Conflicts of Interest Policy
Background & Scope
Onyx Capital Group Limited (“OCGL”) is the group holding company for all Onyx subsidiaries including Onyx Capital Advisory Limited (“OCAL”) and Onyx Commodities Limited (“OCL”) (collectively “the Group”). In accordance with the FCA’s Principles for Businesses, namely Principle 8 (Conflicts of Interest) the Group manages conflicts of interest fairly, both between itself and its clients and between one client and another.
- To identify, by reference to the specific services and activities carried out by (or on behalf of) the Group, 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; and
- To specify procedures to be followed and measures to be adopted to manage such conflicts; and
- To communicate this information to all staff and clients.
For the purpose of identifying the types of conflict that arise in the course of providing a service, and, where there may be a material risk of damage to the interests of a client, a business must take into account certain issues. It must consider as a minimum, whether the Firm or a relevant person or a person directly or indirectly linked by control to the Group:
- Is likely to make a financial gain or avoid a financial loss at the expense of the client.
- Has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome.
- Has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client.
- Carries on the same business as the client.
- Receives or will receive from a person, other than the client, an inducement in relation to a service provided to the client, in the form of monies, goods or services.
It is the responsibility of all staff members to familiarise themselves with the contents of the Policy and report conflicts of interest to Compliance using the appropriate channels.
Identification and Management of Conflicts
Potential Misuse of Information
Staff of the Group may come into possession of material non-public information. The improper use of such information by staff members could cause a conflict with the interests of the Group’s clients, or between the interests of the Group’s clients, and may also be unlawful.
The Group manages these risks by maintaining and following policies and procedures to prevent the misuse of material non-public information. These procedures have been designed to prevent and detect any insider trading, considering the nature of the Group’s business and the instruments typically traded.
Inappropriate Flow of Information
A conflict of interest could occur where there is an inappropriate flow of information between relevant persons within separate areas of the business who should be acting independently and where the absence of this independence could be detrimental to a client.
The Group has procedures in place to control the inappropriate flow of information. Furthermore:
- Relevant persons who provide services to, or carry out activities for, clients who represent interests that may conflict with other clients or those of the Group, are supervised effectively and separately.
- There is no direct link between the remuneration of a relevant person and the remuneration of a separate relevant person engaged in a different activity where a conflict of interest may arise in relation to those activities.
- No person may exercise inappropriate influence over the way in which a relevant person carries out investment or ancillary services or activities.
- There are measures to prevent a relevant person from being simultaneously involved in separate investment or ancillary services where such involvement could impair the proper management of conflicts of interest.
- The Group has Chinese Walls in place between entities to control the flow of relevant information. All entities within the Group adhere to strict compliance Chinese walls (both physical and electronic) to mitigate conflicts of interest. Only necessary staff have access to sensitive information.
Personal Account Dealing
It is possible for Group staff to engage in the trading of securities or other instruments on their own account. These trading activities can create conflicts of interest between staff and the interests of their respective firms and clients.
The Group manages these potential conflicts of interest by maintaining a Personal Account Dealing Policy which has been formulated in accordance with relevant FCA rules and regulations. Members of staff are prohibited from trading commodity derivatives on their own account, relatives accounts or through a managed account. Staff are required to inform Compliance if they wish to deal on their own account. All activity is recorded by Compliance.
The way Group staff are remunerated can give rise to a conflict of interest by incentivising behaviour that could cause unforeseen or unjustified disadvantage to the Group or its clients.
The Group’s remuneration policy is based upon a combination of financial and non-financial indicators, such as individual performance, adherence to overall business objectives and compliance with regulation.
Inducements, Gifts and Entertainment
The receiving of gifts, entertainment, or any other form of gratuity or hospitality by or to the Group’s staff may create the appearance of a lack of impartiality and may lead to a potential conflict of interest between the interests of the donor and recipient.
Staff may give and accept gifts and entertainment, but this must be in accordance with the Gifts and Entertainment policy found in the Compliance Manual. These policies outline specific monetary thresholds for prior approval in regards to any gifts or entertainment given or received.
Disclosure of Personal Conflicts
Group staff members may hold outside business interests, such as directorships or shareholdings, in service providers or other firms. It is possible for business interests or investments to cause potential conflicts between the personal interest of a relevant member of staff and the interests of the Group.
Staff members must inform Compliance about their outside business interests. Compliance must approve any such interests and maintains a record of them.
A close personal relationship refers to a relationship maintained in the workplace or between a member of staff and a client or broker that might influence their judgement or affect decisions that may result in a conflict of interest.
Staff are required to disclose any close personal relationships that they may have with a client or counterparty to Compliance. These are documented in a Close Personal Relationships register.
Best Execution & Order Handling
In accordance with article 27 (1) MiFID II and COBS 11.2A.2 a firm must take all reasonable steps to obtain, when executing orders, the best possible results for its clients considering the execution factors. These factors include price, speed, likelihood of execution and settlement, size, nature or any other considerations relevant to the execution of the order. A conflict may arise where a member of staff fails to act in the best interest of a client when executing an order, either by favouring another client or putting their own interests first.
OCAL has a dedicated Best Execution Policy in place, which ensures that orders are executed in accordance with the above stated execution factors.
Poor governance in a firm can create a conflict of interest by allowing decisions to be made without the adequate oversight may allow business areas with conflicting obligations to make decisions at the detriment of clients’ interests.
The Group has robust governance arrangements. Key business decisions are taken at the Board level and are recorded. The Group has in place rules governing employee conduct, which control and mitigate conflicts of interest. The Group maintains a Conflict of Interest register.
Reporting Lines & Segregation of Functions
Inadequate segregation of functions and reporting lines can give way to potential conflicts of interest where staff are performing multiple functions.
The Group has defined and clear reporting lines. An organisation chart is maintained by HR. Management information relevant to identifying conflicts is reviewed by Compliance. Duties are segregated as appropriate, to avoid conflicts of interest wherever possible. These duties are set out in job descriptions, procedure manuals and organisational charts. Ensuring these duties remain segregated is the responsibility of line managers, as advised by Compliance.
Training & Conduct
A conflict of interest can arise where members of staff do not receive adequate training or where conduct falls below expected thresholds.
Compliance ensure that appropriate training is delivered to all staff. The fitness and propriety of new staff is considered by Compliance & HR as part of the recruitment process, as well as their technical and, where relevant, managerial skills. Suitable background checks are made, and references are taken up.
Compliance Procedures & Monitoring
Inadequate compliance procedures combined with a poor monitoring regime can easily give rise to conflicts of interest occurring and going undetected.
Systems and controls are documented in the compliance and procedures manuals. These are reviewed at least annually to ensure they are fit for purpose. Compliance oversees and executes a suitable risk-based monitoring programme, at least annually, to verify that relevant systems and controls are being applied.
Disclosure of Conflicts
Where the Group cannot ensure with reasonable confidence that the risk of damage to a client arising from a Conflict cannot be prevented, the Group will, as a last resort, disclose the Conflict in accordance with specified disclosure obligations.