within the samegroup, may be repaid with the proceeds of an issue, the investment firm shall have arrangements in place to identify andprevent or manage any conflicts of interest that may arise as a result.

(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

Additional requirements in relation to lending or provision of credit in the context ofunderwriting or placement

Article 424.
Investment firms which offer financial instruments issued that are by themselves or other group entities to theirclients and that are included in the calculation of prudential requirements specified in Regulation (EU) No 575/2013 of
the European Parliament and of the Council (1), Directive 2013/36/EU of the European Parliament and of the Council (2)or Directive 2014/59/EU of the European Parliament and of the Council (3), shall provide those clients with additional
information explaining the differences between the financial instrument and bank deposits in terms of yield, risk,
liquidity and any protection provided in accordance with Directive 2014/49/EU of the European Parliament and of theCouncil (4).

3.
When disclosure of conflicts of interest is required, investment firms shall comply with the requirements in
Article 34(4), including an explanation of the nature and source of the conflicts of interest inherent to this type ofactivity, providing details about the specific risks related to such practices in order to enable clients to make an informed
investment decision.

2.
Investment firms engaging in the placement of financial instruments issued by themselves or by entities within thesame group, to their own clients, including their existing depositor clients in the case of credit institutions, orinvestment funds managed by entities of their group, shall establish, implement and maintain clear and effective
arrangements for the identification, prevention or management of the potential conflicts of interest that arise in relation
to this type of activity. Such arrangements shall include consideration of refraining from engaging in the activity, whereconflicts of interest cannot be appropriately managed so as to prevent any adverse effects on clients.

31.3.2017

3.
Investment firms' conflict of interest policy shall require the sharing of information about the issuer's financial
situation with group entities acting as credit providers, provided this would not breach information barriers set up by
the firm to protect the interests of a client.

L 87/42(c) the key facts and assumptions used to make the comparison are included.

(b) the sources of the information used for the comparison are specified;(a) the comparison is meaningful and presented in a fair and balanced way;3.
Where the information compares investment or ancillary services, financial instruments, or persons providing
investment or ancillary services, investment firms shall ensure that the following conditions are satisfied:(g) the information is up-to-date and relevant to the means of communication used.

(f) the information is consistently presented in the same language throughout all forms of information and marketing
materials that are provided to each client, unless the client has accepted to receive information in more than one
language,(e) the information does not disguise, diminish or obscure important items, statements or warnings,(d) the information is sufficient for, and presented in a way that is likely to be understood by, the average member ofthe group to whom it is directed, or by whom it is likely to be received,(c) the information uses a font size in the indication of relevant risks that is at least equal to the predominant font sizeused throughout the information provided, as well as a layout ensuring such indication is prominent,(b) the information is accurate and always gives a fair and prominent indication of any relevant risks when referencing
any potential benefits of an investment service or financial instrument,(a) the information includes the name of the investment firm,

2.
Investment firm shall ensure that the information referred to in paragraph 1 complies with the following
conditions:

1.
Investment firms shall ensure that all information they address to, or disseminate in such a way that it is likely tobe received by, retail or professional clients or potential retail or professional clients, including marketing communi­
cations, satisfies the conditions laid down in paragraphs 2 to 8.

(Article 24(3) of Directive 2014/65/EU)

Fair, clear and not misleading information requirements

Article 44

Information to clients and potential clients

SECTION 1

OPERATING CONDITIONS FOR INVESTMENT FIRMS

CHAPTER III

Investment firms shall keep records of the content and timing of instructions received from clients. A record of theallocation decisions taken for each operation shall be kept to provide for a complete audit trail between the movements
registered in clients' accounts and the instructions received by the investment firm. In particular, the final allocation
made to each investment client shall be clearly justified and recorded. The complete audit trail of the material steps in
the underwriting and placing process shall be made available to competent authorities upon request.

(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

Article 43

L 87/41

Record keeping in relation to underwriting or placing

Additional requirements in relation to advice, distribution and self-placement

Article 41

Official Journal of the European Union

1.
Investment firms shall have in place systems, controls and procedures to identify and manage the conflicts ofinterest that arise when providing investment service to an investment client to participate in a new issue, where theinvestment firm receives commissions, fees or any monetary or non-monetary benefits in relation to arranging theissuance. Any commissions, fees or monetary or non-monetary benefits shall comply with the requirements in
Article 24(7), 24(8) and 24(9) of Directive 2014/65/EU and be documented in the investment firm's conflicts of interest
policies and reflected in the firm's inducements arrangements.

EN(Articles 16(3), 23 and 24 of Directive 2014/65/EU)

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5.
Investment firms shall ensure that information contained in a marketing communication is consistent with any
information the firm provides to clients in the course of carrying on investment and ancillary services.

(a) the information is not based on or refer to simulated past performance;

1.
Investment firms shall notify new clients, and existing clients that the investment firm has newly categorised as
required by Directive 2014/65/EU, of their categorisation as a retail client, a professional client or an eligible
counterparty in accordance with that Directive.

(Article 24(4) of Directive 2014/65/EU)(Article 24(4) of Directive 2014/65/EU)(b) the languages in which the client may communicate with the investment firm, and receive documents and otherinformation from the firm;(a) the name and address of the investment firm, and the contact details necessary to enable clients to communicate
effectively with the firm;

Investment firms shall provide clients or potential clients with the following general information, where relevant:Information concerning client categorisation
1.

Information about the investment firm and its services for clients and potential clients

Article 47

However, the first subparagraph shall not apply if, in order to respond to an offer or invitation contained in themarketing communication, the potential client must refer to another document or documents, which, alone or in
combination, contain that information.

(b) an invitation to any person who responds to the communication to make an offer to enter into an agreement inrelation to a financial instrument or investment service or ancillary service.

(a) an offer to enter into an agreement in relation to a financial instrument or investment service or ancillary service
with any person who responds to the communication;

Article 45

8.
The information shall not use the name of any competent authority in such a way that would indicate or suggest
endorsement or approval by that authority of the products or services of the investment firm.

7.
Where the information refers to a particular tax treatment, it shall prominently state that the tax treatment
depends on the individual circumstances of each client and may be subject to change in the future.

(e) the information contains a prominent warning that such forecasts are not a reliable indicator of future performance.

(d) the information is based on performance scenarios in different market conditions (both negative and positive
scenarios), and reflects the nature and risks of the specific types of instruments included in the analysis;(c) where the information is based on gross performance, the effect of commissions, fees or other charges is disclosed;

6.
Marketing communications containing an offer or invitation of the following nature and specifying the manner of
response or including a form by which any response may be made, shall include such of the information referred to in
Articles 47 to 50 as is relevant to that offer or invitation:

4.
Investment firms shall notify a client in good time about any material change to the information provided under
Articles 47 to 50 which is relevant to a service that the firm is providing to that client. That notification shall be given
in a durable medium if the information to which it relates is given in a durable medium.

6.
Where the information contains information on future performance, investment firms shall ensure that thefollowing conditions are satisfied:(b) the information is based on reasonable assumptions supported by objective data;

3.
The information referred to in paragraphs 1 and 2 shall be provided in a durable medium or by means ofa website (where it does not constitute a durable medium) provided that the conditions specified in Article 3(2) aresatisfied.

2.
Investment firms shall, in good time before the provision of investment services or ancillary services to clients or
potential clients, to provide the information required under Articles 47 to 50.

(b) the information required by Article 47 relating to that agreement or to those investment or ancillary services.

(a) the terms of any such agreement;

1.
Investment firms shall, in good time before a client or potential client is bound by any agreement for the provisionof investment services or ancillary services or before the provision of those services, whichever is the earlier to providethat client or potential client with the following information:(Article 24(4) of Directive 2014/65/EU)

General requirements for information to clients

Article 46(b) a retail client where that client that is considered a professional client pursuant to Section I of Annex II to Directive
2014/65/EU.

(a) as a professional or retail client where that client might otherwise be classified as an eligible counterparty pursuant
to Article 30(2) of Directive 2014/65/EU;(c) the information contains a prominent warning that the figures refer to simulated past performance and that past
performance is not a reliable indicator of future performance.

(b) in respect of the actual past performance referred to in point (a), the conditions set out in points (a) to (c), (e) and (f)of paragraph 4 are satisfied;(a) the simulated past performance is based on the actual past performance of one or more financial instruments orfinancial indices which are the same as, or substantially the same as, or underlie, the financial instrument concerned;

5.
Where the information includes or refers to simulated past performance, investment firms shall ensure that the
information relates to a financial instrument or a financial index, and the following conditions are satisfied:(f) where the indication is based on gross performance, the effect of commissions, fees or other charges are disclosed.

(e) where the indication relies on figures denominated in a currency other than that of the Member State in which theretail client or potential retail client is resident, the currency is clearly stated, together with a warning that the return
may increase or decrease as a result of currency fluctuations;(d) the information contains a prominent warning that the figures refer to the past and that past performance is nota reliable indicator of future results;(c) the reference period and the source of information is clearly stated;(b) the information must include appropriate performance information which covers the preceding 5 years, or thewhole period for which the financial instrument has been offered, the financial index has been established, or theinvestment service has been provided where less than five years, or such longer period as the firm may decide, andin every case that performance information is based on complete 12-month periods;

3.
Investment firms may, either on their own initiative or at the request of the client concerned treat a client in thefollowing manner:

L 87/43(a) that indication is not the most prominent feature of the communication;

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2.
Investment firms shall inform clients in a durable medium about any right that client has to request a different
categorisation and about any limitations to the level of client protection that a different categorisation would entail.

EN

4.
Where the information contains an indication of past performance of a financial instrument, a financial index or
an investment service, investment firms shall ensure that the following conditions are satisfied:

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31.3.2017

1.
Investment firms shall provide clients or potential clients in good time before the provision of investment services
or ancillary services to clients or potential clients with a general description of the nature and risks of financial
instruments, taking into account, in particular, the client's categorisation as either a retail client, professional client or
eligible counterparty. That description shall explain the nature of the specific type of instrument concerned, thefunctioning and performance of the financial instrument in different market conditions, including both positive andnegative conditions, as well as the risks particular to that specific type of instrument in sufficient detail to enable theclient to take investment decisions on an informed basis.

(Article 24(4) of Directive 2014/65/EU)

Information about financial instruments

Article 48

The information listed in points (a) to (e) shall be provided in good time before the provision of investment services orancillary services to clients or potential clients.

5.
The investment firm shall inform the client or potential client where accounts that contain financial instruments
or funds belonging to that client or potential client are or will be subject to the law of a jurisdiction other than that ofa Member State and shall indicate that the rights of the client or potential client relating to those financial instruments
or funds may differ accordingly.

4.
The investment firm shall inform the client or potential client where it is not possible under national law for client
financial instruments held with a third party to be separately identifiable from the proprietary financial instruments ofthat third party or of the investment firm and shall provide a prominent warning of the resulting risks.

3.
Where financial instruments of the client or potential client may, if permitted by national law, be held in an
omnibus account by a third party, the investment firm shall inform the client of this fact and shall provide a prominent
warning of the resulting risks.

2.
The investment firm shall inform the client or potential client where the financial instruments or funds of thatclient may be held by a third party on behalf of the investment firm and of the responsibility of the investment firm
under the applicable national law for any acts or omissions of the third party and the consequences for the client of theinsolvency of the third party.

(Article 24(4) of Directive 2014/65/EU)
1.
Investment firms holding financial instruments or funds belonging to clients shall provide those clients or
potential clients with the information specified in paragraphs 2 to 7 where relevant.

(e) the management objectives, the level of risk to be reflected in the manager's exercise of discretion, and any specificconstraints on that discretion.

Information concerning safeguarding of client financial instruments or client funds

Article 49

5.
In the case of financial instruments that incorporate a guarantee or capital protection, the investment firm shallprovide a client or a potential client with information about the scope and nature of such guarantee or capital
protection. When the guarantee is provided by a third party, information about the guarantee shall include sufficientdetail about the guarantor and the guarantee to enable the client or potential client to make a fair assessment of theguarantee.

4.
Where a financial instrument is composed of two or more different financial instruments or services, theinvestment firm shall provide an adequate description of the legal nature of the financial instrument, the components ofthat instrument and the way in which the interaction between the components affects the risks of the investment.

3.
Where an investment firm provides a retail client or potential retail client with information about a financial
instrument that is the subject of a current offer to the public and a prospectus has been published in connection withthat offer in accordance with Directive 2003/71/EC, that firm shall in good time before the provision of investment
services or ancillary services to clients or potential clients inform the client or potential client where that prospectus ismade available to the public.

(e) any margin requirements or similar obligations, applicable to instruments of that type.

(d) the fact that an investor might assume, as a result of transactions in such instruments, financial commitments andother additional obligations, including contingent liabilities, additional to the cost of acquiring the instruments;(c) information on impediments or restrictions for disinvestment, for example as may be the case for illiquid financial
instruments or financial instruments with a fixed investment term, including an illustration of the possible exit
methods and consequences of any exit, possible constraints and the estimated time frame for the sale of the financial
instrument before recovering the initial costs of the transaction in that type of financial instruments;(b) the volatility of the price of such instruments and any limitations on the available market for such instruments;(d) the types of financial instrument that may be included in the client portfolio and types of transaction that may be
carried out in such instruments, including any limits;(c) a specification of any benchmark against which the performance of the client portfolio will be compared;(b) details of any delegation of the discretionary management of all or part of the financial instruments or funds in theclient portfolio;(a) information on the method and frequency of valuation of the financial instruments in the client portfolio;

3.
Where investment firms propose to provide portfolio management services to a client or potential client, theyshall provide the client, in addition to the information required under paragraph 1, with such of the following
information as is applicable:

2.
When providing the service of portfolio management, investment firms shall establish an appropriate method of
evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and thetypes of financial instruments included in the client portfolio, so as to enable the client for whom the service is provided
to assess the firm's performance.

The information listed in points (a) to (i) shall be provided in good time before the provision of investment services orancillary services to clients or potential clients.

(i) at the request of the client, further details of that conflicts of interest policy in a durable medium or by means ofa website (where that does not constitute a durable medium) provided that the conditions set out Article 3(2) aresatisfied.

(h) a description, which may be provided in summary form, of the conflicts of interest policy maintained by the firm inaccordance with Article 34;(g) where the investment firm holds client financial instruments or client funds, a summary description of the steps
which it takes to ensure their protection, including summary details of any relevant investor compensation or
deposit guarantee scheme which applies to the firm by virtue of its activities in a Member State;(f) the nature, frequency and timing of the reports on the performance of the service to be provided by the investment
firm to the client in accordance with Article 25(6) of Directive 2014/65/EU;(e) where the investment firm is acting through a tied agent, a statement of this fact specifying the Member State inwhich that agent is registered;(a) the risks associated with that type of financial instrument including an explanation of leverage and its effects and therisk of losing the entire investment including the risks associated with insolvency of the issuer or related events,
such as bail in;

L 87/45(d) a statement of the fact that the investment firm is authorised and the name and contact address of the competentauthority that has authorised it;

Official Journal of the European Union
2.
The description of risks referred to in paragraph 1 shall include, where relevant to the specific type of instrument
concerned and the status and level of knowledge of the client, the following elements:

EN(c) the methods of communication to be used between the investment firm and the client including, where relevant,those for the sending and reception of orders;

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EN

Official Journal of the European Union

31.3.2017(a) where the investment firm recommends or markets financial instruments to clients; or

5.
The obligation to provide in good time a full ex-ante disclosure of information about the aggregated costs andcharges related to the financial instrument and to the investment or ancillary service provided shall apply to investment
firms in the following situations:4.
In relation to the disclosure of product costs and charges that are not included in the UCITS KIID, the investment
firms shall calculate and disclose these costs, for example, by liaising with UCITS management companies to obtain therelevant information.

SECTION 2

3.
Where any part of the total costs and charges is to be paid in or represents an amount of foreign currency,
investment firms shall provide an indication of the currency involved and the applicable currency conversion rates andcosts. Investments firms shall also inform about the arrangements for payment or other performance.

1.
Investment firms shall explain in a clear and concise way whether and why investment advice qualifies as
independent or non-independent and the type and nature of the restrictions that apply, including, when providing
investment advice on an independent basis, the prohibition to receive and retain inducements.

(Article 24(4) of Directive 2014/65/EU)

Information about investment advice

Article 52

Investment advice

Investment firms distributing units in collective investment undertakings or PRIIPs shall additionally inform their clients
about any other costs and associated charges related to the product which may have not been included in the UCITS
KID or PRIIPs KID and about the costs and charges relating to their provision of investment services in relation to that
financial instrument.

(Article 24(4) of Directive 2014/65/EU)

Information provided in accordance with Directive 2009/65/EU and Regulation (EU) No 1286/2014

Article 51(c) the illustration is accompanied by a description of the illustration.

(b) the illustration shows any anticipated spikes or fluctuations in the costs; and(a) the illustration shows the effect of the overall costs and charges on the return of the investment;

10. Investment firms shall provide their clients with an illustration showing the cumulative effect of costs on return
when providing investment services. Such an illustration shall be provided both on an ex-ante and ex-post basis.
Investment firms shall ensure that the illustration meets the following requirements:

Investment firms may choose to provide such aggregated information on costs and charges of the investment services
and the financial instruments together with any existing periodic reporting to clients.

9.
Investment firms shall provide annual ex-post information about all costs and charges related to both the financial
instrument(s) and investment and ancillary service(s) where they have recommended or marketed the financial
instrument(s) or where they have provided the client with the KID/KIID in relation to the financial instrument(s) andthey have or have had an ongoing relationship with the client during the year. Such information shall be based on costs
incurred and shall be provided on a personalised basis.

8.
Where calculating costs and charges on an ex-ante basis, investment firms shall use actually incurred costs as
a proxy for the expected costs and charges. Where actual costs are not available, the investment firm shall makereasonable estimations of these costs. Investment firms shall review ex-ante assumptions based on the ex-post
experience and shall make adjustment to these assumptions, where necessary.

7.
Where more than one investment firm provides investment or ancillary services to the client, each investment firmshall provide information about the costs of the investment or ancillary services it provides. An investment firm thatrecommends or markets to its clients the services provided by another firm, shall aggregate the cost and charges of its
services together with the cost and charges of the services provided by the other firm. An investment firm shall take
into account the costs and charges associated to the provision of other investment or ancillary services by other firms
where it has directed the client to these other firms.

6.
Investment firms that do not recommend or market a financial instrument to the client or are not obliged toprovide the client with a KID/KIID in accordance with relevant Union legislation shall inform their clients about all costs
and charges relating to the investment and/or ancillary service provided.

(b) where the investment firm providing any investment services is required to provide clients with a UCITS KIID or
PRIIPs KID in relation to the relevant financial instruments, in accordance with relevant Union legislation.

L 87/48

Costs referred to in points (a) and (b) are listed in Annex II to this Regulation. For the purposes of point (a), third party
payments received by investment firms in connection with the investment service provided to a client shall be itemised
separately and the aggregated costs and charges shall be totalled and expressed both as a cash amount and asa percentage.

(b) all costs and associated charges associated with the manufacturing and managing of the financial instruments.

(a) all costs and associated charges charged by the investment firm or other parties where the client has been directed tosuch other parties, for the investment services(s) and/or ancillary services provided to the client; and2.
For ex-ante and ex-post disclosure of information on costs and charges to clients, investment firms shall aggregate
the following:

Without prejudice to the obligations set out in Article 24(4) of Directive 2014/65/EU, investment firms providing
investment services to eligible counterparties shall have the right to agree to a limited application of the detailed
requirements set out in this Article, except when, irrespective of the investment service provided, the financial
instruments concerned embed a derivative and the eligible counterparty intends to offer them to its clients.

Without prejudice to the obligations set out in Article 24(4) of Directive 2014/65/EU, investment firms providing
investment services to professional clients shall have the right to agree to a limited application of the detailed
requirements set out in this Article with these clients. Investment firms shall not be allowed to agree such limitations
when the services of investment advice or portfolio management are provided or when, irrespective of the investment
service provided, the financial instruments concerned embed a derivative.

1.
For the purposes of providing information to clients on all costs and charges pursuant to Article 24(4) of Directive
2014/65/EU, investment firms shall comply with the detailed requirements in paragraphs 2 to 10.

(Article 24(4) of Directive 2014/65/EU)

Information on costs and associated charges

Article 50

7.
An investment firm, before entering into securities financing transactions in relation to financial instruments heldby it on behalf of a client, or before otherwise using such financial instruments for its own account or the account ofanother client shall in good time before the use of those instruments provide the client, in a durable medium, with clear,full and accurate information on the obligations and responsibilities of the investment firm with respect to the use of
those financial instruments, including the terms for their restitution, and on the risks involved.

6.
An investment firm shall inform the client about the existence and the terms of any security interest or lien which
the firm has or may have over the client's financial instruments or funds, or any right of set-off it holds in relation to
those instruments or funds. Where applicable, it shall also inform the client of the fact that a depository may havea security interest or lien over, or right of set-off in relation to those instruments or funds.

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L 87/49
EN

Official Journal of the European Union(Article 25(2) of Directive 2014/65/EU)(a) the firm shall market itself in a way that is intended only to attract clients with a preference for those categories orrange of financial instruments;

Where that investment service consists in the provision of investment advice to a professional client covered by
Section 1 of Annex II to Directive 2014/65/EU, the investment firm shall be entitled to assume for the purposes ofpoint (b) of paragraph 2 that the client is able financially to bear any related investment risks consistent with theinvestment objectives of that client.

3.
Where an investment firm provides an investment service to a professional client it shall be entitled to assume thatin relation to the products, transactions and services for which it is so classified, the client has the necessary level ofexperience and knowledge for the purposes of point (c) of paragraph 2.

Where such a comparison is not possible due to the business model or the specific scope of the service provided, theinvestment firm providing investment advice shall not present itself as independent.

2.
An investment firm that provides investment advice on an independent basis and that focuses on certain categories
or a specified range of financial instruments shall comply with the following requirements:(c) it is such that the client has the necessary experience and knowledge in order to understand the risks involved in thetransaction or in the management of his portfolio.

(b) it is such that the client is able financially to bear any related investment risks consistent with his investment
objectives;(a) it meets the investment objectives of the client in question, including client's risk tolerance;

2.
Investment firms shall determine the extent of the information to be collected from clients in light of all thefeatures of the investment advice or portfolio management services to be provided to those clients. Investment firms
shall obtain from clients or potential clients such information as is necessary for the firm to understand the essential
facts about the client and to have a reasonable basis for determining, giving due consideration to the nature and extent
of the service provided, that the specific transaction to be recommended, or entered into in the course of providing
a portfolio management service, satisfies the following criteria:

Where investment advice or portfolio management services are provided in whole or in part through an automated orsemi-automated system, the responsibility to undertake the suitability assessment shall lie with the investment firm
providing the service and shall not be reduced by the use of an electronic system in making the personal recommen­
dation or decision to trade.

1.
Investment firms shall not create any ambiguity or confusion about their responsibilities in the process whenassessing the suitability of investment services or financial instruments in accordance with Article 25(2) of Directive
2014/65/EU. When undertaking the suitability assessment, the firm shall inform clients or potential clients, clearly andsimply, that the reason for assessing suitability is to enable the firm to act in the client's best interest.

(d) the criteria for selecting the various financial instruments shall include all relevant aspects such as risks, costs andcomplexity as well as the characteristics of the investment firm's clients, and shall ensure that the selection of the
instruments that may be recommended is not biased.

(c) the quantity of financial instruments issued by the investment firm itself or by entities closely linked to theinvestment firm itself is proportionate to the total amount of financial instruments considered; and(b) the number and variety of financial instruments considered is adequately representative of financial instruments
available on the market;(a) the number and variety of financial instruments considered is proportionate to the scope of investment advice
services offered by the independent investment adviser;

1.
Investment firms providing investment advice on an independent basis shall define and implement a selection
process to assess and compare a sufficient range of financial instruments available on the market in accordance with
Article 24(7)(a) of Directive 2014/65/EU. The selection process shall include the following elements:(Article 24(4) and 24(7) of Directive 2014/65/EU)

Investment advice on an independent basis

Article 53(c) the way in which an updated recommendation will be communicated to the client.

Assessment of suitability and suitability reports

Article 54(a) the frequency and extent of the periodic suitability assessment and where relevant, the conditions that trigger thatassessment;

SECTION 3(c) the investment firms has adequate organisational requirements and controls in place to ensure that both types ofadvice services and advisers are clearly separated from each other and that clients are not likely to be confused about
the type of advice that they are receiving and are given the type of advice that is appropriate for them. The
investment firm shall not allow a natural person to provide both independent and non-independent advice.

(b) the investment firm has presented itself as independent for the services for which it provides investment advice on
an independent basis;(a) in good time before the provision of its services, the investment firm has informed its clients, in a durable medium,
whether the advice will be independent or non-independent in accordance with Article 24(4)(a) of Directive
2014/65/EU and the relevant implementing measures;

3.
An investment firm offering investment advice on both an independent basis and on a non-independent basis shallcomply with the following obligations:(c) prior to the provision of the service, the firm shall ensure that its service is appropriate for each new client on thebasis that its business model matches the client's needs and objectives, and the range of financial instruments thatare suitable for the client. Where this is not the case the firm shall not provide such a service to the client.

Assessment of suitability and appropriateness(b) the extent to which the information previously collected will be subject to reassessment; and31.3.2017(b) the firm shall require clients to indicate that they are only interested in investing in the specified category or rangeof financial instruments; andL 87/50

5.
Investments firms providing a periodic assessment of the suitability of the recommendations provided pursuant to
Article 54(12) shall disclose all of the following:

4.
When the range of financial instruments assessed by the investment firm providing investment advice on an
independent basis includes the investment firm's own financial instruments or those issued or provided by entities
having close links or any other close legal or economic relationship with the investment firm as well as other issuers orproviders which are not linked or related, the investment firm shall distinguish, for each type of financial instrument, therange of the financial instruments issued or provided by entities not having any links with the investment firm.

3.
Investment firms shall provide a description of the types of financial instruments considered, the range of financial
instruments and providers analysed per each type of instrument according to the scope of the service, and, whenproviding independent advice, how the service provided satisfies the conditions for the provision of investment advice
on an independent basis and the factors taken into consideration in the selection process used by the investment firm torecommend financial instruments, such as risks, costs and complexity of the financial instruments.

2.
Investment firms providing investment advice, on an independent or non-independent basis, shall explain to theclient the range of financial instruments that may be recommended, including the firm's relationship with the issuers orproviders of the instruments.

Where advice is offered or provided to the same client on both an independent and non-independent basis, investment
firms shall explain the scope of both services to allow investors to understand the differences between them and notpresent itself f as an independent investment adviser for the overall activity. Firms shall not give undue prominence totheir independent investment advice services over non-independent investment services in their communications withclients.

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31.3.2017

Article 56

8.
Where, when providing the investment service of investment advice or portfolio management, an investment firm
does not obtain the information required under Article 25(2) of Directive 2014/65/EU, the firm shall not recommend
investment services or financial instruments to the client or potential client.

11. When providing investment advice or portfolio management services that involve switching investments, either
by selling an instrument and buying another or by exercising a right to make a change in regard to an existing
instrument, investment firms shall collect the necessary information on the client's existing investments and therecommended new investments and shall undertake an analysis of the costs and benefits of the switch, such that they
are reasonably able to demonstrate that the benefits of switching are greater than the costs.

10. When providing the investment service of investment advice or portfolio management, an investment firm shallnot recommend or decide to trade where none of the services or instruments are suitable for the client.

9.
Investment firms shall have, and be able to demonstrate, adequate policies and procedures in place to ensure thatthey understand the nature, features, including costs and risks of investment services and financial instruments selected
for their clients and that they assess, while taking into account cost and complexity, whether equivalent investment
services or financial instruments can meet their client's profile.

3.
An investment firm shall be entitled to rely on the information provided by its clients or potential clients unless it
is aware or ought to be aware that the information is manifestly out of date, inaccurate or incomplete.

Investment firms having an on-going relationship with the client, such as by providing an ongoing advice or portfolio
management service, shall have, and be able to demonstrate, appropriate policies and procedures to maintain adequate
and up-to-date information about clients to the extent necessary to fulfil the requirements under paragraph 2.

(a) the result of the appropriateness assessment;

2.
Investment firms shall maintain records of the appropriateness assessments undertaken which shall include thefollowing:

An investment firm shall be entitled to assume that a professional client has the necessary experience and knowledge inorder to understand the risks involved in relation to those particular investment services or transactions, or types oftransaction or product, for which the client is classified as a professional client.

1.
Investment firms, shall determine whether that client has the necessary experience and knowledge in order tounderstand the risks involved in relation to the product or investment service offered or demanded when assessing
whether an investment service as referred to in Article 25(3) of Directive 2014/65/EU is appropriate for a client.

(Article 25(3) and 25(5) of Directive 2014/65/EU)

Assessment of appropriateness and related record-keeping obligations

2.
An investment firm shall not discourage a client or potential client from providing information required for the
purposes of Article 25(2) and (3) of Directive 2014/65/EU.

(c) the level of education, and profession or relevant former profession of the client or potential client.

(b) the nature, volume, and frequency of the client's transactions in financial instruments and the period over which
they have been carried out;(a) the types of service, transaction and financial instrument with which the client is familiar;

1.
Investment firms shall ensure that the information regarding a client's or potential client's knowledge andexperience in the investment field includes the following, to the extent appropriate to the nature of the client, the natureand extent of the service to be provided and the type of product or transaction envisaged, including their complexity
and the risks involved:(Article 25(2) and 25(3) of Directive 2014/65/EU)

Provisions common to the assessment of suitability or appropriateness

Article 55(d) taking steps, as appropriate, to ensure the consistency of client information, such as by considering whether there
are obvious inaccuracies in the information provided by clients.

(c) ensuring questions used in the process are likely to be understood by clients, capture an accurate reflection of theclient's objectives and needs, and the information necessary to undertake the suitability assessment; and(b) ensuring all tools, such as risk assessment profiling tools or tools to assess a client's knowledge and experience,
employed in the suitability assessment process are fit-for-purpose and are appropriately designed for use with theirclients, with any limitations identified and actively mitigated through the suitability assessment process;(a) ensuring clients are aware of the importance of providing accurate and up-to-date information;

7.
Investment firms shall take reasonable steps to ensure that the information collected about their clients or
potential clients is reliable. This shall include, but shall not be limited to, the following:

Where a natural person is represented by another natural person or where a legal person having requested treatment as
professional client in accordance with Section 2 of Annex II to Directive 2014/65/EU is to be considered for thesuitability assessment, the financial situation and investment objectives shall be those of the legal person or, in relation
to the natural person, the underlying client rather than of the representative. The knowledge and experience shall be thatof the representative of the natural person or the person authorised to carry out transactions on behalf of theunderlying client.

13. Investment firms providing a periodic suitability assessment shall review, in order to enhance the service, thesuitability of the recommendations given at least annually. The frequency of this assessment shall be increased
depending on the risk profile of the client and the type of financial instruments recommended.

Where an investment firm provides a service that involves periodic suitability assessments and reports, the subsequent
reports after the initial service is established may only cover changes in the services or instruments involved and/or thecircumstances of the client and may not need to repeat all the details of the first report.

EN

6.
Where a client is a legal person or a group of two or more natural persons or where one or more natural persons
are represented by another natural person, the investment firm shall establish and implement policy as to who should
be subject to the suitability assessment and how this assessment will be done in practice, including from whom
information about knowledge and experience, financial situation and investment objectives should be collected. The
investment firm shall record this policy.

L 87/52

Investment firms shall draw clients' attention to and shall include in the suitability report information on whether therecommended services or instruments are likely to require the retail client to seek a periodic review of theirarrangements.

L 87/51

5.
The information regarding the investment objectives of the client or potential client shall include, where relevant,information on the length of time for which the client wishes to hold the investment, his preferences regarding risktaking, his risk profile, and the purposes of the investment.

Official Journal of the European Union
12. When providing investment advice, investment firms shall provide a report to the retail client that includes anoutline of the advice given and how the recommendation provided is suitable for the retail client, including how itmeets the client's objectives and personal circumstances with reference to the investment term required, client's
knowledge and experience and client's attitude to risk and capacity for loss.

EN

4.
The information regarding the financial situation of the client or potential client shall include, where relevant,information on the source and extent of his regular income, his assets, including liquid assets, investments and real
property, and his regular financial commitments.

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L 87/53

Article 59

Reporting to clients

SECTION 4

Official Journal of the European Union

the venue identification;(k) the unit price;(l)(m) a total sum of the commissions and expenses charged and, where the client so requests, an itemised breakdown
including, where relevant, the amount of any mark-up or mark-down imposed where the transaction was executedby an investment firm when dealing on own account, and the investment firm owes a duty of best execution to theclient;(b) in case of portfolio management services, the types of financial instruments that may be purchased and sold and thetypes of transactions that may be undertaken on behalf of the client, as well as any instruments or transactions
prohibited; and(c) a description of the main features of any services referred to in Section B(1) of Annex I to Directive 2014/65/EU to
be provided, including where applicable the role of the firm with respect to corporate actions relating to client
instruments and the terms on which securities financing transactions involving client securities will generate a returnfor the client.

the nature of the order if other than buy/sell;(j)(a) a description of the services, and where relevant the nature and extent of the investment advice, to be provided;

the total consideration;

the quantity;(i)

The written agreement shall set out the essential rights and obligations of the parties, and shall include the following:(h) the buy/sell indicator;(g) the instrument identification;(f)(e) the type of the order;(d) the trading time;

Investment firms providing any investment service or the ancillary service referred to in Section B(1) of Annex I to
Directive 2014/65/EU to a client after the date of application of this Regulation shall enter into a written basic
agreement with the client, in paper or another durable medium, with the client setting out the essential rights andobligations of the firm and the client. Investment firms providing investment advice shall comply with this obligation
only where a periodic assessment of the suitability of the financial instruments or services recommended is performed.

(c) the trading day;

(Article 24(1) and 25(5) of Directive 2014/65/EU)(b) the name or other designation of the client;(a) the reporting firm identification;

Retail and Professional Client agreements

Article 58

4.
The notice referred to in point (b) of paragraph 1 shall include such of the following information as is applicable
and, where relevant, in accordance with the regulatory technical standards on reporting obligations adopted inaccordance with Article 26 of Regulation (EU) No 600/2014:3.
In the case of client orders relating to units or shares in a collective investment undertaking which are executed
periodically, investment firms shall either take the action specified in point (b) of paragraph 1 or provide the client, atleast once every six months, with the information listed in paragraph 4 in respect of those transactions.

(e) it does not include any explicit or implicit exit charges that have the effect of making the investment illiquid eventhough there are technically frequent opportunities to dispose of, redeem or otherwise realise it;(f) adequately comprehensive information on its characteristics is publicly available and is likely to be readily
understood so as to enable the average retail client to make an informed judgment as to whether to enter intoa transaction in that instrument.

2.
In addition to the requirements under paragraph 1, investment firms shall supply the client, on request, withinformation about the status of his order.

Points (a) and (b) shall not apply where orders executed on behalf of clients relate to bonds funding mortgage loan
agreements with the said clients, in which case the report on the transaction shall be made at the same time as theterms of the mortgage loan are communicated, but no later than one month after the execution of the order.

(d) it does not incorporate a clause, condition or trigger that could fundamentally alter the nature or risk of theinvestment or pay out profile, such as investments that incorporate a right to convert the instrument into a different
investment;(c) it does not involve any actual or potential liability for the client that exceeds the cost of acquiring the instrument;(b) there are frequent opportunities to dispose of, redeem, or otherwise realise that instrument at prices that are
publicly available to market participants and that are either market prices or prices made available, or validated, by
valuation systems independent of the issuer;

Point (b) shall not apply where the confirmation would contain the same information as a confirmation that is to bepromptly dispatched to the client by another person.

(b) send a notice to the client in a durable medium confirming execution of the order as soon as possible and no later
than the first business day following execution or, where the confirmation is received by the investment firm froma third party, no later than the first business day following receipt of the confirmation from the third party.

A financial instrument which is not explicitly specified in Article 25(4)(a) of Directive 2014/65/EU shall be considered
as non-complex for the purposes of Article 25(4)(a)(vi) of Directive 2014/65/EU if it satisfies the following criteria:(a) it does not fall within Article 4(1)(44)(c) of, or points (4) to (11) of Section C of Annex I to Directive 2014/65/EU;(a) promptly provide the client, in a durable medium, with the essential information concerning the execution of thatorder;

31.3.2017(Article 25(4) of Directive 2014/65/EU)(Article 25(6) of Directive 2014/65/EU)

Reporting obligations in respect of execution of orders other than for portfolio management

EN

Provision of services in non-complex instruments

L 87/54

1.
Investment firms having carried out an order on behalf of a client, other than for portfolio management, shall, inrespect of that order:

Article 57(c) any warning given to the client where the client did not provide sufficient information to enable the firm toundertake an appropriateness assessment, whether the client asked to proceed with the transaction despite thiswarning and, where applicable, whether the firm accepted the client's request to proceed with the transaction.

(b) any warning given to the client where the investment service or product purchase was assessed as potentiallyinappropriate for the client, whether the client asked to proceed with the transaction despite the warning and, whereapplicable, whether the firm accepted the client's request to proceed with the transaction;

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31.3.2017(a) where the investment firm provides its clients with access to an online system, which qualifies as a durable medium,
where up-to-date valuations of the client's portfolio can be accessed and where the client can easily access theinformation required by Article 63(2) and the firm has evidence that the client has accessed a valuation of theirportfolio at least once during the relevant quarter;3.
The periodic statement referred to in paragraph 1 shall be provided once every three months, except in thefollowing cases:(h) for each transaction executed during the period, the information referred to in Article 59(4)(c) to (l) where relevant,unless the client elects to receive information about executed transactions on a transaction-by-transaction basis, inwhich case paragraph 4 of this Article shall apply.

(g) information about other corporate actions giving rights in relation to financial instruments held in the portfolio;(f) the total amount of dividends, interest and other payments received during the reporting period in relation to theclient's portfolio;(e) a comparison of performance during the period covered by the statement with the investment performancebenchmark (if any) agreed between the investment firm and the client;(d) the total amount of fees and charges incurred during the reporting period, itemising at least total management fees
and total costs associated with execution, and including, where relevant, a statement that a more detailed breakdown
will be provided on request;(c) a statement of the contents and the valuation of the portfolio, including details of each financial instrument held, its
market value, or fair value if market value is unavailable and the cash balance at the beginning and at the end of thereporting period, and the performance of the portfolio during the reporting period;(b) the name or other designation of the client's account;(a) the name of the investment firm;2.
The periodic statement required under paragraph 1 shall provide a fair and balanced review of the activities
undertaken and of the performance of the portfolio during the reporting period and shall include, where relevant, thefollowing information:(1) Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of thebusiness of credit institutions (OJ L 126, 26.5.2000, p. 1).

The first subparagraph shall not apply to a credit institution authorised under Directive 2000/12/EC of the European
Parliament and of the Council (1) in respect of deposits within the meaning of that Directive held by that institution.

1.
Investment firms that hold client financial instruments or client funds shall send at least on a quarterly basis, toeach client for whom they hold financial instruments or funds, a statement in a durable medium of those financial
instruments or funds unless such a statement has been provided in any other periodic statement. Upon client request,
firms shall provide such statement more frequently at a commercial cost.

(Article 25(6) of Directive 2014/65/EU)

Statements of client financial instruments or client funds

Article 632.
Investment firms that hold a retail client account that includes positions in leveraged financial instruments orcontingent liability transactions shall inform the client, where the initial value of each instrument depreciates by 10 %and thereafter at multiples of 10 %. Reporting under this paragraph should be on an instrument-by-instrument basis,
unless otherwise agreed with the client, and shall take place no later than the end of the business day in which thethreshold is exceeded or, in a case where the threshold is exceeded on a non-business day, the close of the next businessday.

1.
Investment firms providing the service of portfolio management shall inform the client where the overall value ofthe portfolio, as evaluated at the beginning of each reporting period, depreciates by 10 % and thereafter at multiples of
10 %, no later than the end of the business day in which the threshold is exceeded or, in a case where the threshold isexceeded on a non-business day, the close of the next business day.

(Article 25(6) of Directive 2014/65/EU)

Additional reporting obligations for portfolio management or contingent liability transactions

Article 62(Article 24(4) and Article 25(6) of Directive 2014/65/EU)
The requirements applicable to reports for retail and professional clients under Articles 49 and 59 shall apply unlessinvestment firms enter into agreements with eligible counterparties to determine content and timing of reporting.

(Article 25(6) of Directive 2014/65/EU)

Reporting obligations in respect of eligible counterparties

Article 61

The second subparagraph shall not apply where the confirmation would contain the same information asa confirmation that is to be promptly dispatched to the client by another person.

The investment firm shall send the client a notice confirming the transaction and containing the information referred toin Article 59(4) no later than the first business day following that execution or, where the confirmation is received by
the investment firm from a third party, no later than the first business day following receipt of the confirmation fromthe third party.

4.
Investment firms, in cases where the client elects to receive information about executed transactions on
a transaction-by-transaction basis, shall provide promptly to the client, on the execution of a transaction by the portfolio
manager, the essential information concerning that transaction in a durable medium.

The exception provided for in point (b) shall not apply in the case of transactions in financial instruments covered by
Article 4(1)(44)(c) of, or any of points 4 to 11 of Section C in Annex I to Directive 2014/65/EU.

1.
Investments firms which provide the service of portfolio management to clients shall provide each such client witha periodic statement in a durable medium of the portfolio management activities carried out on behalf of that clientunless such a statement is provided by another person.

Reporting obligations in respect of portfolio management

Article 60

5.
The investment firm may provide the client with the information referred to in paragraph 4 using standard codes
if it also provides an explanation of the codes used.

For the purposes of point (k), where the order is executed in tranches, the investment firm may supply the client withinformation about the price of each tranche or the average price. Where the average price is provided, the investment
firm shall supply the client with information about the price of each tranche upon request.

(p) where the client's counterparty was the investment firm itself or any person in the investment firm's group or
another client of the investment firm, the fact that this was the case unless the order was executed througha trading system that facilitates anonymous trading.

(c) where the agreement between an investment firm and a client for a portfolio management service authorises
a leveraged portfolio, the periodic statement must be provided at least once a month.

L 87/55(b) in cases where paragraph 4 applies, the periodic statement must be provided at least once every 12 months;

Official Journal of the European Union(o) the client's responsibilities in relation to the settlement of the transaction, including the time limit for payment ordelivery as well as the appropriate account details where these details and responsibilities have not previously been
notified to the client;EN(n) the rate of exchange obtained where the transaction involves a conversion of currency;

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The statement of client assets referred to in paragraph 1 shall include the following information:EN

L 87/57
EN

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31.3.2017

Upon reasonable request from a client, investment firms shall provide its clients or potential clients with information
about entities where the orders are transmitted or placed for execution.
7.
Investment firms shall monitor on a regular basis the effectiveness of the policy established in accordance withparagraph 5 and, in particular, shall monitor the execution quality of the entities identified in that policy and, whereappropriate, correct any deficiencies.
Investment firms shall review the policy and arrangements at least annually. Such a review shall also be carried out
whenever a material change occurs that affects the firm's ability to continue to obtain the best possible result for theirclients.

For the purposes of this Article and Articles 65 and 66, ‘execution venue’ includes a regulated market, an MTF, an OTF,
a systematic internaliser, or a market maker or other liquidity provider or an entity that performs a similar function ina third country to the functions performed by any of the foregoing.

2.
An investment firm satisfies its obligation under Article 27(1) of Directive 2014/65/EU to take all sufficient steps
to obtain the best possible result for a client to the extent that it executes an order or a specific aspect of an order
following specific instructions from the client relating to the order or the specific aspect of the order.

6.
Investment firms shall provide information to their clients on the policy established in accordance withparagraph 5 and paragraphs 2 to 9 of Article 66. Investment firms shall provide clients with appropriate information
about the firm and its services and the entities chosen for execution. In particular, when the investment firm select otherfirms to provide order execution services, it shall summarise and make public, on an annual basis, for each classof financial instruments, the top five investment firms in terms of trading volumes where it transmitted or placed client
orders for execution in the preceding year and information on the quality of execution obtained. The information
shall be consistent with the information published in accordance with the technical standards developed under
Article 27(10)(b) of Directive 2014/65/EU.

(d) the characteristics of the execution venues to which that order can be directed.

(c) the characteristics of financial instruments that are the subject of that order;(b) the characteristics of the client order, including where the order involves a securities financing transaction (SFT);(a) the characteristics of the client including the categorisation of the client as retail or professional;

1.
When executing client orders, investment firms shall take into account the following criteria for determining therelative importance of the factors referred to in Article 27(1) of Directive 2014/65/EU:(Articles 27(1) and 24(1) of Directive 2014/65/EU)

Best execution criteria

Article 645.
Investment firms shall establish and implement a policy that enables them to comply with the obligation inparagraph 4. The policy shall identify, in respect of each class of instruments, the entities with which the orders areplaced or to which the investment firm transmits orders for execution. The entities identified shall have execution
arrangements that enable the investment firm to comply with its obligations under this Article when it places ortransmits orders to that entity for execution.

An investment firm satisfies its obligations under paragraph 1 or 2, and is not required to take the steps mentioned inthis paragraph, to the extent that it follows specific instructions from its client when placing an order with, ortransmitting an order to, another entity for execution.

Best execution

SECTION 5

4.
Investment firms shall take all sufficient steps to obtain the best possible result for their clients taking into accountthe factors referred to in Article 27(1) of Directive 2014/65/EU. The relative importance of these factors shall be
determined by reference to the criteria set out in Article 64(1) and, for retail clients, to the requirement under
Article 27(1) of Directive 2014/65/EU.

3.
In order to comply with paragraphs 1 or 2, investment firms shall comply with paragraphs 4 to 7 of this Article
and Article 64(4).

2.
Investment firms, when providing the service of reception and transmission of orders, shall comply with the
obligation under Article 24(1) of Directive 2014/65/EU to act in accordance with the best interests of their clients whentransmitting client orders to other entities for execution.

1.
Investment firms, when providing portfolio management, shall comply with the obligation under Article 24(1) of
Directive 2014/65/EU to act in accordance with the best interests of their clients when placing orders with other entities
for execution that result from decisions by the investment firm to deal in financial instruments on behalf of its client.

(Article 24(1) and 24(4) of Directive 2014/65/EU)

Duty of investment firms carrying out portfolio management and reception and transmission oforders to act in the best interests of the client

Article 65

4.
When executing orders or taking decision to deal in OTC products including bespoke products, the investment
firm shall check the fairness of the price proposed to the client, by gathering market data used in the estimation of theprice of such product and, where possible, by comparing with similar or comparable products.

3.
Investment firms shall not structure or charge their commissions in such a way as to discriminate unfairly between
execution venues.

L 87/58

3.
Investment firms which hold financial instruments or funds and which carry out the service of portfolio
management for a client may include the statement of client assets referred to in paragraph 1 in the periodic statement
it provides to that client pursuant to Article 60(1).

The periodic statement of client assets referred to in paragraph 1 shall not be provided where the investment firm
provides its clients with access to an online system, which qualifies as a durable medium, where up-to-date statements ofclient's financial instruments or funds can be easily accessed by the client and the firm has evidence that the client hasaccessed this statement at least once during the relevant quarter.

In cases where the portfolio of a client includes the proceeds of one or more unsettled transactions, the informationreferred to in point (a) may be based either on the trade date or the settlement date, provided that the same basis isapplied consistently to all such information in the statement.

(f) the market or estimated value, when the market value is not available, of the financial instruments included in thestatement with a clear indication of the fact that the absence of a market price is likely to be indicative of a lack ofliquidity. The evaluation of the estimated value shall be performed by the firm on a best effort basis.

(e) a clear indication of which assets are affected by some peculiarities in their ownership status, for instance due toa security interest;(d) a clear indication of the assets or funds which are subject to the rules of Directive 2014/65/EU and its implementing
measures and those that are not, such as those that are subject to Title Transfer Collateral Agreement;(c) the extent of any benefit that has accrued to the client by virtue of participation in any securities financing
transactions, and the basis on which that benefit has accrued;(b) the extent to which any client financial instruments or client funds have been the subject of securities financing
transactions;(a) details of all the financial instruments or funds held by the investment firm for the client at the end of the period
covered by the statement;

2.

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EN

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Investment firms shall satisfy the following conditions when carrying out client orders:2.
Where an investment firm is responsible for overseeing or arranging the settlement of an executed order, it shalltake all reasonable steps to ensure that any client financial instruments or client funds received in settlement of that
executed order are promptly and correctly delivered to the account of the appropriate client.
3.
An investment firm shall not misuse information relating to pending client orders, and shall take all reasonable
steps to prevent the misuse of such information by any of its relevant persons.

(f) a clear and prominent warning that any specific instructions from a client may prevent the firm from taking thesteps that it has designed and implemented in its execution policy to obtain the best possible result for the executionof those orders in respect of the elements covered by those instructions;(c) inform a retail client about any material difficulty relevant to the proper carrying out of orders promptly upon
becoming aware of the difficulty.

(b) carry out otherwise comparable client orders sequentially and promptly unless the characteristics of the order or
prevailing market conditions make this impracticable, or the interests of the client require otherwise;(a) ensure that orders executed on behalf of clients are promptly and accurately recorded and allocated;1.

(Articles 28(1) and 24(1) of Directive 2014/65/EU)

General principles

Article 67

Client order handling

SECTION 6

9.
Where an investment firm executes orders for retail clients, it shall provide those clients with a summary of therelevant policy, focused on the total costs they incur. The summary shall also provide a link to the most recent
execution quality data published in accordance with Article 27(3) of Directive 2014/65/EU for each execution venue
listed by the investment firm in its execution policy.

8.
Where a client makes reasonable and proportionate requests for information about its policies or arrangements
and how they are reviewed to an investment firm, that investment firm shall answer clearly and within a reasonable
time.

7.
Where an investment firm charges more than one participant in a transaction, in compliance with Article 24(9) of
Directive 2014/65/EU and its implementing measures, the firm shall inform its clients of the value of any monetary or
non-monetary benefits received by the firm.

6.
Investment firms shall only receive third-party payments that comply with Article 24(9) of Directive 2014/65/EU
and shall inform clients about the inducements that the firm may receive from the execution venues. The information
shall specify the fees charged by the investment firm to all counterparties involved in the transaction, and where the feesvary depending on the client, the information shall indicate the maximum fees or range of the fees that may be payable.

5.
Where investment firms invite clients to choose an execution venue, fair, clear and not misleading information
shall be provided to prevent the client from choosing one execution venue rather than another on the sole basis of theprice policy applied by the firm.

4.
Where investment firms apply different fees depending on the execution venue, the firm shall explain thesedifferences in sufficient detail in order to allow the client to understand the advantages and the disadvantages of the
choice of a single execution venue.

That information shall be provided in a durable medium, or by means of a website (where that does not constitutea durable medium) provided that the conditions specified in Article 3(2) are satisfied.

(g) a summary of the selection process for execution venues, execution strategies employed, the procedures and processused to analyse the quality of execution obtained and how the firms monitor and verify that the best possible results
were obtained for clients.

L 87/60(e) where applicable, information that the firm executes orders outside a trading venue, the consequences, for example
counterparty risk arising from execution outside a trading venue, and upon client request, additional information
about the consequences of this means of execution;(d) how the execution factors of price costs, speed, likelihood of execution and any other relevant factors are consideredas part of all sufficient steps to obtain the best possible result for the client;(c) a list of factors used to select an execution venue, including qualitative factors such as clearing schemes, circuit
breakers, scheduled actions, or any other relevant consideration, and the relative importance of each factor; The
information about the factors used to select an execution venue for execution shall be consistent with the controls
used by the firm to demonstrate to clients that best execution has been achieved in a consistent basis whenreviewing the adequacy of its policy and arrangements;(b) a list of the execution venues on which the firm places significant reliance in meeting its obligation to take allreasonable steps to obtain on a consistent basis the best possible result for the execution of client orders andspecifying which execution venues are used for each class of financial instruments, for retail client orders,
professional client orders and SFTs;(a) an account of the relative importance the investment firm assigns, in accordance with the criteria specified in
Article 59(1), to the factors referred to in Article 27(1) of Directive 2014/65/EU, or the process by which the firm
determines the relative importance of those factors.

3.
Investment firms shall provide clients with the following details on their execution policy in good time prior to theprovision of the service:2.
The information on the execution policy shall be customised depending on the class of financial instrument andtype of the service provided and shall include information set out in paragraphs 3 to 9.

Such a review shall also be carried out whenever a material change as defined in Article 65(7) occurs that affects thefirm's ability to continue to obtain the best possible result for the execution of its client orders on a consistent basis
using the venues included in its execution policy. An investment firm shall assess whether a material change has
occurred and shall consider making changes to the relative importance of the best execution factors in meeting theoverarching best execution requirement.

1.
Investment firms shall review, at least on an annual basis execution policy established pursuant to Article 27(4) of
Directive 2014/65/EU, as well as their order execution arrangements.

(Article 27(5) and (7) of Directive 2014/65/EU)

Execution policy

Article 66

8.
This Article shall not apply where the investment firm that provides the service of portfolio management or
reception and transmission of orders also executes the orders received or the decisions to deal on behalf of its client's
portfolio. In those cases Article 27 of Directive 2014/65/EU shall apply.

A material change shall be a significant event that could impact parameters of best execution such as cost, price, speed,
likelihood of execution and settlement, size, nature or any other consideration relevant to the execution of the order.

Investment firms shall assess whether a material change has occurred and shall consider making changes to the
execution venues or entities on which they place significant reliance in meeting the overarching best execution
requirement.

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(Articles 28(1) and 24(1) of Directive 2014/65/EU)

Aggregation and allocation of orders

Article 68

Official Journal of the European Union

L 87/61
EN(Article 30 of Directive 2014/65/EU)

Eligible counterparties

Article 71

Eligible counterparties

SECTION 7

Official Journal of the European Union

31.3.20172.
Regulated markets and MTFs shall be prioritised according to the firm's execution policy to ensure execution assoon as market conditions allow.

(e) the firm's arrangements comply with the record keeping requirements irrespective of the technology used.

(d) it allows IT or any other efficient exploitation when the analysis of the data cannot be easily carried out due to thevolume and the nature of the data; and(c) it is not possible for the records otherwise to be manipulated or altered;(b) it is possible for any corrections or other amendments, and the contents of the records prior to such corrections oramendments, to be easily ascertained;(a) the competent authority is able to access them readily and to reconstitute each key stage of the processing of eachtransaction;(Article 28 of Directive 2014/65/EU)

1.
A client limit order in respect of shares admitted to trading on a regulated market or traded on a trading venue
which have not been immediately executed under prevailing market conditions as referred to in Article 28(2) ofDirective 2014/65/EU shall be considered available to the public when the investment firm has submitted the order for
execution to a regulated market or a MTF or the order has been published by a data reporting services provider locatedin one Member State and can be easily executed as soon as market conditions allow.

(Article 16(6) of Directive 2014/65/EU)
1.
The records shall be retained in a medium that allows the storage of information in a way accessible for futurereference by the competent authority, and in such a form and manner that the following conditions are met:

Article 70

Retention of records

Article 72

Record-keeping

SECTION 8(b) the client shall confirm in writing the request to be treated as an eligible counterparty either generally or in respectof one or more investment services or a transaction or type of transaction or product and that they are aware of theconsequences of the protection they may lose as a result of the request.

(a) the investment firm shall provide the client with a clear written warning of the consequences for the client of sucha request, including the protections they may lose;

5.
Where a client requests to be treated as an eligible counterparty, in accordance with Article 30(3) of Directive
2014/65/EU, the following procedure shall be followed:

4.
Where the eligible counterparty expressly requests treatment as a retail client, the investment firm shall treat theeligible counterparty as a retail client, applying the provisions in respect of requests of non-professional treatment
specified in the second, third and fourth sub-paragraphs of Section I of Annex II to Directive 2014/65/EU.

3.
Where an eligible counterparty requests treatment as a client whose business with an investment firm is subject to
Articles 24, 25, 27 and 28 of Directive 2014/65/EU, but does not expressly request treatment as a retail client, the firmshall treat that eligible counterparty as a professional client.

2.
Where, pursuant to the second subparagraph of Article 30(2) of Directive 2014/65/EU, an eligible counterparty
requests treatment as a client whose business with an investment firm is subject to Articles 24, 25, 27 and 28 of that
Directive, the request should be made in writing, and shall indicate whether the treatment as retail client or professional
client refers to one or more investment services or transactions, or one or more types of transaction or product.

1.
In addition to the categories which are explicitly set out in Article 30(2) of Directive 2014/65/EU, Member States
may recognise as eligible counterparty, in accordance with Article 30(3) of that Directive, an undertaking falling withina category of clients who are to be considered professional clients in accordance with paragraphs 1, 2 and 3 of Section Iof Annex II to that Directive.

L 87/62

Prompt fair and expeditious execution of client orders and publication of unexecuted client limit
orders for shares traded on a trading venue

3.
As part of the order allocation policy referred to in Article 68(1)(c), investment firms shall put in place procedures
designed to prevent the reallocation, in a way that is detrimental to the client, of transactions for own account which are
executed in combination with client orders.

Where an investment firm is able to demonstrate on reasonable grounds that without the combination it would nothave been able to carry out the order on such advantageous terms, or at all, it may allocate the transaction for own
account proportionally, in accordance with its order allocation policy referred to in Article 68(1)(c).

2.
Where an investment firm aggregates a client order with a transaction for own account and the aggregated order ispartially executed, it shall allocate the related trades to the client in priority to the firm.

1.
Investment firms which have aggregated transactions for own account with one or more client orders shall not
allocate the related trades in a way that is detrimental to a client.

(Articles 28(1) and 24(1) of Directive 2014/65/EU)

Aggregation and allocation of transactions for own account

Article 69

2.
Where an investment firm aggregates an order with one or more other client orders and the aggregated order ispartially executed, it shall allocate the related trades in accordance with its order allocation policy.

(c) an order allocation policy is established and effectively implemented, providing for the fair allocation of aggregatedorders and transactions, including how the volume and price of orders determines allocations and the treatment ofpartial executions.

(b) it is disclosed to each client whose order is to be aggregated that the effect of aggregation may work to its
disadvantage in relation to a particular order;(a) it is unlikely that the aggregation of orders and transactions will work overall to the disadvantage of any client
whose order is to be aggregated;

1.
Investment firms shall not carry out a client order or a transaction for own account in aggregation with anotherclient order unless the following conditions are met:

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Official Journal of the European Union

L 87/63
EN

Official Journal of the European Union

31.3.2017

The information referred to in the first sub-paragraph shall be presented in the same language(s) as that used to provide
investment services to clients.

Article 75(a) the identification of the telephone conversations and electronic communications, including relevant internal
telephone conversations and electronic communications, that are subject to the recording requirements inaccordance with Article 16(7) of Directive 2014/65/EU; and1.
Investment firms shall establish, implement and maintain an effective recording of telephone conversations andelectronic communications policy, set out in writing, and appropriate to the size and organisation of the firm, and thenature, scale and complexity of its business. The policy shall include the following content:

11.

The period of time for the retention of a record shall begin on the date when the record is created.

Firms shall ensure the quality, accuracy and completeness of the records of all telephone recordings and electronic
communications.

Records shall be stored in a medium so that they are readily accessible and available to clients on request.

10. Records shall be stored in a durable medium, which allows them to be replayed or copied and must be retainedin a format that does not allow the original record to be altered or deleted.

Recording of telephone conversations or electronic communications(Article 16(7) of Directive 2014/65/EU)(e) relevant information about the client order including the price, volume, type of order and when it shall betransmitted or executed.

(d) initiator of the meetings; and(c) identity of the attendees;(b) location of meetings;(a) date and time of meetings;

Article 76

Where the details set out in Section 2 of Annex IV are also prescribed under Articles 25 and 26 of Regulation (EU)No 600/2014, they shall be maintained in a consistent way and according to the same standards prescribed under
Articles 25 and 26 of Regulation (EU) No 600/2014.

Investment firms shall, immediately after receiving a client order or making a decision to deal to the extent they areapplicable to the order or decision to deal in question, record and keep at the disposal of the competent authority atleast the details set out in Section 2 of Annex IV.

(Article 16(6) of Directive 2014/65/EU)

9.
Investment firms shall record in a durable medium all relevant information related to relevant face-to-face conver­sations with clients. The information recorded shall include at least the following:(b) that a copy of the recording of such conversations with the client and communications with the client will beavailable on request for a period of five years and, where requested by the competent authority, for a period of up toseven years.

Record keeping of transactions and order processing(a) that the conversations and communications are being recorded; andWhere the details set out in Section 1 of Annex IV to this Regulation are also prescribed under Articles 25 and 26 ofRegulation (EU) No 600/2014, these details should be maintained in a consistent way and according to the same
standards prescribed under Articles 25 and 26 of Regulation (EU) No 600/2014.

8.
Before investment firms provide investment services and activities relating to the reception, transmission andexecution of orders to new and existing clients, firms shall inform the client of the following:

7.
Investment firms shall demonstrate the policies, procedures and management oversight of the recording rules tothe relevant competent authorities upon request.

6.
To monitor compliance with the recording and record-keeping requirements in accordance with Article 16(7) of
Directive 2014/65/EU, investment firms shall periodically monitor the records of transactions and orders subject tothese requirements, including relevant conversations. Such monitoring shall be risk based and proportionate.

5.
Investment firms shall educate and train employees in procedures governing the requirements in Article 16(7) of
Directive 2014/65/EU.

4.
Investment firms shall keep and regularly update a record of those individuals who have firm devices or privately
owned devices that have been approved for use by the firm.

3.
Investment firms shall ensure that the arrangements to comply with recording requirements are technologyneutral. Firms shall periodically evaluate the effectiveness of the firm's policies and procedures and adopt any suchalternative or additional measures and procedures as are necessary and appropriate. At a minimum, such adoption ofalternative or additional measures shall occur when a new medium of communication is accepted or permitted for use
by the firm.

2.
Investment firms shall ensure that the management body has effective oversight and control over the policies andprocedures relating to the firm's recording of telephone conversations and electronic communications.

(b) the specification of the procedures to be followed and measures to be adopted to ensure the firm's compliance withthe third and eighth subparagraphs of Article 16(7) of Directive 2014/65/EU where exceptional circumstances arise
and the firm is unable to record the conversation/communication on devices issued, accepted or permitted by thefirm. Evidence of such circumstances shall be retained and shall be accessible to competent authorities.

L 87/64

An investment firm shall, in relation to every initial order received from a client and in relation to every initial decision
to deal taken, immediately record and keep at the disposal of the competent authority at least the details set out in
Section 1 of Annex IV to this Regulation to the extent they are applicable to the order or decision to deal in question.

(Article 16(6) of Directive 2014/65/EU)

Record keeping of client orders and decision to deal

Article 74

Records which set out the respective rights and obligations of the investment firm and the client under an agreement toprovide services, or the terms on which the firm provides services to the client, shall be retained for at least the durationof the relationship with the client.

(Article 25(5) of Directive 2014/65/EU)

Record keeping of rights and obligations of the investment firm and the client

Article 73

Competent authorities may require investment firms to keep additional records to the list identified in Annex I to thisRegulation.

3.
Investment firms shall also keep records of any policies and procedures they are required to maintain pursuant to
Directive 2014/65/EU, Regulation (EU) No 600/2014, Directive 2014/57/EU and Regulation (EU) No 596/2014 andtheir respective implementing measures in writing.

The list of records identified in Annex I to this Regulation is without prejudice to any other record-keeping obligations
arising from other legislation.

2.
Investment firms shall keep at least the records identified in Annex I to this Regulation depending upon the natureof their activities.

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Official Journal of the European Union

31.3.2017(g) requires the issuers whose securities are traded on its venue to publish annual financial reports within 6 months
after the end of each financial year, and half yearly financial reports within 4 months after the end of the first
6 months of each financial year;

Article 79(c) the average of the last closing share prices of each of the first two years of trading, if its shares have been admitted
to trading for more than two years but less than three years.

(d) has established and applies rules that define the minimum content of the admission document referred to underpoint (c), in such a way that sufficient information is provided to investors to enable them to make an informed
assessment of the financial position and prospects of the issuer, and the rights attaching to its securities;(c) has established and applies rules that require an issuer seeking admission of its financial instruments to trading on
the MTF, to publish, in cases where Directive 2003/71/EC does not apply, an appropriate admission document,
drawn up under the responsibility of the issuer and clearly stating whether or not it has been approved or reviewed
and by whom;(c) where the financial viability of the issuer would be threatened, such as where it is involved in a corporatetransaction or capital raising.

(b) where the continuation of trading on the market is necessary to perform critical post-trade risk management
functions when there is a need for the liquidation of financial instruments due to the default of a clearing member
under the default procedures of a CCP and a CCP would be exposed to unacceptable risks as a result of an inability
to calculate margin requirements;(a) where it would create a systemic risk undermining financial stability, such as where the need exists to unwind
a dominant market position, or where settlement obligations would not be met in a significant volume;(a) has established and applies rules providing for objective and transparent criteria for the initial and ongoing
admission to trading of issuers on its venue;(b) has an operating model which is appropriate for the performance of its functions and ensures the maintenance offair and orderly trading in the financial instruments admitted to trading on its venue;(Articles 32(1), 32(2), 52(1) and 52(2) of Directive 2014/65/EU)
1.
For the purpose of Articles 32(1), 32(2), 52(1) and 52(2) of Directive 2014/65/EU, a suspension or a removalfrom trading of a financial instrument shall be deemed likely to cause significant damage to investors' interests or theorderly functioning of the market at least in the following circumstances:

Circumstances constituting significant damage to investors' interests and the orderly functioningof the market

Article 80

OPERATING OBLIGATIONS FOR TRADING VENUESCHAPTER IV

2.
With regard to the conditions specified in points (b) to (g) of Article 33(3) of Directive 2014/65/EU and in
Article 78(2) of this Regulation, the operator of an SME growth market shall be deregistered by the competent authorityof its home Member State where such conditions are no longer satisfied.

1.
With regard to the proportion of SMEs, and without prejudice to the other conditions specified in points (b) to (g)of Article 33(3) of Directive 2014/65/EU and in Article 78(2) of this Regulation, an SME growth market shall only bederegistered by the competent authority of its home Member State where the proportion of SMEs, as determined inaccordance with the first subparagraph of Article 78(1) of this Regulation, falls below 50 % for three consecutive
calendar years.

(Article 33(3) of Directive 2014/65/EU)

2.
With regard to the criteria laid out in points (b), (c), (d) and (f) of Article 33(3) of Directive 2014/65/EU, thecompetent authority of the home Member State of the operator of an MTF shall not register the MTF as an SME growthmarket unless it is satisfied that the MTF:

Without prejudice to the other conditions for registration specified in points (b) to (g) of Article 33(3) of Directive
2014/65/EU, the competent authority shall register as an SME growth market an applicant with no previous operating
history and, after three calendar years have elapsed, shall verify that it complies with the minimum proportion of SMEs,
as determined in accordance with the first subparagraph.

1.
When determining whether at least 50 % of the issuers admitted to trading on an MTF are SMEs for the purposesof registration as an SME growth market in accordance with point (a) of Article 33(3) of Directive 2014/65/EU, thecompetent authority of the home Member State of the operator of an MTF shall calculate the average ratio of SMEs over
the total number of issuers whose financial instruments are admitted to trading on that market. The average ratio shallbe calculated on 31 December of the previous calendar year as the average of the twelve end-of-month ratios of thatcalendar year.

(Article 33(3) of Directive 2014/65/EU)

Registration as an SME growth market

Article 782.
An issuer which has no equity instrument traded on any trading venue shall be deemed an SME for the purpose of
Article 4(1)(13) of Directive 2014/65/EU if, according to its last annual or consolidated accounts, it meets at least two of
the following three criteria: an average number of employees during the financial year of less than 250, a total balance
sheet not exceeding EUR 43 000 000 and an annual net turnover not exceeding EUR 50 000 000.

Deregistration as an SME growth market(i) ensures that the regulatory information referred to under point (h) and direct links remain available on its website
for a period of at least five years.

(a) the closing share price of the first day of trading, if its shares have been admitted to trading for less than one year;(b) the last closing share price of the first year of trading, if its shares have been admitted to trading for more than one
year but less than two years;(Article 4(1)(13) of Directive 2014/65/EU)

Qualification as an SME(e) requires the issuer to state, in the admission document referred to under point (c), whether or not, in its opinion, its
working capital is sufficient for its present requirements or, if not, how it proposes to provide the additional
working capital needed;

L 87/66(f) has made arrangements for the admission document referred to under point (c) to be subject to an appropriate
review of its completeness, consistency and comprehensibility;

L 87/65

Article 77

SME growth markets

SECTION 9

Official Journal of the European Union(h) ensures dissemination to the public of prospectuses drawn up in accordance with Directive 2003/71/EC, admission
documents referred to under point (c), financial reports referred to under point (g) and information defined in
Article 7(1) of Regulation (EU) No 596/2014 publicly disclosed by the issuers whose securities are traded on its
venue, by publishing them on its website, or providing thereon a direct link to the page of the website of the issuers
where such documents, reports and information are published;EN1.
An issuer whose shares have been admitted to trading for less than three years shall be deemed an SME for the
purpose of point (a) of Article 33(3) of Directive 2014/65/EU where its market capitalisation is below EUR 200 million
based on any of the following:

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L 87/68
EN

Official Journal of the European Union

31.3.2017(Article 58(1) of Directive 2014/65/EU)
1.
For the purpose of the weekly reports referred to in Art 58(1)(a) of Directive 2014/65/EU, the obligation fora trading venue to make public such a report shall apply when both of the following two thresholds are met:(d) the effects of a suspension on the interests of market end users who are not financial counterparties, such as entities
trading in financial instruments to hedge commercial risks.

3.
The factors set out in paragraph 2 shall also be taken into consideration where a national competent authority,a market operator operating a regulated market or an investment firm or a market operator operating an MTF or an
OTF decides not to suspend or remove a financial instrument on the basis of circumstances not covered by the list ofparagraph 1.

1.
When assessing whether the requirement to immediately inform their competent authorities of conduct that may
indicate behaviour that is prohibited under Regulation (EU) No 596/2014 applies, operators of trading venues shallconsider the signals listed in Section B of Annex III to this Regulation.

(b) the information available or accessible to the operator, whether that be internally as part of the operations of the
trading venue or publicly available.

(a) the deviations from the usual trading pattern of the financial instruments admitted to trading or traded on its
trading venue; and2.
Articles 85, 86(2), 87, 88(2) and 89 shall not apply to APAs or CTPs that make market data available to the public
free of charge.

1.
For the purposes of making market data containing the information set out in Articles 6, 20 and 21 of Regulation(EU) No 600/2014 available to the public on a reasonable commercial basis in accordance with Articles 64(1) and 65(1)of Directive 2014/65/EU, approved publication arrangements (APAs) and consolidated tape providers (CTPs) shallcomply with the obligations set out in Articles 85 to 89.

(Article 64(1) and 65(1) of Directive 2014/65/EU)

Obligation to provide market data on a reasonable commercial basis

Article 84(Articles 31(2) and 54(2) of Directive 2014/65/EU)

2.
The operator of one or several trading venues where a financial instrument and/or related financial instrument aretraded shall apply a proportionate approach and shall exercise judgment on the signals triggered, including any relevant
signals not specifically included in Section B of Annex III to this Regulation, before informing the relevant national
competent authority, taking into account the following:

CHAPTER VIDATA PROVISION OBLIGATIONS FOR DATA REPORTING SERVICE PROVIDERS

Circumstances where a conduct indicating behaviour that is prohibited under Regulation (EU)No 596/2014 may be assumed

5.
Where the conditions set out in points (a) and (b) of paragraph 1 are no longer met, trading venues shall continue
to publish the weekly reports for a period of three months. The obligation to publish the weekly report no longer
applies where the conditions set out in points (a) and (b) of paragraph 1 have not been met continuously upon expiry ofthat period.

4.
For contracts that meet the conditions set out in points (a) and (b) of paragraph 1 for the first time, trading venues
shall publish the contracts first weekly report as soon as it is feasibly practical, and in any event no later than 3 weeks
from the date on which the thresholds are first triggered.

3.
For contracts where there are less than five position holders active in a given category of persons, the number of
position holders in that category shall not be published.

Article 82

2.
Information shall only be required in cases of significant events which have the potential to jeopardise the role andfunction of trading venues as part of the financial market infrastructure.

1.
When assessing whether the requirement to immediately inform their competent authorities of significant infringe­
ments of the rules of their trading venue or disorderly trading conditions or system disruptions in relation to a financial
instrument applies, operators of trading venues shall consider the signals listed in Section A of Annex III to thisRegulation.

2.
The threshold set out in point (a) of paragraph 1 shall apply in aggregate on the basis of all of the categories of
persons regardless of the numbers of position holders in any single category of persons.

Where the commodity derivative does not have a physically deliverable underlying asset and for emission allowancesand derivatives thereof, point (b) shall not apply.

Circumstances where significant infringements of the rules of a trading venue or disorderly
trading conditions or system disruptions in relation to a financial instrument may be assumed(Articles 31(2) and 54(2) of Directive 2014/65/EU)(b) the absolute amount of the gross long or short volume of total open interest, expressed in the number of lots of therelevant commodity derivative, exceeds a level of four times the deliverable supply in the same commodity
derivative, expressed in number of lots.

Article 81(a) 20 open position holders exist in a given contract on a given trading venue; andPosition reporting

Article 83

POSITION REPORTING IN COMMODITY DERIVATIVES(c) the knock-on effects of a suspension or removal of sufficiently related derivatives, indices or benchmarks for which
the removed or suspended instrument serves as an underlying or constituent;(b) the nature of the envisaged action where actions with a sustained or lasting impact on the ability of investors totrade a financial instrument on trading venues, such as removals, are likely to have a greater impact on investors
than other actions;

CHAPTER V

L 87/67(a) the relevance of the market in terms of liquidity where the consequences of the actions are likely to be moresignificant where those markets are more relevant in terms of liquidity than in other markets;

Official Journal of the European Union
3.
The operator of one or several trading venues shall take into account front running behaviours, which consist ina market member or participant trading, for its own account, ahead of its client, and shall use for that purpose the orderbook data required to be recorded by the trading venue pursuant to Article 25 of Regulation (EU) No 600/2014, inparticular those relating to the way the member or participant conducts its trading activity.

EN

2.
For the purpose of determining whether a suspension or a removal is likely to cause significant damage to theinvestors' interest or the orderly functioning of the markets in any particular case, the national competent authority,a market operator operating a regulated market or an investment firm or a market operator operating an MTF or an
OTF shall consider all relevant factors, including:

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Official Journal of the European Union(Article 64(1) and 65(1) of Directive 2014/65/EU)

The disclosure shall include the following:
fees per display user;

fees for pre-trade and for post-trade market data;

1.

APAs and CTPs shall make market data available without being bundled with other services.

(Article 64(1) and 65(1) of Directive 2014/65/EU)

Unbundling and disaggregating market data

Article 88

3.
APAs or CTPs shall provide grounds for the refusal to make market data available on a per user basis and shall
publish those grounds on their webpage.

(1) Commission Delegated Regulation (EU) 2017/572 of 2 June 2016 supplementing Regulation (EU) No 600/2014 of the European
Parliament and of the Council with regard to regulatory technical standards on the specification of the offering of pre-and post-trade data
and the level of disaggregation of data (see page 142 of this Official Journal).

(a) the host Member State has formerly been the home Member State of the regulated market in question;

1.
The operations of a regulated market in a host Member State shall be considered to be of substantial importancefor the functioning of the securities markets and the protection of investors in that host Member State where at least
one of the following criteria is met:

(Article 79(2) of Directive 2014/65/EU)

Article 90
Determination of the substantial importance of the operations of a trading venue in a host
Member StateCOMPETENT AUTHORITIES AND FINAL PROVISIONS

2.
By way of derogation from paragraph 1, APAs and CTPs may decide not to make market data available on a peruser basis where to charge on a per user basis is disproportionate to the cost of making market data available, having
regard to the scale and scope of the market data.

CHAPTER VII(e) information on how the price was set, including the cost accounting methodologies used and information about the
specific principles according to which direct and variable joint costs are allocated and fixed joint costs areapportioned, between the production and dissemination of market data and other services provided by APAs and
CTPs.

(Article 64(1) and 65(1) of Directive 2014/65/EU)

1.
APAs and CTPs shall charge for the use of market data on the basis of the use made by individual end-users of themarket data (‘per user basis’). APAs and CTPs shall have arrangements in place to ensure that each individual use of
market data is charged only once.

(d) revenue obtained from making market data available and the proportion of that revenue compared to total revenueof the APA or CTP;(v) the date of the last licence fee adaption for market data provided;(iv) information on any data provided in addition to market data;(iii) pre-trade and post-trade market data ratio;

Per user fees

Article 87

the number of instruments covered;(ii) the total turnover of instruments covered;(i)(c) information on the content of the market data including the following information:(b) the use made by the customer of the market data, including whether it is used for the customer's own trading
activities, for resale or for data aggregation.

3.
For the purposes of paragraph 1, APAs and CTPs shall have scalable capacities in place to ensure that customers
can obtain timely access to market data at all times on a non-discriminatory basis.

(b) advance disclosure with a minimum of 90 days' notice of future price changes;(vii) other contractual terms and conditions;(vi) fees for other subsets of information, including those required in accordance with the regulatory technicalstandards pursuant to Article 12(2) of Regulation (EU) No 600/2014;(v)(iv) fees associated with licence conditions;(iii) discount policies;(ii) non-display fees;(i)(a) current price lists, including the following information:

2.

1.
APAs and CTPs shall disclose and make easily available to the public the price and other terms and conditions forthe provision of the market data in a manner which is easily accessible.

(a) the scope and scale of the market data including the number of financial instruments covered and trading volume;2.
Any differentials in prices charged to different categories of customers shall be proportionate to the value which
the market data represent to those customers, taking into account:

1.
APAs and CTPs shall make market data available at the same price and on the same terms and conditions to all
customers falling within the same category in accordance with published objective criteria.

(Article 64(1) and 65(1) of Directive 2014/65/EU)

Obligation to provide market data on a non-discriminatory basis

Article 86

2.
The costs of producing and disseminating market data may include an appropriate share of joint costs for otherservice provided by APAs and CTPs.

31.3.20172.
Prices for market data shall be charged on the basis of the level of market data disaggregation provided for in
Article 12(1) of Regulation (EU) No 600/2014 as further specified in Articles of Commission Delegated Regulation (EU)2017/572 (1).

L 87/70

Article 89

L 87/69

Transparency obligation

Provision of market data on the basis of cost

Article 85

Official Journal of the European Union(Article 64(1) and 65(1) of Directive 2014/65/EU)

EN

1.
The price of market data shall be based on the cost of producing and disseminating such data and may include
a reasonable margin.

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Official Journal of the European Union

L 87/71

Done at Brussels, 25 April 2016.

Jean-Claude JUNCKER

The President

For the Commission

This Regulation shall be binding in its entirety and directly applicable in all Member States.

It shall apply from the date that appears first in the second subparagraph of Article 93(1) of Directive 2014/65/EU.

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of theEuropean Union.

Entry into force and application

Article 91

FINAL PROVISIONSCHAPTER VIII(b) the MTF or OTF is registered as an SME growth market.

(a) before one of the situations set out in paragraph 1 occurred in regard to the MTF or OTF, the trading venue had
a market share of at least 10 % of trading in terms of total turnover in monetary terms in on-venue trading andsystematic internaliser trading in the host Member State in at least one asset class subject to the transparency
obligations of Regulation (EU) No 600/2014;2.
The operations of an MTF or OTF in a host Member State shall be considered to be of substantial importance forthe functioning of the securities markets and the protection of investors in that host Member State where at least one of
the criteria laid down in paragraph 1 is met in regard to that MTF or OTF and at least one of the following additional
criteria is met:(b) the regulated market in question has acquired through merger, takeover, or any other form of transfer of the wholeor part of the business of a regulated market which was previously operated by a market operator which had its
registered office or head office in the host Member State.

31.3.2017
EN

Record-keeping

ANNEX I

Official Journal of the European Union

Legislative reference

Client financial instru­
ments held by an invest­
ment firm

Safeguarding of client assets

Obligation in respectof services provided toclients

Records as provided for under Article 16(8) Article 16(8) of Directive 2014/65/EU
of Directive 2014/65/EU and under Article 2 Article 2 of Delegated Directive (EU)of Commission Delegated Directive (EU) 2017/593
2017/593

Articles 53 to 58 of this Regulation

Contents as provided for under Articles 53 Article 24(1) and (6) and Article 25(1)to 58 of this Regulationand (6) of Directive 2014/65/EU

Records as provided for under Article 70 of Article 16(6) of Directive 2014/65/EU
this Regulation
Article 70 of this Regulation

Record keeping of trans­
actions and order pro­cessing
Reporting to clients

Records as provided for under Article 69 of Article 16(6) of Directive 2014/65/EU
this Regulation
Article 69 of this Regulation

Article 65 of this Regulation

Records as provided for under Article 65 of Articles 28(1) and 24(1) of Directive
this Regulation
2014/65/EU

Articles 63 to 66 of this Regulation

Record keeping of client
orders or decision to deal

Client Orders and transactions

Aggregation and alloca­
tion of trans-actions forown account

Client order-handling —Aggregated transactions

Records as provided for under Articles 63 to Articles 24(1) and 28(1) of Directive
66 of this Regulation
2014/65/EU

Content as provided for under Article 25(2) Article 25(2) and (3) of Directiveand (3) of Directive 2014/65/EU and Article 50 2014/65/EUof this Regulation
Articles 35, 36 and 37 of this Regu­
lationAssessment of suitability
and appropriateness

Order handling

Records as provided for under Article 25(5) of Article 25(5) MIFID II
Directive 2014/65/EU
Article 53 of this Regulation

Content as provided for under Article 24(4) of Article 24(4) MIFID II
Directive 2014/65/EU and Articles 39 to 45 of Articles 39 to 45 of this Regulation
this Regulation

Summary of content

31.3.2017

Client agreements

Information to clients

Type of record

Minimum list of records to be kept by investment firms depending upon the nature of their activities

Client assessment

Nature ofobligation

L 87/72

251

Content as provided for under Articles 45 and Article 24(4) of Directive 2014/65/EU
46 of this Regulation
Articles 45 and 46 of this Regulation

Records of communication

Information about theinvestment firm and its
services, financial instru­
ments and safe-guardingof client assets

Information to clients

Records as provided for under Article 35 of Article 16(3) of Directive 2014/65/EU
this Regulation
Article 35 of this Regulation

Conflict of Interest record

Article 16(2) of Directive 2014/65/EU
Article 22(2)(b) and Article 25(2) of thisRegulation

Each compliance report to management body

Article 21(1)(h) of this Regulation

Compliance reports

The firm's business andinternal organisation

Records as provided for under Article 21(1)(h) Article 16(2) to (10) of Directiveof this Regulation
2014/65/EU

Each item of investment research issued by the Article 24(3) of Directive 2014/65/EU
investment firm in a durable medium
Articles 36 and 37 of this Regulation

Investment research

Organisational requirements(i) The fact, time and date that investment Article 25(6) of Directive 2014/65/EU
advice was rendered and (ii) the financial instru­ Article 54 of this Regulation
ment that was recommended (iii) the suitability
report provided to the client

Investment advice toretail clients

Marketing communica­
Each marketing communication issued by the Article 24(3) of Directive 2014/65/EU
tions (except in oral form) investment firm (except in oral form) as Articles 36 and 37 of this Regulation
provided under Articles 36 and 37 of thisRegulation

Article 39 of this Regulation

Article 24(3) of Directive 2014/65/EU

Contents as provided for under Article 45 of Article 24(4)(c) of Directive 2014/65/EU
this Regulation
Article 45 of this Regulation

Information about Costs
and associated charges

Article 5 of Delegated Directive (EU)2017/593

Records provided for under Article 5 of Article 16(8) to (10) of Directive
Delegated Directive (EU) 2017/593
2014/65/EU

Use of client financial
instruments

Legislative reference

L 87/73

Records as provided for under Article 16(9) of Article 16(9) of Directive 2014/65/EU
Directive 2014/65/EU and under Article 2 of Article 2 of Delegated Directive (EU)
Delegated Directive (EU) 2017/593
2017/593

Summary of content

Official Journal of the European Union

Client funds held by aninvestment firm

Type of record

EN

Communication with clients

Nature ofobligation

31.3.2017
Nature ofobligation

L 87/74

Records of personal trans­ Records as provided for under Article 29(2)(c) Article 16(2) of Directive 2014/65/EU
actionsof this Regulation
Article 29(2)(c) of this Regulation

Each complaint and the complaint handling Article 16(2) of Directive 2014/65/EU
measures taken to address the complaint
Article 26 of this Regulation

Complaints-handlingrecords

Article 23(1)(b) and Article 25(2) of thisRegulation

senior Article 16(5) of Directive 2014/65/EU

Each internal audit report to senior manage­ Article 16(5) of Directive 2014/65/EU
ment
Article 24 and Article 25(2) of thisRegulation

toInternal audit reports

reportEach risk management
management

Risk management reports

Legislative reference

31.3.2017

The information dis-closed to clients under Article 24(9) of Directive 2014/65/EU
Article 24(9) of Directive 2014/65/EU
Article 11 of Delegated Directive (EU)2017/593

Summary of content

Official Journal of the European Union

Inducements

Type of record

EN

252

Costs and charges

ANNEX II

Official Journal of the European Union

Identified costs that should form part of the costs to be disclosed to the clients (1)EN

L 87/75

Examples:Broker commissions (2), entry- and exitcharges paid to the fund manager, platform
fees, mark ups (embedded in the transaction
price), stamp duty, transactions tax andforeign exchange costs.

Performance fees(1) It should be noted that certain cost items appear in both tables but are not duplicative since they respectively refer to costs of the productand costs of the service. Examples are the management fees (in table 1, this refers to management fees charged by an investment firm
providing the service of portfolio management to its clients while in Table 2 it refers to management fees charged by an investment fundmanager to its investor) and broker commissions (in Table 1, they refer to commissions incurred by the investment firm when trading on
behalf of its clients while in Table 2 they refer to commissions paid by investment funds when trading on behalf of the fund).

All ongoing costs and charges related to Management fees, service costs, swap fees,
the management of the financial product securities lending costs and taxes, financingthat are deducted from the value of the costs.
financial instrument during the investmentin the financial instrument.

Ongoing charges

Examples:All costs and charges (included in the price Front-loaded management fee, structuring
or in addition to the price of the financial fee (1), distribution fee.
instrument) paid to product suppliers at
the beginning or at the end of the invest­
ment in the financial instrument.

One-off charges

Cost items to be disclosed

Table 2 — All costs and associated charges related to the financial instrument that should form part of the amount to bedisclosed

1( ) Switching costs should be understood as costs (if any) that are incurred by investors by switching from one investment firm toanother investment firm.
(2) Broker commissions should be understood as costs that are charged by investment firms for the execution of orders.

Incidental costs

Any charges that are re­ Any costs and charges that are related to Research costs.
lated to ancillary services
ancillary services that are not included in Custody costs.
the costs mentioned above.

All costs related to trans­ All costs and charges that are related toactions initiated in the transactions performed by the investment
course of the provision of firm or other parties.
an investment service

Ongoing charges related All ongoing costs and charges paid to Management fees, advisory fees, custodian
to the provision of an investment firms for their services pro­ fees.
investment service
vided to the client.

One-off charges related to All costs and charges paid to the invest­ Deposit fees, termination fees and switching
the provision of an invest­ ment firm at the beginning or at the end costs (1).
ment serviceof the provided investment service(s).

Cost items to be disclosed

Table 1 — All costs and associated charges charged for the investment service(s) and/or ancillary services provided to theclient that should form part of the amount to be disclosed

31.3.2017
EN
Cost items to be disclosed

Official Journal of the European Union
Examples:

31.3.2017

Performance fees

(1) Structuring fees should be understood as fees charged by manufacturers of structured investment products for structuring the
products. They may cover a broader range of services provided by the manufacturer.

Incidental costs

All costs related to the All costs and charges that incurred as a Broker commissions, entry- and exit-charges
transactions
result of the acquisition and disposal of paid by the fund, mark ups embedded ininvestments.
the transaction price, stamp duty, transac­
tions tax and foreign exchange costs.

L 87/76

253

EN

Official Journal of the European Union

31.3.2017

12. Transactions or orders to trade which have the effect of, or are likely to have the effect of, setting a market pricewhen the liquidity of the financial instrument or the depth of the order book is not sufficient to fix a price within
the session.

10. Any major malfunction or breakdown of the systems of the trading venue to monitor and control the trading
activities of the market participants; and any major malfunction or breakdown in the sphere of other interrelated
services providers, in particular CCPs and CSDs, that has repercussions on the trading system.

2. Unusual repetition of a transaction among a small number of members/participants over a certain period of time.

1. Unusual concentration of transactions and/or orders to trade in a particular financial instrument with one
member/participant or between certain members/participants.

Signals of possible insider dealing or market manipulation

Signals that may indicate abusive behaviour under Regulation (EU) No 596/2014

SECTION B

11. Transactions or orders to trade which have the effect of, or are likely to have the effect of increasing/decreasing theweighted average price of the day or of a period during the session.

Any major malfunction or breakdown of the systems for the dissemination of pre- and post-trade transparency andother relevant data published by trading venues in accordance with their obligations under Directive 2014/65/EU
and Regulation (EU) No 600/2014;9.

15. Engaging in a transaction or series of transactions which are shown on a public display facility to give theimpression of activity or price movement in a financial instrument (usually known as painting the tape).

14. Entering orders representing significant volumes in the central order book of the trading system a few minutes
before the price determination phase of the auction and cancelling these orders a few seconds before the orderbook is frozen for computing the auction price so that the theoretical opening price might look higher or lower
than it otherwise would do.

13. Execution of a transaction, changing the bid-offer prices when this spread is a factor in the determination of theprice of another transaction whether or not on the same trading venue.

10. Buying or selling of a financial instrument at the reference time of the trading session (e.g. opening, closing,settlement) in an effort to increase, to decrease or to maintain the reference price (e.g. opening price, closing price,
settlement price) at a specific level (usually known as marking the close).

Any major malfunction or breakdown of the system for the matching of transactions, that results in participants
losing certainty over the status of completed transactions or live orders as well as unavailability of informationindispensable for trading (e.g., index value dissemination for trading certain derivatives on that index);

8.

Transactions or orders to trade by a market/participant with no other apparent justification than toincrease/decrease the price or value of, or to have a significant impact on the supply of or demand for a financial
instrument, namely near the reference point during the trading day, e.g. at the opening or near the close.

Any major malfunction or breakdown of the system for market access that results in participants losing their ability
to enter, adjust or cancel their orders;

9.

Orders to trade given or transactions undertaken which are concentrated within a short time span in the trading
session and lead to a price change which is subsequently reversed.

7.

Orders to trade given which change the representation of the best bid or offer prices in a financial instrument
admitted to trading or traded on a trading venue, or more generally the representation of the order book available
to market participants, and are removed before they are executed.

Orders to trade given or transactions undertaken by a member/participant with a significant buying or sellinginterest in a financial instrument which lead to significant changes in the price of the financial instrument on
a trading venue.

6.

8.

Orders to trade given or transactions undertaken which represent a significant proportion of the daily volume oftransactions in the relevant financial instrument on the trading venue concerned, in particular when these activities
lead to a significant change in the price of the financial instruments.

5.

The signals described below in points 18 to 23 are particularly relevant in an automated trading environment.

Signals of possible market manipulation

7.

System disruptions

6. Breakdown or failure of critical mechanisms under Article 48 of Directive 2014/65/EU and its implementing
measures which are designed to protect the trading venue against the risks of algorithmic trading.

5. Market makers/liquidity providers repeatedly claim mis-trades; or

4. The capacities of the trading systems are reached or exceeded;

3. The price discovery process is interfered with over a significant period of time;

Disorderly trading conditions

2. A trading venue considers that an infringement is of sufficient severity or impact to justify consideration of
disciplinary action.

1. Market participants infringe rules of the trading venue which aim to protect the market integrity, the orderly
functioning of the market or the significant interests of the other market participants; andSECTION A

4. Whether orders to trade are given or transactions are undertaken by a market member/participant before or
immediately after that member/participant or persons publicly known as linked to that member/participant produce
or disseminate research or investment recommendations that are made publicly available.

Signals of possible insider dealing

L 87/78

Signals that may indicate significant infringements of the rules of a trading venue or disorderly trading
conditions or system disruptions in relation to a financial instrument

L 87/77

3. Unusual and significant trading or submission of orders to trade in the financial instruments of a company by certain
members/participants before the announcement of important corporate events or of price sensitive information
relating to the company; orders to trade/transactions resulting in sudden and unusual changes in the volume oforders/transactions and/or prices before public announcements regarding the financial instrument in question.

ANNEX III

Official Journal of the European Union

Requirement for operators of trading venues to immediately inform their national competentauthority

EN

Significant infringements of the rules of a trading venue

31.3.2017

254

EN

Official Journal of the European Union

L 87/79

29. Orders to trade given or transactions undertaken by a member/participant with a significant buying or sellinginterest in a financial instrument which lead to significant changes in the price of the related derivative orunderlying asset admitted to trading on a trading venue;

28. Transactions which have the effect of, or are likely to have the effect of modifying the settlement price of a financial
instrument when this price is used as a reference/determinant, namely, in the calculation of margins requirements;

27. Transactions which have the effect of, or are likely to have the effect of modifying the price of the underlying
financial instrument so that it surpasses/not reaches the strike price, or other element used to determine the pay-out(e.g. barrier), of a related derivative at expiration date;

26. Transactions or orders to trade which have the effect of, or are likely to have the effect of maintaining the price of
the underlying financial instrument below or above the strike price, or other element used to determine the pay-out(e.g. barrier), of a related derivative at expiration date;

25. Transactions or orders to trade which have the effect of, or are likely to have the effect of increasing/decreasing/maintaining the price of a financial instrument during the days preceding the issue, optional redemption or expiryof a related derivative or convertible;

The signals described below should be particularly considered by the operator of a trading venue where both a financial
instrument and related financial instruments are admitted to trading or traded or where the above mentioned
instruments are traded on several trading venues operated by the same operator.

Signals for cross-product market manipulation, including across different trading venues

24. The extent to which, to the best knowledge of the operator of a trading venue, orders to trade given or transactions
undertaken show evidence of position reversals in a short period and represent a significant proportion of the dailyvolume of transactions in the relevant financial instrument on the trading venue concerned, and might beassociated with significant changes in the price of a financial instrument admitted to trading or traded on the
trading venue.

23. Executing orders to trade or a series of orders to trade, in order to uncover orders of other participants, and thenentering an order to trade to take advantage of the information obtained (usually known as phishing).

22. Posting of orders to trade, to attract other market members/participants employing traditional trading techniques(‘slow traders’), that are then rapidly revised onto less generous terms, hoping to execute profitably against theincoming flow of ‘slow traders’ orders to trade (usually known as smoking).

21. Entry of large numbers of orders to trade and/or cancellations and/or updates to orders to trade so as to create
uncertainty for other participants, slowing down their process and to camouflage their own strategy (usually known
as quote stuffing).

20. Entry of small orders to trade in order to ascertain the level of hidden orders and particularly used to assess what is
resting on a dark platform (usually know as ping order).

19. Submitting multiple or large orders to trade often away from the touch on one side of the order book in order to
execute a trade on the other side of the order book. Once that trade has taken place, the manipulative orders will be
removed (usually known as layering and spoofing).

18. Entering of orders to trade or a series of orders to trade, executing transactions or series of transactions likely tostart or exacerbate a trend and to encourage other participants to accelerate or extend the trend in order to create
an opportunity to close out/open a position at a favourable price (usually know as momentum ignition).

17. Transactions or orders to trade which have the effect of, or are likely to have the effect of bypassing the trading
safeguards of the market (e.g. as regards volume limits; price limits; bid/offer spread parameters; etc.).

16. Transactions carried out as a result of the entering of buy and sell orders to trade at or nearly at the same time,with the very similar quantity and similar price by the same or different but colluding market members/participants(usually known as improper matched orders).

31.3.2017
EN

Official Journal of the European Union

31.3.201731. Creating or enhancing arbitrage possibilities between a financial instrument and another related financial instrument
by influencing reference prices of one of the financial instruments can be carried out with different financial
instruments (like rights/shares, cash markets/derivatives markets, warrants/shares, …). In the context of rights issues,
it could be achieved by influencing the (theoretical) opening or (theoretical) closing price of the rights.

30. Undertaking trading or entering orders to trade in one trading venue or outside a trading venue (including entering
indications of interest) with a view to improperly influencing the price of a related financial instrument in anotheror in the same trading venue or outside a trading venue (usually known as cross-product manipulation (trading on
financial instrument to improperly position the price of a related financial instrument in another or in the same
trading venue or outside a trading venue)).

L 87/80

255(1

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金融商品取引法研究会名簿（令和３年３月 16 日現在）

会
長
会長代理

委
員
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃

神
弥

作
永

裕
真

之
生

飯
大
尾
加
河
小
後
武
中
藤
松
松
松
松
宮

田
崎
崎
藤
村
出
藤
井
東
田
井
井
尾
尾
下

秀
貞
悠
貴
賢

総
和
一
仁
治
篤
元
浩
文
敬
予
征
一
彦
央

東京大学大学院法学政治学研究科教授
筑波大学ビジネスサイエンス系
ビジネス科学研究科教授
東京大学大学院法学政治学研究科准教授
野村総合研究所未来創発センターフェロー
東京都立大学大学院法学政治学研究科教授
東京大学大学院法学政治学研究科教授
立教大学大学院法務研究科教授
学習院大学法学部教授
東京大学大学院法学政治学研究科教授
西村あさひ法律事務所パートナー弁護士
名古屋大学大学院法学研究科教授
東京大学大学院法学政治学研究科教授
東京大学大学院法学政治学研究科教授
立教大学法学部教授
大阪大学大学院高等司法研究科教授
松尾国際法律事務所弁護士
ＴＭＩ総合法律事務所弁護士

オブザーバー
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃

三 井
太田原
岸 田
森
森
田 中
窪
島 村
松 本
横 田
塚 﨑

秀
和
吉
忠
正
秀
久
昌
昌

範
房
史
之
孝
樹
子
征
男
裕
由 寛

預金保険機構理事長
金融庁企画市場局市場課長
野村ホールディングス執行役員
大和証券グループ本社経営企画部担当部長兼法務課長
ＳＭＢＣ日興証券法務部長
みずほ証券法務部長
三菱ＵＦＪモルガン・スタンレー証券法務部長
日本証券業協会常務執行役政策本部共同本部長
日本証券業協会自主規制本部長
日本証券業協会自主規制本部自主規制企画部長
日本取引所グループ総務部法務グループ課長

一
正
友
智
秀
健
直

研 究 所 増 井 喜一郎〃
髙 木隆〃（幹事）石 川 真 衣


日本証券経済研究所理事長
日本証券経済研究所常務理事
日本証券経済研究所研究員

257

（敬称略）

［参考］ 既に公表した「金融商品取引法研究会（証券取引法研究会）
研究記録」

第１号「裁判外紛争処理制度の構築と問題点」
報告者 森田章同志社大学教授

2003 年 11月

第２号「システム障害と損失補償問題」
報告者 山下友信東京大学教授

2004 年１月

第３号「会社法の大改正と証券規制への影響」
報告者 前田雅弘京都大学教授

2004 年３月

第４号「証券化の進展に伴う諸問題（倒産隔離の明確化等）」
報告者 浜田道代名古屋大学教授

2004 年６月

第５号「EU における資本市場法の統合の動向

2005 年 7 月―投資商品、証券業務の範囲を中心として―」報告者

神作裕之東京大学教授

第６号「近時の企業情報開示を巡る課題
―実効性確保の観点を中心に―」報告者 山田剛志新潟大学助教授

2005 年７月

第７号「プロ・アマ投資者の区分―金融商品・

2005 年９月

販売方法等の変化に伴うリテール規制の再編―」

報告者

青木浩子千葉大学助教授

第８号「目論見書制度の改革」

報告者 黒沼悦郎早稲田大学教授

2005 年 11月

第９号「投資サービス法（仮称）について」
2005 年 11月
報告者 三井秀範金融庁総務企画局市場課長
松尾直彦金融庁総務企画局
投資サービス法（仮称）法令準備室長
第 10 号「委任状勧誘に関する実務上の諸問題

―委任状争奪戦（proxy fight）の文脈を中心に―」

報告者

2005 年 11月

太田洋 西村ときわ法律事務所パートナー・弁護士

第 11 号「集団投資スキームに関する規制について
2005 年 12月―組合型ファンドを中心に―」報告者 中村聡 森・濱田松本法律事務所パートナー ･ 弁護士
第 12 号「証券仲介業」

報告者 川口恭弘同志社大学教授

258

2006 年３月

第 13 号「敵対的買収に関する法規制」
報告者 中東正文名古屋大学教授

2006 年５月

第 14 号「証券アナリスト規制と強制情報開示・不公正取引規制」 2006 年７月
報告者 戸田暁京都大学助教授
第 15 号「新会社法のもとでの株式買取請求権制度」
報告者 藤田友敬東京大学教授

2006 年９月

第 16 号「証券取引法改正に係る政令等について」

2006 年 12月（ＴＯＢ、大量保有報告関係、内部統制報告関係）

報告者

池田唯一

金融庁総務企画局企業開示課長

第 17 号「間接保有証券に関するユニドロア条約策定作業の状況」 2007 年５月
報告者 神田秀樹 東京大学大学院法学政治学研究科教授
第 18 号「金融商品取引法の政令・内閣府令について」
2007 年６月
報告者 三井秀範 金融庁総務企画局市場課長
第 19 号「特定投資家・一般投資家について―自主規制業務を中心に―」 2007 年９月
報告者 青木浩子 千葉大学大学院専門法務研究科教授
第 20 号「金融商品取引所について」
2007 年 10月
報告者 前田雅弘 京都大学大学院法学研究科教授
第 21 号「不公正取引について－村上ファンド事件を中心に－」
2008 年１月
報告者 太田 洋 西村あさひ法律事務所パートナー・弁護士
第 22 号「大量保有報告制度」

報告者 神作裕之

2008 年３月
東京大学大学院法学政治学研究科教授

第 23 号「開示制度（Ⅰ）―企業再編成に係る開示制度および
2008 年４月
集団投資スキーム持分等の開示制度―」
報告者 川口恭弘 同志社大学大学院法学研究科教授
第 24 号「開示制度（Ⅱ）―確認書、内部統制報告書、四半期報告書―」 2008 年７月
報告者 戸田 暁 京都大学大学院法学研究科准教授
第 25 号「有価証券の範囲」

報告者 藤田友敬

2008 年７月
東京大学大学院法学政治学研究科教授

第 26 号「民事責任規定・エンフォースメント」
2008 年 10月
報告者 近藤光男 神戸大学大学院法学研究科教授
第 27 号「金融機関による説明義務・適合性の原則と金融商品販売法」2009 年１月
報告者 山田剛志 新潟大学大学院実務法学研究科准教授
第 28 号「集団投資スキーム（ファンド）規制」
2009 年３月
報告者 中村聡 森・濱田松本法律事務所パートナー・弁護士259

第 29 号「金融商品取引業の業規制」
2009 年４月
報告者 黒沼悦郎 早稲田大学大学院法務研究科教授
第 30 号「公開買付け制度」

報告者 中東正文2009 年７月
名古屋大学大学院法学研究科教授

第 31 号「最近の金融商品取引法の改正について」
2011 年３月
報告者 藤本拓資 金融庁総務企画局市場課長
第 32 号「金融商品取引業における利益相反

―利益相反管理体制の整備業務を中心として―」

報告者

神作裕之

2011 年６月

東京大学大学院法学政治学研究科教授

第 33 号「顧客との個別の取引条件における特別の利益提供に関する問題」2011 年９月
報告者 青木浩子 千葉大学大学院専門法務研究科教授
松本譲治 ＳＭＢＣ日興証券 法務部長
第 34 号「ライツ・オファリングの円滑な利用に向けた制度整備と課題」2011 年 11月
報告者 前田雅弘 京都大学大学院法学研究科教授
第 35 号「公開買付規制を巡る近時の諸問題」
2012 年２月
報告者 太田 洋 西村あさひ法律事務所弁護士・NY州弁護士
第 36 号「格付会社への規制」

報告者 山田剛志

成城大学法学部教授

2012 年６月

第 37 号「金商法第６章の不公正取引規制の体系」
2012 年７月
報告者 松尾直彦 東京大学大学院法学政治学研究科客員教授・西村あさひ法律事務所弁護士
第 38 号「キャッシュ・アウト法制」
2012 年 10月
報告者 中東正文 名古屋大学大学院法学研究科教授
第 39 号「デリバティブに関する規制」
2012 年 11月
報告者 神田秀樹 東京大学大学院法学政治学研究科教授
第 40 号「米国 JOBS 法による証券規制の変革」
2013 年１月
報告者 中村聡 森・濱田松本法律事務所パートナー・弁護士
第 41 号「金融商品取引法の役員の責任と会社法の役員の責任 2013 年３月―虚偽記載をめぐる役員の責任を中心に―」報告者 近藤光男 神戸大学大学院法学研究科教授
第 42 号「ドッド＝フランク法における信用リスクの保持ルールについて」 2013 年４月
報告者 黒沼悦郎 早稲田大学大学院法務研究科教授
第 43 号「相場操縦の規制」

報告者 藤田友敬

2013 年８月
東京大学大学院法学政治学研究科教授

260

第 44 号「法人関係情報」
2013 年 10月
報告者 川口恭弘 同志社大学大学院法学研究科教授
平田公一 日本証券業協会常務執行役
        第 45 号「最近の金融商品取引法の改正について」
2014 年６月
報告者 藤本拓資 金融庁総務企画局企画課長
        第 46 号「リテール顧客向けデリバティブ関連商品販売における民事責任 2014 年９月―「新規な説明義務」を中心として―」報告者 青木浩子 千葉大学大学院専門法務研究科教授        第 47 号「投資者保護基金制度」

報告者 神田秀樹

2014 年 10月
東京大学大学院法学政治学研究科教授        第 48 号「市場に対する詐欺に関する米国判例の動向について」 2015 年１月
報告者 黒沼悦郎 早稲田大学大学院法務研究科教授        第 49 号「継続開示義務者の範囲―アメリカ法を中心に―」
2015 年３月
報告者 飯田秀総 神戸大学大学院法学研究科准教授        第 50 号「証券会社の破綻と投資者保護基金
2015 年５月―金融商品取引法と預金保険法の交錯―」
報告者 山田剛志 成城大学大学院法学研究科教授        第 51 号「インサイダー取引規制と自己株式」
2015 年７月
報告者 前田雅弘 京都大学大学院法学研究科教授        第 52 号「金商法において利用されない制度と利用される制度の制限」 2015 年８月
報告者 松尾直彦 東京大学大学院法学政治学研究科
客員教授・弁護士        第 53 号「証券訴訟を巡る近時の諸問題

2015 年 10月―流通市場において不実開示を行った提出会社の責任を中心に―」報告者

太田 洋 西村あさひ法律事務所パートナー・弁護士        第 54 号「適合性の原則」

報告者 川口恭弘

2016 年３月
同志社大学大学院法学研究科教授        第 55 号「金商法の観点から見たコーポレートガバナンス・コード」 2016 年５月
報告者 神作裕之 東京大学大学院法学政治学研究科教授        第 56 号「ＥＵにおける投資型クラウドファンディング規制」 2016 年７月
報告者 松尾健一 大阪大学大学院法学研究科准教授        第 57 号「上場会社による種類株式の利用」
2016 年９月
報告者 加藤貴仁 東京大学大学院法学政治学研究科准教授        261第 58 号「公開買付前置型キャッシュアウトにおける
2016 年 11月
価格決定請求と公正な対価」
報告者 藤田友敬 東京大学大学院法学政治学研究科教授        第 59 号「平成26年会社法改正後のキャッシュ・アウト法制」 2017 年１月
報告者 中東正文 名古屋大学大学院法学研究科教授        第 60 号「流通市場の投資家による発行会社に対する証券訴訟の実態」 2017 年３月
報告者 後藤 元 東京大学大学院法学政治学研究科准教授        第 61 号「米国における投資助言業者（investment adviser） 2017 年５月の負う信認義務」
報告者 萬澤陽子 専修大学法学部准教授・当研究所客員研究員
        第 62 号「最近の金融商品取引法の改正について」
2018 年２月
報告者 小森卓郎 金融庁総務企画局市場課長
        第 63 号「監査報告書の見直し」

報告者 弥永真生

2018 年３月
筑波大学ビジネスサイエンス系
ビジネス科学研究科教授        第 64 号「フェア・ディスクロージャー・ルールについて」 2018 年６月
報告者 大崎貞和 野村総合研究所未来創発センターフェロー        第 65 号「外国為替証拠金取引のレバレッジ規制」
2018 年８月
報告者 飯田秀総 東京大学大学院法学政治学研究科准教授        第 66 号「一般的不公正取引規制に関する一考察」
報告者 松井秀征 立教大学法学部教授

2018 年 12月        第 67 号「仮想通貨・ＩＣＯに関する法規制・自主規制」
2019 年３月
報告者 河村賢治 立教大学大学院法務研究科教授        第 68 号「投資信託・投資法人関連法制に関する問題意識について」 2019 年５月
報告者 松尾直彦 東京大学大学院法学政治学研究科
客員教授・弁護士        第 69 号「「政策保有株式」に関する開示規制の再構築について」 2019 年７月
報告者 加藤貴仁 東京大学大学院法学政治学研究科教授        第 70 号「複数議決権株式を用いた株主構造のコントロール」 2019 年 11月
報告者 松井智予 上智大学大学院法学研究科教授        第 71 号「会社法・証券法における分散台帳の利用
―デラウェア州会社法改正などを参考として」報告者 小出 篤 学習院大学法学部教授

2020 年２月        第 72 号「スチュワードシップコードの目的とその多様性」 2020 年５月
報告者 後藤 元 東京大学大学院法学政治学研究科教授
262

第 73 号「インデックスファンドとコーポレートガバナンス」 2020 年７月
報告者 松尾健一 大阪大学大学院高等司法研究科教授        第 74 号「株対価 M&A/株式交付制度について」
2020 年８月
報告者 武井一浩 西村あさひ法律事務所パートナー弁護士        第 75 号「取締役の報酬に関する会社法の見直し」
2021 年２月
報告者 尾崎悠一 東京都立大学大学院法学政治学研究科教授
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金融商品取引法研究会研究記録

第 76 号

投資助言業に係る規制―ドイツ法との比較を中心として―

令和３年６月９日
定価 550 円（本体 500 円＋税 10%）
編 者
発行者

金 融 商 品 取 引 法 研 究 会
公益財団法人 日本証券経済研究所

東京都中央区日本橋 2-11-2

〒 103-0027

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電話

03（6225）2326 代表

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URL: https://www.jsri.or.jp

ISBN978-4-89032-692-1 C3032 ¥500E