Operations and Systems
Client-Facing Business
Client-facing work, from understanding needs, explaining products and checking suitability to execution, valuation reports and early termination.
Introductory6 pagesPractitioner4 pages
1Up to the Trade
- IntroductoryThe Client Business FlowA bank puts in place arrangements for explaining the key points of a trade in light of the client's knowledge, experience, financial situation, and purpose of the trade.
- IntroductoryUnderstanding Client NeedsStaff check the purpose of the transaction. If it is a hedge, the institution checks that it will work as one until the contract ends.
- IntroductoryKYC and Credit ReviewKYC exists to prevent the transfer of criminal proceeds, and credit review exists to prepare for losses if a client fails.
- IntroductoryProposals and ExplanationsThe seller and the client differ in their knowledge of the product and in the information they have, so proposals and explanations help the client make its own decision.
- PractitionerProduct Explanations and Pre-Contract DisclosuresThe required contents come from the seven items of Article 37-3 of the Financial Instruments and Exchange Act, plus matters for each type of transaction added by a Cabinet Office Order.
- PractitionerSuitability ChecksFinancial institutions must not solicit in a way that is inappropriate in light of the client's knowledge, experience, financial situation, and purpose of the contract.
- IntroductoryTrade ExecutionA trade is done when both sides agree on the terms and price. The confirmation later records those terms so that both sides can check them.
2From Trade to Maturity
- IntroductoryTrade ConfirmationsA confirmation puts the terms agreed by phone or other means in writing, such as the parties, direction, amount, rate, and delivery date, so errors and fraud can be caught before settlement.
- PractitionerMark-to-Market Reporting to ClientsThe supervisory guidelines list, as a point to check, a framework for telling a client the market value and the termination payment amount on request.
- PractitionerEarly TerminationA client may cancel a trade mid-term for its own reasons, but some trades cannot, in principle, be cancelled mid-term.