Expected regulatory standards
and procedures should ensure that remote-working staff use a recorded phone line to
receive agency orders. Where the intermediary has not implemented a call recording
system at remote locations, remote-working staff should immediately call back to the
intermediary’s telephone recording system in the office to record the time of receipt and
order details
22
. Where an intermediary has adopted remote working arrangements as a
new norm for its trading staff, it should equip staff who receive telephone orders from
clients with appropriate information and communication technology equipment including
telephone recording.
Where staff are allowed to conduct off-premises trading activities for client orders, the
policies and procedures should also ensure that:
there are appropriate measures for complying with the requirements set out in the
Circular to Intermediaries - Receiving Client Orders through Instant Messaging
issued on 4 May 2018; and
staff can access the trading and all other systems which are necessary for them to
manage the overall order execution process and determine the execution strategy
and parameters to execute client orders promptly and on the best available terms
23
.
Where staff are allowed to conduct off-premises trading activities for proprietary
accounts for back-to-back transactions with a client concerning an investment product,
the policies, procedures and controls should ensure that staff can access all the
necessary systems which enable them to obtain in a timely manner the information
needed to determine the amount of trading profit to be disclosed to clients prior to or at
the point of entering into these back-to-back transactions
24
.
Independent compliance or audit functions, in close coordination with senior
management, business operations, risk management and other relevant control
functions
25
, should carry out proactive compliance oversight for off-premises trading
activities. Remote-working staff’s adherence to the compliance policies, procedures and
controls in relation to off-premises trading should be subject to stringent review
processes.
Suggested techniques and procedures
16. An oversight mechanism which includes the following is implemented:
(a) more frequent reviews and enhanced supervisory measures for off-premises
trading activities such as approval by designated management personnel, and
monitoring of off-premises trading activities by means of a set of breach and
incident reporting tools and reporting metrics which will prompt escalation of
22
Paragraph 3.9 of the Code of Conduct, Paragraph VII(6) of the Internal Control Guidelines and Paragraph 2
of the Circular to Intermediaries on Extended deadlines for implementation of regulatory expectations and
reminder of order recording requirements under the COVID-19 pandemic issued on 31 March 2020.
23
Paragraphs 3.1 and 3.2 of the Code of Conduct.
24
Paragraph 8.3 Part A(a)(ii) of the Code of Conduct.
25
Parts V and VI of the Internal Control Guidelines.