intl survey of investment adviser regulation phils

8/17/2019 Intl Survey of Investment Adviser Regulation Phils

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International Survey of Investment Adviser Regulation


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International Survey of Investment Adviser Regulation

THIRD EDITION

Marcia L. MacHarg

Kenneth J. Berman

Editors


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Published by:Kluwer Law InternationalPO Box 3162400 AH Alphen aan den RijnThe NetherlandsWebsite: www.kluwerlaw.com

Sold and distributed in North, Central and South America by:Aspen Publishers, Inc.7201 McKinney CircleFrederick, MD 21704United States of AmericaEmail: [email protected]

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ISBN 978-90-411-3602-2

# 2012 Kluwer Law International BV, The Netherlands

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Printed and Bound by CPI Group (UK) Ltd, Croydon, CR0 4YY.


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Table of Contents

Preface lxxv

List of Abbreviations lxxvii

Introduction lxxxi

Argentina 1

Patricia Lopez Aufranc

A. Overview of the Regulatory Structure 11. Introduction 12. Role of the Banco Central de la Repu ´ blica Argentina, the

Comisió n Nacional de Valores and the Mercado de Valores deBuenos Aires S.A. 2

B. The Registration Process 31. Activities or Actions Requiring Registration 3

1.1. General 31.2. Non-Argentine Advisers 4

2. Registration Requirements 42.1. Banks 4

2.1.1. General 42.1.2. Registration of Banks’ Representatives 5

2.2. Brokers and Brokerage Firms 52.3. Over-the-Counter Brokers 62.4. Companies Acting as Managers of Investment Funds 7

C. Overview of Substantive Regulation 81. Anti-fraud Provisions 82. Insider Trading; Confidentiality; Market Manipulation 8


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3. Contractual Relationships with Clients 104. Compensation Terms 105. Disclosure Requirements 106. Personal Securities Trading 117. Performance-Based Fees 118. Advertising Restrictions 119. Use of Internet 1110. Soft Dollar Arrangements 1211. Client Solicitors 1312. Books and Records 1313. Custody Regulations 1314. Regulatory Inspections 1315. Regulation of Specified Financial Entities 14

15.1. Banks 1415.2. Brokers and Brokerage Firms 1415.3. Over-the-Counter Brokers 1515.4. Companies Acting as Managers of Investment Funds 15

D. Anti-money Laundering, Data Protection and Consumer Protection 151. Anti-money Laundering 15

1.1. Information Requirements 151.2. Suspicious Activity Reports and Know-Your-Customer

Procedures 162. Data Protection 163. Consumers and Users’ Protection 18

E. Enforcement 19F. Unauthorized Financial Activities 19G. Extraterritorial Application 21

Australia 23Steven Rice

A. Overview of the Regulatory Structure 231. Applicable Laws and Regulations 23

1.1. Regulatory Structure 231.2. Regulatory Authorities 24

2. Registration Requirements 242.1. Activities or Actions Requiring Registration 24

2.1.1. Are Financial Services Being Provided? 252.1.2. Is a Financial Services Business Being Carried On

in Australia? 252.2. Financial Product Advice 26

2.2.1. ‘‘Dealing’’ in Financial Products 272.3. Financial Products 27

2.3.1. Financial Products—General Definition 272.3.2. Specific Inclusions as Financial Products 29

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2.3.3. Specific Exclusions From Financial Products 292.3.4. Exclusions from Financial Product Advice 292.3.5. Exclusions from the definition of ‘‘dealing’’ 30

2.4. Registration of Associated Persons 312.5. Registration of Affiliates 312.6. Registration of Non-Australian Advisers 322.7. Exemptions 32

B. The Registration Process 341. How to Register 34

1.1. Registration Form 341.2. Registration Fee 341.3. How Long Does the Registration Process Take? 341.4. Reciprocity 341.5. Are There Different or Additional Registration Provisions

for Non-Australian Applicants? 351.6. Information Required 35

1.6.1. ‘‘Proof’’ Documents 351.6.2. People Proofs 371.6.3. Other Core Proofs 381.6.4. Non-core Proofs 39

1.7. Scope of the License 391.8. Substantive Requirements for Registration 40

1.8.1. General Standards for Granting Registration 401.8.2. Organizational Competence and Responsible

Managers 411.8.2.1. General 411.8.2.2. Overseas Qualifications 42

1.8.3. Adequate Compliance Arrangements 431.9. Jurisdiction of Organization 451.10. Nationals/Residents Serving as Directors, Officers or

Employees 452. Withdrawal from Registration 453. Grounds for Denial and Rescission of Registration 46

C. Overview of Substantive Regulation 471. Anti-fraud Provisions 472. Insider Trading 493. Contractual Relationship with Clients 514. Compensation Terms 525. Can the Advisory Contract Be Assigned by the Investment

Adviser? 526. Disclosure Requirements 52

6.1. Wholesale Clients and Retail Clients 526.2. Disclosures to Retail Clients 54

7. Personal Securities Trading 558. Performance-Based Fees 55

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9. Advertising Restrictions 5510. Electronic Media; Use of Internet 5611. Client Solicitors 5612. Books and Records 5613. Custody Regulations 5714. Soft Dollars 5715. Regulatory Inspections 57

D. Anti-money Laundering, Data Protection and Consumer Privacy 581. Anti-money Laundering 582. Consumer Privacy and Data Protection 58

E. Enforcement Proceedings 58F. Extraterritorial Application 59

Austria 61 Michael Binder & Stefan Frank



2. Registration Requirements 622.1. Activities or Actions Requiring Registration 622.2. Definition of Financial Instruments 632.3. Licensing Requirements 64

2.3.1. Investment Firms 642.3.2. Investment Services Undertakings 642.4. Associated Persons 64

2.4.1. Managing Directors 642.4.2. Compliance Function 66

2.5. Qualifying Holdings 662.6. Advisers from Outside Austria 67

2.6.1. Member State Investment Firms 672.6.2. Advisers from Outside the EU 68


1.1. Registration Process for Investment Firms 681.1.1. Essential Requirements 681.1.2. Information Requirements 69

1.2. Registration Process for Investment Services Undertakings 701.2.1. Essential Requirements 70

2. Expiration and Revocation of Authorizations 70C. Overview of Substantive Regulation 71

1. Conflicts of Interest and Other Prudential Obligations 711.1. Identifying Conflicts of Interest 711.2. Policies and Procedures 72

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2. Disclosure Requirements 732.1. Information Required 732.2. Classification of Clients 74

2.2.1. Professional Clients 742.2.2. Eligible Counterparties 742.2.3. Retail Clients 75

3. Insider Trading; Personal Transactions 754. Compensation and Performance-Based Fees 765. Soft Dollars 766. Agents 777. Record Keeping 778. Custody Regulations 779. Regulatory Inspections 78

D. Anti-money Laundering and Data Protection 781. Anti-money Laundering 782. Data Protection 79


Belgium 83 Marc Vermylen & Jan Missoul


1.1. Regulatory Structure 831.2. Regulatory Authorities 841.3. Self-regulatory Associations 84

2. Registration Requirements 842.1. Investment Services Requiring Registration 852.2. Ancillary Services 852.3. Definition of Financial Instruments 862.4. Registration of Affiliates 872.5. Registration of Non-Belgian Advisers 87

2.5.1. EEA Member States 872.5.2. Non-EEA Member States 88

2.6. Exemptions from Registration 89B. The Registration Process 89

1. How to Register 891.1. Application Process 891.2. How Long Does Registration Take? 901.3. Information Required 90

2. Substantive Requirements for Authorization 912.1. Associated Persons; Personnel Qualifications 91

2.1.1. Management Personnel 912.1.2. Shareholders 91

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2.2. Compliance, Audit and Risk Management 912.3. Jurisdiction of Organization and Other Obligations 922.4. Capital and Liquidity Requirements 93

3. Denial and Withdrawal of Licenses 93C. Overview of Substantive Regulation 93

1. Anti-fraud Provisions 941.1. Duty of Care 941.2. Market Abuse 941.3. Conflicts of Interest 951.4. Codes of Conduct 95

2. Insider Trading 952.1. Insiders and Inside Information 952.2. Obligations to Prevent Insider Trading 962.3. Administrative and Criminal Offense 96

3. Conduct of Business Rules; Suitability 963.1. Client Classification 973.2. Disclosure Requirements 97

4. Advertising 985. Electronic Media and Use of the Internet 996. Personal Securities Trading 1007. Compensation of Professionals 100

7.1. General Requirements 1017.2. Performance-Based Remuneration 101

8. Solicitation by Intermediaries 102

9. Custody 10210. Soft Dollars; Fees 10211. Regulatory Inspections 103

D. Anti-money Laundering and Data Protection 1041. Anti-money Laundering 1042. Data Protection 105


Brazil 109 Joaquim Simo˜ es Barbosa & Paulo Eduardo Penna


1.1. Regulatory Structure 1091.2. Role of the CVM 1101.3. Self-Regulatory Organization 110


2.1.1. Investment Managers 1112.1.2. Investment Consultants 111

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2.1.3. Investment Analysts and AutonomousInvestment Agents 111

2.2. Definition of Securities 1122.3. Registration of Associated Persons 112

2.3.1. Officer, Administrator or Managing Partner 1122.4. Registration of Non-Brazilian Managers or Consultants 1132.5. Exemption from Registration 113

B. The Registration Process 1131. How to Register with the CVM 113

1.1. Investment Manager Registration 1131.1.1. Individuals 1131.1.2. Corporate Entities 114

1.2. Investment Consultant Registration 1141.3. Registration Fee 1151.4. How Long Does the Registration Process Take? 1151.5. Reciprocity 115

2. Information Required 1152.1. Individual Investment Managers 1152.2. Corporate Investment Managers 1162.3. Investment Consultants 117

2.3.1. Individuals 1172.3.2. Corporate Entities 117

3. Substantive Requirements 1183.1. Capital or other Financial Requirements 118

3.2. Jurisdiction of Organization 1183.3. Nationals Serving as Officers,Directors or Employees 118

4. Withdrawal from Registration 1185. Grounds for Denial of Registration 119

C. Overview of Substantive Regulation 1191. Anti-fraud Provisions 1192. Insider Trading and Privileged Information 1203. Contractual Relationship with Clients 1204. Disclosure Requirements 121

4.1. Reports to the CVM 1215. Personal Securities Trading 1216. Performance-Based Fees 1217. Advertising Restrictions 1228. Electronic Media; Use of Internet 1229. Client Solicitors 12210. Books and Records 12211. Custody Regulations 12312. Soft Dollars 12313. Regulatory Inspections 12314. Loans 123

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15. General Responsibility 12416. Other Activities 124

D. Anti-money Laundering, Data Protection and Consumer Privacy 1241. Anti-money Laundering 1242. Data Protection and Consumer Privacy 125

E. Enforcement Proceedings 1251. Administrative Proceedings 1252. Penalties 1263. Private Rights of Action 127

F. Extraterritorial application 127

Canada 129 Bryce Kraeker & Paul Dempsey


1.1. Regulatory Structure 1291.2. Regulatory Authorities 1301.3. Self-Regulatory Organizations 130


2.1.1. Portfolio Managers and Restricted PortfolioManagers 131

2.1.2. Definition of Securities 131

2.2. Exemptions 1312.2.1. General Advice 1312.2.2. Registered Dealers and Dealing Representatives 1322.2.3. Advisers to Private Equity Funds 1322.2.4. International Advisers 132

2.3. Registration of Associated Persons 1322.3.1. Representatives and Permitted Individuals 1322.3.2. Chief Compliance Officer; Ultimate

Designated Person 1332.4. Registration of Affiliates 1332.5. Registration of Advisers from Outside Canada 133


1.1. Registration Form 1341.1.1. Regulator Forms 1341.1.2. NRD Forms 134

1.2. Registration Fee 1351.2.1. NRD Fees 1351.2.2. Regulator Fees 135

1.3. Length of the Registration Process 1351.4. Reciprocity 1361.5. Registration Provisions for Foreign Applicants 136

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1.6. Information Required 1361.7. Associated Persons 1371.8. Financial Statements 138

2. Substantive Requirements for Registration 1382.1. Working Capital and Insurance 1382.2. Jurisdiction of Organization 1392.3. Nationals or Residents Serving as Directors, Officers

or Employees 1393. Withdrawal from Registration 1394. Grounds for Denial of Registration 139

C. Overview of Substantive Regulation 1401. Conflicts of Interest 1402. Insider Trading 1413. Contractual Relationship with Clients 141

3.1. Required Terms and Conditions 1413.2. Standard of Care 141

4. Compensation Terms 1415. Assignments of Advisory Contracts 1416. Disclosure Requirements 1427. Personal Securities Trading 1428. Performance-Based Fees 1439. Advertising Restrictions 14310. Electronic Media; Use of Internet 14411. Client Solicitors 144

12. Books and Records 14513. Custody Regulations 14514. Soft Dollars 14615. Regulatory Inspections 14716. Tied Settling and Selling 147

D. Anti-money Laundering, Data Protectionand Consumer Privacy 1481. Anti-money Laundering 1482. Data Protection 1483. Consumer Privacy 149

E. Enforcement 1491. Enforcement Authority 1492. Enforcement Powers and Remedies 1493. Private Right of Action 150

F. Extraterritorial Application 150

Chile 153 Jose Maria Eyzaguirre B. & Luisa Fernanda Nunez P.

A. Overview of the Regulatory Structure 1531. Introduction 153

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1.1. General 1531.2. Regulatory Authorities 154

2. Investment Advisory Activities of Specially Regulated orLicensed Entities 1552.1. Broker-Dealers and Stockbrokers 1552.2. Registration of Broker-Dealers and Stockbrokers 1562.3. Management of Securities Portfolios 1562.4. Ancillary Activities 1562.5. Advice with Respect to Non-Chilean Securities 157

2.5.1. Mandate Agreement 1572.6. Advisory Activities by Unlicensed Entities 158

B. Overview of Substantive Regulation 1581. General 1582. Insider Trading 1593. Conflicts of Interest and Risk Management 1594. Contractual Relationship with Clients 159

4.1. General 1594.2. Written Contracts 160

4.2.1. Portfolio Management Agreements 1604.3. Compensation 1614.4. Assignments 161

5. Disclosure Requirements 1616. Use of the Internet 1617. Books and Records 161

8. Custody 1619. Regulatory Inspection 162C. Anti-money Laundering, Data Protection and Consumer Privacy 162

1. Anti-money Laundering 1621.1. FAU 1621.2. AML and Terrorism Regulations 163

2. Data Protection and Consumer Privacy 163D. Enforcement Proceedings 164E. Extraterritorial Application 165

People’s Republic of China 167Edward Drew Dutton, Tingting Wu & Fengjian Ao


1.1. Regulatory Structure 1671.2. Role of the CSRC 1681.3. PRC Securities Law 169

2. Laws Applicable to Advisory Service Companies 1692.1. Securities Investment Fund Management Companies

(SIFMCs) 1692.2. Securities Investment Consulting Companies (SICCs) 169

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2.3. Securities Companies with Asset Management BusinessQualification (SCAMBQs) 170

3. Registration Requirements 1703.1. Securities Investment Fund Management Companies 170

3.1.1. Securities Investment Fund Management 1703.1.2. PRC Companies 1703.1.3. Registration of Affiliates 1703.1.4. Registration of Non-PRC Companies 171

3.2. Securities Investment Consulting Companies 1713.2.1. PRC Companies 1713.2.2. Registration of Affiliates 1723.2.3. Registration of Non-PRC Companies 172

3.3. Securities Companies with Asset Management BusinessQualification 1723.3.1. PRC Companies 1723.3.2. Registration of Affiliates 1733.3.3. Registration of Non-PRC Companies 173

B. Approval and Registration Process 1731. Securities Investment Fund Management Companies 173

1.1. Requirements for Approval 1731.1.1. Shareholder Requirements 1731.1.2. Foreign Shareholder Requirements 174

1.2. Information Required 1751.2.1. PRC Applicants 175

1.2.2. Foreign Joint Venture Applicants 1751.3. Qualifications of Associated Persons 1761.4. Registration Fee 1761.5. How Long Does the Approval Process Take? 1761.6. Grounds for Rejection 176

2. Securities Investment Consulting Companies 1762.1. Requirements for Approval 1762.2. Information Required 1772.3. Qualifications of Associated Persons 1772.4. Registration Fee 1772.5. How Long Does the Approval Process Take? 1772.6. Grounds for Rejection 178

3. Securities Companies with Asset Management BusinessQualification 1783.1. Requirements for Approval 178

3.1.1. Pooled Asset Management Business 1783.2. Information Required 1793.3. Qualifications of Associated Persons 1793.4. Registration Fee 1793.5. How Long Does the Approval Process Take? 1793.6. Grounds for Rejection 180

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C. Overview of Substantive Regulation 1801. Anti-fraud Provisions 1802. Insider Trading 1803. Contractual Relationship with Clients 181

3.1. Securities Investment Fund Management Companies 1813.2. Securities Investment Consulting Companies 1813.3. Securities Companies with Asset Management Business

Qualification 1814. Compensation Terms 181

4.1. Securities Investment Fund Management Companies 1814.2. Securities Investment Consulting Companies 1824.3. Securities Companies with Asset Management Business

Qualification 1825. Assignment 1826. Disclosure Requirements 182

6.1. Securities Investment Fund Management Companies 1826.2. Securities Companies with Asset Management Business

Qualification 1837. Personal Securities Trading 1838. Performance-Based Fees 1839. Advertising Restrictions 18310. Electronic Media; Use of Internet 18411. Client Solicitors 18412. Books and Records 184

13. Custody Regulations 18514. Soft Dollars 18515. Regulatory Inspections 185

D. Anti-money Laundering, Data Protection and ConsumerPrivacy 185


Denmark 187 Regina M. Andersen


1.1. Regulatory Structure 1871.2. Regulatory Authorities 1881.3. Self-Regulatory Associations 188


2.1.1. Investment Advice 1882.1.2. Investment Services Activities 1892.1.3. Investment Advice on a Stand-Alone Basis 190

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2.2. Definition of Financial Instruments 1902.3. Registration of Associated Persons 1912.4. Registration of ownership 1922.5. Registration of Affiliates 1922.6. Registration of Advisers from Outside Denmark 1922.7. Tied Agents 1932.8. Exemptions from Licensing Requirements 194

2.8.1. General Specific Exemptions 1942.9. Stand-Alone Adviser Exemption 194

B. The Registration Process 1951. How to register 195

1.1. The Application Form 1951.2. Registration Fee 1961.3. How Long Does the Registration Process Take? 1961.4. Are There Different Registration Provisions for

Non-Danish Applicants? 1961.5. Information Required 197

1.5.1. Stand-Alone Adviser Applicants 1971.5.2. Securities Dealer Applicants 1971.5.3. Associated Persons 1981.5.4. Stock Ownership 198

1.6. Financial Information 1982. Substantive Requirements for Registration 198

2.1. Net Worth or Other Financial Requirements 198

2.2. Jurisdiction of Organization 1992.3. Nationals/Residents Serving as Directors, Officers orEmployees 199


C. Overview of Substantive Regulation 2001. Anti-fraud Provisions 2002. Inducements 2013. Conflicts of Interest 2014. Governance 2015. Insider Trading 2026. Contractual Relationship with Clients 203

6.1. Client Categorization 2036.2. Contract Terms 2046.3. Portfolio Management 2046.4. Client Suitability 205

7. Disclosure Requirements; Performance Reports 2058. Compensation and Fees 206

8.1. Investment Advisory-Related Fees 2068.2. Portfolio Management-Related Fees 207

9. Assignment of the Advisory Contract 207

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10. Personal Securities Trading 20811. Performance-Based Fees 20812. Advertising Restrictions 20813. Electronic Media; Use of Internet 21114. Client solicitors 21215. Books and Records 21216. Custody Regulations 21217. Soft Dollars 21318. Regulatory Inspection 213

D. Anti-money Laundering, Data Protection and Consumer Privacy 2141. Anti-money Laundering 2142. Data Protection 215

2.1. Persons Covered by the PPD Act 2152.2. Collection and Processing of Personal Data 2162.3. Notification Requirement 2172.4. Transfer of Data Outside the EEA 2172.5. Disclosure Requirements 217

3. Consumer Privacy 218E. Enforcement Proceedings 218F. Extraterritorial Application 220

European Union 221 Anthony McWhirter & Philip Orange

A. Overview of the Regulatory Structure 2211. Applicable Laws and Regulations 2211.1. Regulatory Structure 2211.2. Regulatory Authorities 2221.3. EU Directives Relevant to Investment Adviser Activities 223

1.3.1. General 2231.3.2. MiFID 223


2.1.1. Investment Firms 2242.1.2. Investment Services and Investment Activities 2242.1.3. MiFID Definition of ‘‘Financial Instruments’’ 2242.1.4. Ancillary Services 225

2.2. MiFID Passporting Regime 2262.3. MiFID Licensing Exemptions 2262.4. Certain Exempt Persons 227


1.1. Registration Process 2281.2. How Long Does the Registration Process Take? 228

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1.3. Reciprocity 2281.4. Are there Different or Additional Registration Provisions

for Foreign Applicants? 2292. Substantive Requirements for Registration 229

2.1. Specific MiFID Requirements 2292.2. ‘‘Close-Link’’ Relationships 2292.3. Scope of Business; Shareholders; Suitability of Personnel 230

3. Withdrawal from Registration 2304. Doing Business in other Member States 231

4.1. The MiFID Passport 2314.2. Passporting Investment Services and Activities 2314.3. Establishing a Branch in a Host Member State 231

C. Overview of Substantive Regulation 2321. Home Member State Regulation 2322. Operational Requirements; Policies and Procedures 2333. Conduct of Business Requirements 2334. Client Categories 234

4.1. Professional Clients; Eligible Counterparties 2344.2. Retail Clients 235

5. Capital Requirements 2355.1. Applicable Directives 2355.2. Initial Capital Requirements 2355.3. Risk Capital Requirements 2365.4. Liquidity Standards 236

5.5. Remuneration Policies 2366. Insider Trading 2376.1. Inside Information 2376.2. Market Manipulation 237

7. Acquiring Interests in Investment Firms 2387.1. Notification of Acquisition of Qualifying Holding 2387.2. Assessment of Proposed Acquirer 238

8. Reporting to Member State Authorities 2398.1. Changes in Control 2398.2. Transactions in Financial Instruments 239

9. Electronic Media; Use of the Internet 23910. Investor Compensation 23911. Auditor’s Duty to Whistleblow 24012. Collective Investment Undertakings 24013. Alternative Investment Fund Managers Directive 24114. Cooperation among Member States 242

D. Anti-money Laundering, Data Protection and Consumer Privacy 2421. Anti-money Laundering 2422. Data Protection 242

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E. Enforcement Proceedings 2431. Enforcement Reserved to Member States 2432. Judicial Review 2433. Individual Private Rights of Action 243


France 245 Antoine d’Ornano




2.1.1. Investment Advice 2462.1.2. Related Investment Services 2472.1.3. Definition of Financial Instruments 2472.1.4. Fund Management 2482.1.5. Related Services 2482.1.6. Financial Advisers 2482.1.7. Exemptions from Registration 249

2.2. Registration of Associated Persons 2492.2.1. Persons Associated with MIF Advisers 249

2.2.2. Persons Associated with Financial Advisers 2502.2.3. Personnel Qualifications for MIF Advisers 2512.2.3.1. Compliance Officer; Risk Management

Function 2512.3. Registration of Affiliates 252

2.3.1. Qualifying Shareholders 2522.4. Registration of Advisers from Outside France 252


1.1. Authorization Forms 2531.1.1. MIF Advisers 2531.1.2. Financial Advisers 253

1.2. Registration Fees 2531.2.1. MIF Advisers 2531.2.2. Financial Advisers 253

1.3. Documentation Required 2541.3.1. MIF Advisers 2541.3.2. Financial Advisers 255

1.4. How Long Does the Authorization Process Take? 2551.4.1. MIF Advisers 2551.4.2. Financial Advisers 256

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1.5. Reciprocity 2561.5.1. EEA Member States 256

1.5.1.1. MIF Advisers 2561.5.1.2. Financial Advisers 256

1.5.2. Countries outside the EEA 2571.6. Information Required 257

2. Substantive Requirements for Authorization or Registration 2572.1. Capital Requirements for MIF Advisers 2572.2. Capital Requirements for Financial Advisers 2582.3. Jurisdiction of Organization for MIF Advisers 2582.4. Jurisdiction of Organization of Financial Advisers 2592.5. Nationals or Residents Serving as Directors,

Officers, and Employees 2593. Voluntary withdrawal from Authorization or Registration 259

3.1. MIF Advisers 2593.2. Financial Advisers 260

4. Grounds for Denial of Authorization or Registration 2604.1. MIF Advisers 2604.2. Financial Advisers 260

5. Grounds for Termination of Authorization 2615.1. MIF Advisers 2615.2. Financial Advisers 261

C. Overview of Substantive Regulation 2621. Anti-fraud Provisions 262

1.1. MIF Advisers 2621.2. Financial Advisers 2622. Client Suitability 262

2.1. MIF Advisers 2622.2. Financial Advisers 263

3. Conflicts of Interest 2633.1. MIF Advisers 2633.2. Financial Advisers 264

4. Insider Trading 2644.1. MIF Advisers 2644.2. Financial Advisers 265

5. Contractual Relationships with Clients 2655.1. MIF Advisers 265

5.1.1. Categorization of Clients 2655.1.2. Disclosure of Information to Clients 2665.1.3. Written Contracts 267

5.2. Financial Advisers 2675.2.1. Categorization of Clients 2675.2.2. Disclosure of Information to Clients 2675.2.3. Written Contracts 268

5.3. Can the Contracts Be Assigned? 268

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6. Disclosure Requirements 2686.1. MIF Advisers 268

6.1.1. Disclosure Prior to Service 2686.1.2. Ongoing Disclosure 269

6.2. Financial Advisers 2696.2.1. Disclosure Prior to Service 2696.2.2. Ongoing Disclosure 270

7. Personal Securities Trading 2707.1. MIF Advisers 2707.2. Financial Advisers 271

8. Performance-Based Fees 2718.1. MIF Advisers 2718.2. Financial Advisers 271

9. Advertising 2729.1. MIF Advisers 2729.2. Financial Advisers 272

10. Electronic Media; Use of Internet 27210.1. MIF Advisers 27210.2. Financial Advisers 273

11. Client Solicitors 27311.1. MIF Advisers 27311.2. Financial Advisers 273

12. Books and Records 27412.1. MIF Advisers 274

12.2. Financial Advisers 27413. Custody Arrangements 27513.1. MIF Advisers 27513.2. Financial Advisers 275

14. ‘‘Soft Dollars’’ 27514.1. MIF Advisers 27514.2. Financial Advisers 276

15. Regulatory Inspections 276D. Anti-money Laundering, Data Protection and Consumer Privacy 277

1. Anti-money Laundering 2772. Data Protection and Consumer Privacy 277

E. Enforcement Proceedings, Private Right of Action 2781. MIF Advisers 278

1.1. Criminal Sanctions 2781.2. Professional Sanctions 2791.3. Civil Claims 279

2. Financial Advisers 2792.1. Criminal sanctions 2792.2. Professional Sanctions 2802.3. Civil Claims 280


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C. Overview of Substantive Regulation 3001. General 3002. Duty of Care and Best Execution 3013. Insider Trading and Market Manipulation 301

3.1. Insider Trading 3013.2. Market Manipulation 302

4. Client Classification 3035. Suitability 3036. Conflicts of Interest 3047. Contractual Relationship with Clients 3058. Assignment of Advisory Contracts 3059. Disclosure Requirements 305

9.1. Required Information 3059.2. Disclosure to Retail Clients 3069.3. Disclosure to BaFin 306

10. Fees 30711. ‘‘Soft Dollars’’; Incentive Payments 30812. Advertising Restrictions 30813. Electronic Media; Use of Internet 30914. Client Solicitors 30915. Books and Records 31016. Custody 31017. Regulatory Inspections 311

D. Anti-money Laundering, Data Protection and Consumer Privacy 311

1. Anti-money Laundering and Terrorist Financing 3111.1. Client Due Diligence 3111.2. Recordkeeping 3121.3. Reporting 313

2. Data Protection 313E. Enforcement Proceedings 314

1. Administrative Proceedings 3141.1. Corrective Actions 3141.2. Administrative Fines 315

2. Criminal Offenses 315F. Extraterritorial Application 315

Greece 317Vassiliki Lazarakou & Michalis Pattakos



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2.1.1. Investment Advice; Portfolio Management 3182.2. Definition of Financial Instruments 3192.3. Ancillary Services 3192.4. Exemptions 3192.5. Certification of Associated Persons 320

2.5.1. Officers and Directors 3202.5.2. Qualified Personnel, Compliance and

Internal Audit 3212.6. Registration of Affiliates 3222.7. Registration of Advisers from Outside Greece 323

B. The Registration Procedure 3231. How to Register 323

1.1. Authorization Form 3231.2. Authorization Fee 3241.3. How Long Does the Authorization Process Take? 3241.4. Reciprocity 3251.5. Information Required 325

1.5.1. Applicant Entity 3251.5.2. Board of Directors 3261.5.3. Controlling Shareholders 327

1.6. Financial Information 3272. Substantive Requirements for Licensing 327

2.1. Capital Requirements 3272.2. Jurisdiction of Organization; Type of Legal Entity 3282.3. Nationals or Residents Serving as Directors,

Officers or Employees 3283. Termination or Withdrawal of License 3284. Grounds for Denial of Registration 329

C. Overview of Substantive Regulation 3291. Anti-fraud Provisions 3292. Conflicts of Interest 3303. Insider Trading 330

3.1. Privileged Information Relating to Financial Instruments 3313.2. Privileged Information Relating to Derivatives 3313.3. Persons Covered 3313.4. Policies and Procedures against Market Abuse 332

4. Contractual Relationship with Clients 3324.1. Written Agreements 3324.2. Classification of Clients 332

4.2.1. Professional Clients 3324.2.2. Non-Professional Clients 333

4.3. Notification of Guarantee Scheme 3335. Compensation Terms 333

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6. Can the Contract be Assigned? 3347. Disclosure Requirements 334

7.1. Client Disclosures 3347.2. Ongoing Disclosure to the CMC 335

8. Personal Securities Trading 3359. Performance-Based Fees 33610. Advertising Restrictions 33711. Electronic Media; Use of Internet 33812. Client Solicitors 33913. Books and Records 33914. Custody Regulations 33915. Regulatory Inspections 340

15.1. Role of CMC and BoG 34015.2. Inspections of EU and Non-EU Firms 341

D. Anti-money Laundering, Data Protection and Consumer Privacy 3411. Anti-money Laundering and Counter-Terrorism 3412. Data Protection and Consumer Privacy 342

2.1. Data Protection 3432.2. Consumer Protection 343

E. Enforcement Proceedings 3441.1. Regulatory Authorities 3441.2. Private Right of Action 345


Hong Kong 347 Rory Gallaher & Alice Qian


1.1. The Securities and Futures Ordinance 3471.2. The Role of the Securities and Futures Commission 348

2. Regulated Activities 3492.1. Activities Requiring Authorization 3492.2. Definition of Securities 3492.3. Advising on Securities 3502.4. Asset Management 3502.5. Licenses for Asset Management and Advising on

Securities 3502.6. Authorized Financial Institutions 3512.7. Authorization of Associated Persons 351

2.7.1. Licensed Representatives 3512.7.2. Responsible Officers 351

2.8. Associated Entities 3522.9. Approval of Substantial Shareholders 352

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2.10. Registration of Entities from Outside Hong Kong 3522.11. Provisional Licenses 3532.12. Exemptions from Licensing Requirements 353

2.12.1. Incidental Exemption 3532.12.2. Advising Wholly Owned Group Companies 3542.12.3. Exemptions from Adviser Licensing 354

2.13. Activities in Hong Kong 355B. The Licensing Process 355

1. How to Obtain a License 3551.1. Application Form 3551.2. Licensing or Registration Fees 3561.3. How Long Does the Licensing Process Take? 3571.4. Information Required 357

1.4.1. Information about Associated Persons 3581.4.2. Information on Financial Resources 358

1.5. Financial Statements 3581.5.1. Reciprocity 358

1.6. No Additional Licensing Provisions for ForeignApplicants 358

2. Substantive Requirements for Licensing 3592.1. Fit and Proper Criteria 3592.2. Capital and Other Financial Requirements for Licensed

Corporations 3592.3. Insurance Requirements 360

2.4. Competence Requirements for Associated Persons 3602.4.1. Individuals 3602.4.2. Test of Competence for Responsible Officers 3612.4.3. Test of Competence for Licensed Representatives 362

2.5. Jurisdiction and Form of Organization 3632.6. Number of Residents Serving as Directors, Officers or

Employees 3633. Withdrawal from Carrying on Licensed Regulated Activity 3634. Grounds for Denial of License 3645. Revocation or Suspension of a License 364

5.1. Individuals 3645.2. Corporations 364


1.1. Insider Dealing 3651.1.1. Duty of Officers to Implement Policies and

Procedures 3661.2. Market Misconduct 367

1.2.1. False Trading 3671.2.2. Price Rigging 3671.2.3. Disclosure of Information about Prohibited

Transactions 367

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1.2.4. Disclosure of False or Misleading InformationInducing Transactions 367

1.2.5. Stock Market Manipulation 3682. Contractual Relationship with Clients 368

2.1. Required Terms and Conditions 3682.2. Standard of Care 3682.3. Compensation Terms 3692.4. Assignment of Client Agreement 369

3. Disclosure Requirements 3693.1. The Securities and Futures (Contract Note, Statement of

Account and Receipts) Rules (the ‘‘Rules’’) 3693.1.1. Receipts for Deposits of Money or Securities 3693.1.2. Monthly Statements of Account 369

3.2. Ongoing Disclosure Requirements for Licensed Persons 3703.2.1. Submission of Audited Accounts 3703.2.2. Submission of Financial Resources Returns 3703.2.3. Submission of Annual Returns 3713.2.4. Notification of Certain Events and Changes 371

3.3. Disclosure of Financial and Disciplinary Action 3714. Personal Securities Trading 372

4.1. Disclosure of Interests in Securities 3735. Performance-Based Fees 3736. Advertising Restrictions 3747. Electronic Media; Use of Internet to Provide or Advertise

Services 3748. Client Solicitors 3759. Books and Records 37610. Custody Regulations 376

10.1. Client Money 37610.2. Client Securities/Securities Collateral 377

11. Soft Dollars 37712. Regulatory Inspections 378

12.1. Who Can Conduct Inspections of Licensed InvestmentAdvisers? 378

12.2. Inspection Process 378D. Anti-money Laundering, Data Protection and

Consumer Privacy 3781. Anti-money Laundering Regulations 3782. Data Protection 379

E. Enforcement Proceedings 3791. Enforcement Authority 3792. Enforcement Powers 379

2.1. Disciplinary Action 379

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2.2. Powers of Intervention 3802.3. Injunctions and Other Orders 3812.4. Securities and Futures Appeals Tribunal (‘‘SFAT’’) 381

3. Civil Liability for Market Misconduct 381F. Extraterritorial Application 382

India 383Cyril Shroff


1.1. Regulatory Structure 3832. Licensing Requirements 384

2.1. Activities or Actions Requiring Licensing 3842.2. Definition of Securities 3852.3. Reciprocity 3862.4. Future Regulation of Investment Advisers 386

2.4.1. SEBI 2007 Consultative Paper 3862.4.2. SEBI 2011 Concept Paper 386

B. The Registration Process 3871. How to Obtain Registration 387

1.1. Application Form for Portfolio Managers 3871.2. Registration Fee 3871.3. Information Required 388

1.4. Renewal of Registration 3891.5. Registration of Stock Brokers;Merchant Bankers 3891.5.1. Stock Brokers 3891.5.2. Merchant Bankers 389

2. Substantive Requirements for Registration 390C. Overview of Substantive Regulation 391

1. Insider Trading 3912. Conflicts of Interest 3913. Contractual Relationship with Clients 3924. Disclosure Requirements and Compensation Terms 3925. Assignment of Client Contract 3936. Client Assets; Custody 3937. Advertising Restrictions 3938. Client Solicitation 3939. Books and Records 39310. Soft Dollars 39411. Regulatory Inspections 394

D. Anti-money Laundering 394E. Data Protection Laws 395

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F. Enforcement Proceedings 3951. Penalties under the SEBI (Intermediaries)

Regulations, 2008 3962. Adjudication Proceedings under Chapter VI A of

the SEBI Act 3963. Directives under Section 11 and 11B of the SEBI Act 3964. Criminal Prosecution under Section 24 of the SEBI Act 397

G. Extraterritorial Application 397H. Recent Legislative Developments 398

Indonesia 399 Miranti Malikus-Ramadhani & Dian Lindajanti



1.2.1. Bapepam-LK 4001.2.2. Minister of Finance 4001.2.3. Self-Regulatory Organization 400

2. Licensing Requirements 4012.1. Activities or Actions Requiring Licensing 401

2.1.1. Investment Advisory Activities 4012.1.2. Investment Management Activities 401

2.1.3. Securities Rating Activities 4022.1.4. Definition of ‘‘Securities’’ 4022.2. Licensing of Associated Persons 4022.3. Registration of Affiliates 4032.4. Registration of Non-Indonesian Advisers 403

3. How to Apply For a License 4033.1. Application Forms; Fees 4033.2. How Long Does the Registration Process Take? 4043.3. Reciprocity 4043.4. Are there Different or Additional Registration Provisions

for Foreign Applicants? 4043.5. Information Required 404

3.5.1. Individual Investment Adviser License 4043.5.2. Corporate Investment Adviser License 4043.5.3. Investment Manager License 405

3.6. Investment Manager Representative License 4074. Substantive Requirements for Registration 408

4.1. Capital Requirements 4084.2. Jurisdiction of Organization 4084.3. Nationals or Residents Serving as Directors, Officers

or Employees 409

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5. Grounds for Rejection of Application 4096. Revocation of License 409

B. Overview of Substantive Regulation 4101. Anti-fraud Provisions 4102. Insider Trading 4103. Contractual Relationship with Clients 4104. Compensation Terms 4115. Can the Advisory Contract Be Assigned by the Investment

Adviser? 4116. Disclosure Requirements 4117. Personal Securities Trading 4128. Performance-Based Fees 4129. Advertising Restrictions 41210. Electronic Media; Use of Internet 41311. Client Solicitors 41312. Books and Records; Reports to Regulators 414

12.1. Books and Records 41412.2. Reports to Bapepam-LK 414


C. Anti-money Laundering, Data Protection and Consumer Privacy 4161. Anti-money Laundering 416

1.1. Know Your Customer Working Units and Guidelines 416

1.2. Acceptance and Identification of Clients 4171.3. Identification and Verification of Documents Provided byProspective Clients 417

1.4. Monitoring Accounts and Transactions 4181.5. Risk Management Policies 418

2. Data Protection and Consumer Privacy 419D. Enforcement Proceedings 419

1. Enforcement 4191.1. Administrative Sanctions 4191.2. Criminal Sanctions 420

1.2.1. Failure to Obtain a License 4201.2.2. Fraud, Market Manipulation or Insider Trading 4201.2.3. Management of Reksa Dana 4201.2.4. Inspection 420

E. Extraterritorial Application 420

Ireland 423 Darragh Murphy, John O’Halloran & Ciara Murphy

A. Overview of the Regulatory Structure 423

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1. Applicable Laws and Regulations 4231.1. Regulatory Structure 4231.2. Role of the Central Bank of Ireland 424

2. Authorization Requirements 4242.1. Activities Requiring Authorization 4242.2. Definition of Financial Instruments 4252.3. Ancillary Services 4262.4. Authorization of Associated Persons 426

2.4.1. Director and Manager Qualifications 4262.4.2. Employees Generally 4272.4.3. Compliance Officer 427

2.5. Internal Audit and Risk Management 4282.5.1. Authorization of Affiliates 428

2.6. Change of Control 4282.7. Registration of Advisers from Outside Ireland 4292.8. Exemptions from Authorization 430

2.8.1. Investment Advice Exemption 4302.8.2. Intra-Group Exemption 430

2.9. Territorial Safe Harbor 431B. The Authorization Process 431

1. How to Obtain an Authorization 4311.1. Authorization Form 4311.2. Authorization Fees 4311.3. Documentation Required 432

1.4. How Long Does the Authorization Process Take? 4321.5. Reciprocity 4331.5.1. EEA Member States 4331.5.2. Countries Outside the EEA 434

1.6. Information Required for Authorization 4342. Substantive Requirements for Authorization 434

2.1. Capital Requirements 4342.2. Jurisdiction of Organization 4362.3. Nationals or Residents Serving as Directors 436

3. Withdrawal from Registration 4364. Grounds for Denial of Authorization 4375. Grounds for Withdrawal of Authorization 437

C. Overview of Substantive Regulation 4391. Anti-fraud Provisions 4392. Best Results for Clients 4393. Client Suitability 4394. Conflicts of Interest 4405. Insider Trading 4406. Contractual Relationship with Clients 441

6.1. Categories of Clients 4416.2. Professional Clients; Eligible Counterparties 442

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6.3. Retail Clients 4426.4. Agreements with Retail Clients 4426.5. Compensation Terms 4436.6. Can the Advisory Contract be Assigned by the

Investment Adviser? 4437. Disclosure Requirements 4448. Personal Securities Trading 4449. Performance-Based fees 44510. Advertising Restrictions 44611. Electronic Media; Use of Internet 44712. Client Solicitors 44713. Books and Records 44714. Custody Regulations 44815. Soft Dollars 44916. Regulatory Inspections 449

D. Anti-money Laundering; Data Protection and Consumer Privacy 4511. Anti-money Laundering 4512. Data Protection and Consumer Privacy 452

2.1. Fair Collection and Processing 4522.1.1. Criteria for Legitimizing the Processing of

Personal and Sensitive Data 4522.1.2. Security Measures 4532.1.3. Accuracy of Personal Data; Retention 453

2.2. Transfer of Data Outside the European Economic Area 453

2.3. Processing of Personal Data by Data Processor 4532.4. Marketing 453E. Enforcement Proceedings 454

1. Criminal Proceedings 4542. Administrative Sanction Regime 4553. Withdrawal of Authorization 4564. Extraterritorial Application 457

The State of Israel 459Tomer Maharshak & Roy Wiesner



2. Registration Requirements 4612.1. Activities Requiring Registration 461

2.1.1. Definition of Securities and Financial Assets 4612.1.2. Investment Advice 4622.1.3. Investment Marketing 463

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2.1.4. Portfolio Management 4632.1.5. Exemptions from Licensing 463

2.2. Registration of Associated Persons 4652.3. Registration of Affiliates 4662.4. Registration of Non-Israeli Providers of Investment

Services 4662.5. Extraterritorial Application 466


1.1. Registration Form 4661.2. Registration Fee 4671.3. How Long Does the Registration Process Take? 4671.4. Registration Provisions for Non-Israeli Applicants and

Reciprocity 4671.5. Incorporation and Information Required 469

1.5.1. Investment Advice License 4701.5.2. Investment Marketing License 4701.5.3. Portfolio Management License 471

1.6. Substantive Requirements for Registration 4721.6.1. Substantive Requirements for Companies 4721.6.2. Substantive Requirements for Individuals 473

1.7. Jurisdiction of Organization 4741.8. Nationals/Residents Serving as Directors, Officers or

Employees 474

2. Withdrawal from Registration 4753. Grounds for Denial of Registration 475C. Overview of Substantive Regulation 476

1. Anti-fraud Provisions 4762. Insider Trading 4773. Contractual Relationship with Clients 4784. Compensation Terms 4795. Can the Advisory Contract Be Assigned by the Investment


6.1. Portfolio Manager Disclosures 4796.1.1. Investment Advisers and Investment Marketers

Disclosures 4806.1.2. Licensee Disclosures 4806.1.3. Details Concerning Investment Advice 480

7. Personal Securities Trading 4808. Performance-Based Fees 4819. Advertising Restrictions 48210. Electronic Media; Use of Internet 48311. Client Solicitors 48312. Books and Records 483

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13. Custody Regulations 48413.1. Separation of Assets 48413.2. Separate Account Management 48413.3. Prohibition of Using Clients’ Assets 484

14. Soft Dollars 48415. Regulatory Inspections 485

D. Anti-money Laundering, Data Protection and Consumer Privacy 4851. Anti-money Laundering Regulations 4852. Privacy Protection 486

E. Enforcement Proceedings 4871. Securities Authority Disciplinary and Administrative

Enforcement 4871.1. Monetary Sanctions 4881.2. Administrative Sanctions 489

1.2.1. Monetary Sanctions 4911.2.2. Payment to the Party Injured by the Violation 4921.2.3. Corrective Measures 4921.2.4. Prohibition on Serving as Senior Office Holder 4921.2.5. Revocation or Suspension of a License 4931.2.6. Publication 4931.2.7. Responsibility of a General Manager or Partner 4931.2.8. Judicial Review 4941.2.9. Administrative proceedings and Criminal

Proceedings 494

1.3. Prohibition on Indemnification and Insurance 4942. Criminal and Disciplinary Sanctions 4943. Client Lawsuits 495


Italy 497 Alessandro Portolano & Salvo Arena



2. Registration Requirements 4982.1. Activities and Actions Requiring Registration 498

2.1.1. Definition of Investment Services 4982.2. Definition of Financial Instruments 4992.3. Definition of Advisory Services 4992.4. Definition of Portfolio Management 4992.5. Definition of Ancillary Services 5002.6. Registration of Associated Persons 500

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2.7. Advisers from Outside Italy 5012.7.1. Non-EU Intermediaries 5012.7.2. EU Intermediaries 502


1.1. Registration of SIMs 5031.1.1. Application 5031.1.2. Corporate Form 5031.1.3. Capital Requirements 5031.1.4. Timing of Application 5031.1.5. Information Required 5041.1.6. Qualification of Shareholders 5041.1.7. Qualification of Management Personnel 505

1.2. Registration of Banks Carrying Out InvestmentServices 506

1.3. Registration of SGRs 5071.3.1. Information Required 507


C. Overview of Substantive Regulation 5081. Conflicts of Interests 5082. Anti-fraud Provisions 5093. Insider Trading 5094. Client Suitability 510

5. Contractual Relationship with Clients 5115.1. Advisory Services Contracts 5115.1.1. Definition of Retail and Professional Clients 511

5.2. Portfolio Management Contracts 5125.2.1. General Requirements 5125.2.2. Retail Customers 513

6. Compensation Terms 5137. Can the Advisory Contract Be Assigned by the Investment

Adviser? 5148. Disclosure Requirements 5149. Personal Securities Trading 516

9.1. Regulations Applicable to Personal Transactions 5169.2. Policies and Procedures 517

10. Performance-Based Fees 51711. Advertising Restrictions 51812. Electronic Media; Use of Internet 51813. Financial Salesmen 51914. Books and Records 52015. Custody Regulations 52116. Regulatory Inspections 521

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D. Anti-money Laundering, Data Protection and ConsumerPrivacy 5211. Anti-money Laundering Regulation 5212. Data Protection and Consumer Privacy 524

E. Enforcement Proceedings 5241. Administrative Sanctions 5242. Criminal Sanctions 526


Japan 527Kei Ito & Shinya Uchida

A. Overview of the Regulatory Structure 5271. Applicable Laws and Regulations 5271.1. Regulatory Structure 527

1.1.1. General 5271.1.2. The Financial Instruments and Exchange Law 5281.1.3. The Commodities Investment Advisory Law 528

1.2. Regulatory Authorities 5281.2.1. The Financial Instruments and Exchange Law 5281.2.2. The Commodities Investment Advisory Law 529

2. Registration Requirements 5292.1. The Financial Instruments and Exchange Law 529

2.1.1. General 5292.1.2. Definition of Securities and Derivative

Transactions 5302.1.3. Investment Advisory Business on

a Discretionary Basis 5312.1.4. Scope of Permitted Business of a Registered

Investment Manager 5322.1.5. Non-Discretionary Investment Advisory Business 5332.1.6. Registration of Associated Persons 5342.1.7. Registration of Affiliates 5342.1.8. Registration of Advisers from Outside Japan 5352.1.9. Exemptions 536

2.2. The CIAL 5372.2.1. Definition of Commodity Investment 537

2.2.2. Commodity Investment Advice ona Discretionary Basis 5372.2.3. Non-Discretionary Commodity

Investment Advice 538B. The Registration Process 538

1. How to Register 5381.1. Application Form 5381.2. Application Fee 538

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1.3. How Long Does The Registration Process Take? 5381.4. Are There Different Registration Requirements for

Non-Japanese Applicants? 5392. Required Information 5393. Substantive Requirements for Registration 541

3.1. Investment Management Business 5413.1.1. Capital Requirements 5413.1.2. Jurisdiction of Organization 5413.1.3. Compliance Framework 5413.1.4. Human Resources Requirements 5423.1.5. Withdrawal and Denial of Registration 5433.1.6. Additional Requirements in the Case

of Investment in Beneficial Interests ina Trust of Real Estate 545

3.1.7. Investment Management Business Targeting OnlyAccredited Investors 545

3.2. Non-Discretionary Investment Advisory Business 5453.2.1. Capital Requirements and Deposit 5453.2.2. Jurisdiction of Organization 5453.2.3. Compliance Framework and Human Resources

Requirements 5453.3. Withdrawal and Denial of Registration 546


2. Insider Trading 5483. Contractual Relationship with Clients 5494. Standard of care 5495. Compensation Terms 5506. Assignment of Advisory Agreements 5507. Disclosure Requirements 550

7.1. Initial Disclosure to Client 5507.2. Subsequent Disclosure to Clients 5507.3. Regulatory Reports 551

8. Personal Securities Trading 5529. Performance-Based Fees 55210. Advertising Restrictions 55211. Electronic Media; Use of Internet 55312. Client Solicitors 55313. Books and Records 55414. Custody Regulations 55515. Soft Dollars 55516. Regulatory Inspections 555

D. Anti-money Laundering, Data Protection and ConsumerPrivacy 5561. Anti-money Laundering 5562. Data Protection and Consumer Privacy 556

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E. Enforcement Proceedings And Dispute Resolution 5571. Court Proceedings 5572. Proceedings by the FSA and LFBs 5573. Financial ADR System 558

3.1. Measures to Deal with Customers Complaints 5593.2. Measures to Resolve Disputes with Customers 559


Korea 561Sang Man Kim & Sung-You Choi


1. Applicable Laws and Regulations 5621.1. Regulatory Structure 5621.2. Regulatory Authorities 562

1.2.1. FSC 5621.2.2. FSS 5621.2.3. KoFIA 563


2.1.1. Types of Companies 5632.1.2. Exemptions from Registration 564

2.2. Registration of Associated Persons 5652.3. Registration of Affiliates 5652.4. Registration of Advisers from Outside Korea 565


1.1. Registration Form 5661.2. Registration Fee 5661.3. How Long Does the Registration Process Take? 5661.4. Reciprocity 5661.5. Are There Different or Additional Registration

Provisions for Non-Korean Applicants? 5661.6. Information Required 5671.7. Substantive Requirements for Registration 5681.8. Jurisdiction of Organization 5711.9. Nationals/Residents Serving as Directors, Officers or

Employees 5712. Withdrawal from Registration 5712.1. Voluntary Withdrawal from Registration 5712.2. Denial or Revocation of Registration 5712.3. Other Matters to be Approved by FSC 572


1.1. Regulations Applicable to Regulated Companies 572

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Luxembourg 593 Alex Schmitt & Philipp Mo ¨ ssner


1.1. Regulatory Structure 5931.2. Regulatory Authorities 5941.3. Self-Regulatory Organizations 594


2.1.1. Non-Discretionary and Discretionary AdvisoryActivities 595

2.1.2. Provision of Investment Advisory Services 5952.1.3. Provision of Private Portfolio Management

Services 5962.1.4. Definition of Financial Instruments 596

2.2. Registration of Associated Persons 5972.2.1. Qualifications of Management Personnel 597

2.3. Audit and Compliance Functions 5972.4. Registration of Affiliates 5982.5. Registration of Investment Advisors and Private Portfolio

Managers from Outside Luxembourg 5982.6. Exemptions from Registration 599

B. The Registration Process 600

1. How to Register 6001.1. Registration Form 6001.2. Registration Fee 6001.3. How Long Does the Authorization Process Take? 6001.4. Reciprocity 6001.5. Are There Different Registration Requirements for

non-Luxembourg Applicants? 6011.6. Information Required 601

2. Substantive Requirements for Registration 6022.1. Capital Requirements 6022.2. Jurisdiction of Organization 6032.3. Nationals or Residents Serving as Directors, Officers or

Employees 6033. Withdrawal from Registration 6034. Grounds for Denial of Registration 604


1.1. Conflicts of Interest 6041.2. Duty to Act in Best Interest of Clients 605

2. Insider Trading 6053. Contractual Relationship with Clients 606

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4. Compensation Terms 6065. Performance-Based Fees 6076. Can the Advisory Contract Be Assigned? 6077. Disclosure Requirements 6078. Personal Securities Trading 6089. Advertising Restrictions 60910. Electronic Media; Use of Internet 60911. Client Solicitors 60912. Books and Records 61013. Custody Regulations 61014. Soft Dollars 61115. Regulatory Inspections 61116. Other 612

D. Anti-money Laundering, Data Protection and Consumer Privacy 6121. Anti-money Laundering 6122. Data Protection 6133. Consumer Privacy 613


The Netherlands 617 Antonia A.F. Netiv, Jesler J. Hartman Kok & Walter A.M. Schellekens


1. Applicable Laws and Regulations 6171.1. Regulatory Structure 6171.2. Regulatory Authorities 6181.3. Definitions in the FSA 619

1.3.1. Investment Advisory Activities in the FSA 6191.3.2. Definitions Relating to Advisory Activities 6201.3.3. Definition of Financial Instruments and Financial

Products 6202. Activities Requiring Registration 621

2.1. Entities Requiring Registration 6212.2. Activities or Actions Requiring a License 622

2.2.1. Investment Advice 6222.2.2. Individual Asset Management 623

2.3. Licensing of Associated Persons 6232.3.1. Tied Agents and MiFID Requirements 6232.3.2. Tied Agents Regulated under the FSA 6242.3.3. Tied Agents of EEA Member State Firms 624

2.4. Licensing of Affiliates 6252.4.1. Affiliated Enterprises 6252.4.2. Acquisition of Shares and Control Acquisitions 625

2.5. Licensing of Advisers from Outside the Netherlands 626

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2.6. What Constitutes Performing Services in the Netherlands? 6262.7. Limitations to the License Requirements 627

2.7.1. Limitations on Scope of FSA 6272.7.2. Exceptions from Licensing for Certain Financial

Enterprises 6292.7.3. EEA Member State Exceptions 6292.7.4. Non-EEA Member State Exemptions; Other

Exemptions and Limitations 630B. The Registration Process 631

1. How to Register 6311.1. Application Form 6311.2. Application Fees 6311.3. Information Required 6311.4. Reciprocity 6331.5. How Long Does the Licensing Process Take? 634

2. License Modification, Withdrawal and Limitations 6342.1. Notifications for Licensed Investment Firms 6342.2. License Withdrawal or Limitations 634

C. Overview of Substantive Regulation 6351. General 635

1.1. Compliance Officer 6362. Anti-fraud Provisions 6363. Insider Trading 636

3.1. Insider Trading: Price Sensitive Information 636

3.2. Obligation to Report Insider Trading 6374. Conflicts of Interest 6385. Contractual Relationship with Clients 639

5.1. Form and Content Requirements 6395.2. Providing Information 640

6. Clients 6406.1. Due Care; ‘‘Know Your Customer’’ Requirements 6406.2. Categories of Clients 641

6.2.1. Professional Investors; Eligible Counterparties 6426.2.2. Non-Professional Investors 6426.2.3. Reclassification of Professional Investors; Eligible

Counterparties 6437. Compensation Terms 6438. Transfer of the Advisory Contract 6449. Disclosure Requirements 644

9.1. Initial Disclosures to Clients 6449.2. Ongoing Disclosures to Clients 645

10. Personal Securities Trading 64511. Performance-Based Fees; Compensation 64612. Advertising Restrictions 64713. Electronic Media; Use of Internet 647

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14. Client Solicitors 64915. Books and Records 64916. Custody Regulations 65017. Soft Dollars 651


E. Regulatory Inspections and Enforcement 6531. Regulatory Inspections 6532. Enforcement: General 6543. Administrative Enforcement 655

3.1. General 6553.2. Issuing an Instruction 6553.3. Appointment of a Trustee 6563.4. Prohibitions on Activities or Transactions 6563.5. Dismissal of an Accountant or Actuary 6573.6. Penalty-Backed Duty 6573.7. Administrative Fines 6573.8. Public Warnings 6573.9. Publication of Fines and Penalty-Backed Duties 6573.10. Withdrawing a License 658

4. Administrative Measures and Criminal Prosecution 658

Norway 661

Peter Hammerich & Markus Heistad




2.1.1. Advisers to Private Equity Funds 6622.1.2. Investment Advice 6622.1.3. Portfolio Management (Discretionary Advice) 6632.1.4. Financial Instruments 6632.1.5. Exemptions 663

2.2. Registration of Associated Persons 6642.3. Registration of Affiliates; Tied Agents 6642.4. Registration of Non-Norwegian Advisers 6652.5. Capital Requirements 665


1.1. Registration Form 6661.2. Registration Fee 666

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1.3. How Long Does the Registration Process Take? 6671.4. Jurisdiction of Organization; Type of Legal Entity 6671.5. Nationals or Residents Servings as Directors, Officers

or Employees 6671.6. EEA Investment Advisers and Portfolio Managers 6671.7. Non-EEA Investment Advisers and Portfolio Managers 667

2. Withdrawal from Authorization 6683. Grounds for Denial or Rescission of Authorization 668

C. Substantive Regulations 6681. Anti-fraud Provisions 668

1.1. Conflicts of Interest 6691.2. Employee Activities 6691.3. Best Execution 669

2. Insider Dealing 6693. Contractual Relationship with Clients 6704. Compensation Terms 6705. Assignment of Advisory Agreement 6716. Disclosure Requirements 671

6.1. The Brochure 6716.2. Ongoing Reporting Obligations 6716.3. Financial and Disciplinary Disclosure 671

7. Personal Securities Dealing 6728. Performance-Based Fees 6729. Advertising Restrictions 672

10. Electronic Media 67311. Client Solicitors 67312. Books and Records 67313. Custody Regulations 67314. Soft Dollars 67415. Regulatory Inspections 674



The Philippines 677 Rafael A. Morales


1.1. Regulatory Structure 6771.1.1. General Banking Law 6771.1.2. Investment Houses Law 6781.1.3. Investment Company Act 678

1.2. Role of the Monetary Board 678

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2.1.1. Investment Management Activity 6792.1.2. Non-Discretionary Investment Advice 679

2.2. Definition of Securities 679B. The Authorization Process 680

1. The Monetary Board 6801.1. Banks 6801.2. Investment Houses 6801.3. Other Entities 681

2. SEC Registration 6812.1. How to Register 6812.2. Authorization Process 6822.3. Registration Fees 6822.4. How Long Does Registration Take? 6822.5. Information Required 682

3. Application of Authorization Requirements to Non-PhilippineAdvisers 682

C. Overview of Substantive Regulation 6831. Anti-fraud Provisions and Conflicts of Interest 6832. Insider Trading 6833. Disclosures and Other Obligations 6844. Taxation 6845. Currency for Settlement 684

6. Management of Investment Companies 6846.1. Corporate Form 6846.2. Investment Company Service Contract 6856.3. Subcontract 6856.4. Exclusions 685

7. Commodity Trading Advisers 686D. Consumer Privacy, Anti-money Laundering and Data Protection 686E. Enforcement 687F. Extraterritorial Application 687

Poland 689 Magdalena S ́ cibor


1.1. Regulatory Structure 6891.2. Role of Polish Financial Supervision Authority 6901.3. Self-Regulatory Bodies 691


2.1.1. Brokerage Activities 691

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2.2. Requirement to Employ Individual ProfessionalInvestment Advisers 692

2.3. Definition of Financial Instruments 6932.4. Ancillary Activities 6932.5. Registration of Associated Persons 693

2.5.1. Management Board Qualifications 6932.6. Compliance, Internal Audit and Risk Management

Functions 6932.7. Registration of Affiliates 694

2.7.1. Non-EU Affiliates 6942.7.2. Member States 695

2.8. Acquisition of Shares and Control Acquisitions 6952.9. Registration of Non-Polish Firms 697

2.9.1. Registration of Non-Polish Firms DomiciledOutside the EU 697

2.9.2. Registration of Non-Polish Firms Domiciledin the EU 697

2.9.3. Enrollment of Non-Polish Citizens as IndividualInvestment Advisers 698

2.10. Exemptions from Registration 698B. The Registration Process 700

1. How to Register 7001.1. Registration Form for Individual Investment Advisers 7001.2. Registration Form to Conduct Brokerage Activities 700

1.3. Registration Fee 7001.4. How Long Does the Registration Process Take? 7011.5. Reciprocity 7011.6. Are There Different or Additional Registration Provisions

for Foreign Applicants? 7011.7. Information Required for a Brokerage Authorization 701

1.7.1. The Applicant 7011.7.2. Affiliates of the Applicant 703

1.8. Information Requirements for Investment Advisers 7042. Substantive Requirements for Registration 705

2.1. Capital Requirements 7052.2. Jurisdiction of Organization 7062.3. Nationals or Residents Serving as Directors, Officers or

Employees 7073. Withdrawal from Registration 7074. Grounds for Denial of Registration 707

4.1. General 7074.2. Grounds for Canceling a License 7084.3. Grounds for Refusal to Enroll an Applicant on the

List of Investment Advisers 7084.4. Grounds for Removal from the List of Investment

Advisers 709

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C. Overview of Substantive Regulation 7091. Conflicts of Interest 709

1.1. Guidelines for Addressing Conflicts of Interest 7101.2. Personal Securities Trading 710

1.2.1. Policies and Procedures 7101.2.2. Records of Personal Transactions 711

1.4. Trading by Research Personnel 7112. Insider Trading 7123. Contractual Relationship with Clients 713

3.1. Professional Clients 7143.2. Retail Clients 7153.3. Best Interest of Client 716

4. Compensation Terms 7165. Can the Advisory Contract Be Assigned by the Investment


6.1. Disclosures to Retail Clients 7176.2. Disclosure to Portfolio Management Clients 7186.3. Reports to the PFSA 719

7. Performance-Based Fees 7198. Advertising Restrictions 7209. Electronic Media; Use of Internet 72010. Client Solicitors 72111. Books and Records 722


D. Anti-money Laundering, Data Protection and Consumer Privacy 7251. Anti-money Laundering and Terrorist Financing 7252. Data Protection 726


Portugal 729 Diogo Leó nidas Rocha & Bruno Ferreira



2. Registration Requirements 7312.1. Activities or Actions Requiring Registration 7312.2. Investment Consulting 7312.3. Portfolio Management 7312.4. Definition of Financial Instruments 731

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2.5. Registration of Associated Persons 7322.6. Registration of Affiliates 7322.7. Registration of Non-Portuguese Entities 732

2.7.1. General 7322.7.2. Use of Internet or Website 733

2.8. Exemptions from Regulation 734B. Registration Process 735

1. General 7351.1. Registration of Portuguese Entities and Individuals 7351.2. Registration of Non-Portuguese Entities and Individuals 735

1.2.1. Entity Domiciled in the EU 7351.2.2. Entity Domiciled Outside the EU 736

2. Registration Form 7363. Registration Fees 7374. Length of Registration Process 7375. Reciprocity 7376. Information Required 737

6.1. General 7376.2. EU Branch 738

7. Substantive Requirements for Registration 7397.1. Capital Requirements 7397.2. Personnel Qualifications 7397.3. Jurisdiction of Organization 7397.4. Nationality of Officers and Directors 739

8. Withdrawal and Denial of Registration 740C. Overview of Substantive Regulation 7401. Conflicts of Interest 740

1.1. Qualified Investors 7412. Insider Trading 7423. Contractual Relationships with Clients 7434. Compensation Terms 7445. Assignment of the Contract 7446. Disclosure Requirements 7447. Personal Securities Trading 745

7.1. Research Personnel 7457.2. Trading on Confidential Information 746

8. Performance-Based Fees 7469. Soft Dollars 74610. Advertising Restrictions 74711. Electronic Media 74712. Client Solicitors; Tied Agents 74913. Books and Records 75014. Custody Regulations 75015. Regulatory Inspections 751

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E. Enforcement Proceedings; Private Right of Action 753F. Extraterritorial Application 753

Russia 755 Alyona Kucher, Alan Kartashkin & Yulia Sazykina


1.1. Role of the Federal Service for Financial Markets 7561.2. Self-Regulating Organizations 7561.3. Definition of Securities 756

2. Authorization Requirements 7572.1. Activities Requiring Authorization 757

2.1.1. Securities Trust Management 7572.1.2. Unit Investment Trust Management (PIF) and Other

Pooled Entity Management (AIF) 7582.1.2.1. PIFs 7582.1.2.2. AIFs 758

2.1.3. Bank Common Trust Fund Management (OFBU) 7582.2. Licensing of Non-Russian Managers 7592.3. Authorization of Associated Persons 759

2.3.1. Securities Trust Manager Personnel QualificationRequirements 7592.3.2. PIF and AIF Managers 7612.3.3. AIFs 7612.3.4. Financial Controller 7612.3.5. Compliance Officer 762

2.4. Affiliates 763B. The Licensing Process 763C. The Application Process 763

1. How to Obtain a License 7631.1. Securities Trust Manager Application Form 7631.2. Information Required for Securities Trust Manager License 7641.3. PIF/AIF Manager Application Form 7661.4. Documents Required for PIF/AIF Manager License 7661.5. Application Fee 7681.6. Non-Russian Applicants 7691.7. How Long does the Application Process Take? 7691.8. Term of License 770

2. Substantive Requirements for Authorization 7702.1. Capital Requirements 770

2.1.1. Securities Trust Managers 770

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2.1.2. PIF and AIF Managers 7702.1.3. OFBU Managers 770

2.2. Personnel Qualification Requirements 7712.3. Other Requirements 7712.4. Limitations of Ownerships 772

3. Grounds for Denial of License 772D. Overview of Substantive Regulation 773

1. Conflict of Interest and Other Prohibited Actions 7731.1. Securities Trust Managers 773

2. PIF and AIF Managers’ Duties and Obligations 7743. Insider Trading 774

3.1. Definitions 7743.2. Policies and Procedures 775

4. Contractual Terms 7764.1. Securities Trust Managers 7764.2. PIF and AIF Managers 777

4.2.1. PIF Managers 7774.2.2. AIF Managers and AIFs 777

4.3. OFBU Managers 7775. Continuing Reporting Obligations 7786. Disclosure Requirements 7787. Reporting to Clients or Shareholders 780

7.1. Securities Trust Managers 7807.2. PIF and AIF Managers; AIFs 780

7.3. OFBU Managers 7818. Fees 7818.1. Securities Trust Managers 7818.2. PIF and AIF Managers; AIFs 781

9. Advertising Regulations 78210. Segregation of Accounts; Custody 78311. Client Solicitors 78412. Use of the Internet 78513. Assignment of Trust Management 78514. Regulatory Inspections 786

14.1. Types of Inspections 78714.2. Inspection Process 78714.3. SRO Inspection 788

15. Books and Records 78816. Soft Dollars 789

E. Money Laundering, Data Protection and Consumer Privacy 7901. Money Laundering 7902. Data Protection and Consumer Privacy 792

F. Enforcement 7921. Enforcement by the FSFM 792

1.1. License Suspension and Cancellation 792

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1.2. Grounds for Suspension or Cancellation 7921.2.1. Securities Trust Managers 7921.2.2. PIF and AIF Managers, AIFs 793

1.3. Procedure for Suspension or Cancellation 7941.3.1. Securities Trust Managers 7941.3.2. PIF and AIF Managers, AIFs 794

1.4. Other Means of Enforcement 7952. Criminal Penalties 7953. Private Rights of Action 795

G. Extraterritorial Application 7961. Civil Jurisdiction 7962. Criminal Jurisdiction 796

Saudi Arabia 799Tom Travers


1.1. Regulatory Structure 7991.2. Regulatory Authority 800


2.1.1. Carrying on Securities Business 8002.1.2. Investment Advice 801

2.1.3. Definition of Securities 8012.1.4. Customer Categories 8022.1.5. Exemptions 803

2.2. Registration of Associated Persons 8052.3. Registration of Affiliates 8052.4. Registration of Foreign Advisers 806


1.1. Registration Form 8061.2. Registration Fee 8071.3. How Long Does the Registration Process Take? 8071.4. Are There Different or Additional Application

Provisions for Foreign Applicants? 8071.5. Information Required by the CMA 809

1.5.1. Information about Associated Persons 8101.5.2. Financial Information 811

1.6. Substantive Requirements for Registration 8121.6.1. Net Worth or Other Financial Requirements 812

1.7. Jurisdiction of Organization; Type of Entity 8121.8. Nationals/Residents Serving as Directors, Officers or

Employees 813

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C. Overview of Substantive Regulation 8151. Anti-fraud Provisions 8152. Confidentiality 8163. Conflicts of Interest 8164. Market Manipulation and Insider Trading 8175. Contractual Relationship with Clients 8196. Compensation Terms 8197. Assignment of the Advisory Contract 8208. Disclosure Requirements 820

8.1. Disclosure to CMA 8208.2. Disclosure to Client 822

9. Personal Securities Trading 82410. Performance Fees 82511. Advertising Restrictions 82512. Electronic Media; Use of Internet 82513. Client Solicitors 82614. Books and Records 82615. Custody Regulations 82616. Soft Dollars 82817. Regulatory Inspections 828

D. Anti-money Laundering, Data Protection and Consumer Privacy 8291. Anti-money Laundering 829

2. Consumer Privacy and Data Protection Regulations 829E. Enforcement Proceedings 830F. Extraterritorial Application 831

Singapore 833 Arnold Tan & Leong Lu Yueh


1.1. Applicable Statutes 8341.1.1. The Securities and Futures Act 8341.1.2. The Financial Advisers Act 8341.1.3. The Commodity Trading Act 835

1.2. Regulatory Authorities 8351.2.1. The Monetary Authority of Singapore 8351.2.2. Minister for Finance 8361.2.3. Securities Industry Council 8361.2.4. International Enterprise Singapore 8361.2.5. Accounting and Corporate Regulatory Authority

of Singapore 836

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1.3. Definition of Securities 8371.4. Definition of Invest