Conflicts of Interest Policy and Register Template (MiFID II, SEC)

Conflicts of Interest Policy and Register: [Firm legal name]

Written conflicts of interest policy and the register of conflicts that have arisen or may arise, for an investment firm, asset manager or investment adviser. It is built on MiFID II (Directive 2014/65/EU Articles 16(3), 23 and 24(9)) and Commission Delegated Regulation (EU) 2017/565 Articles 27 and 33 to 35, with rows for AIFMs (Directive 2011/61/EU Article 14 and Delegated Regulation (EU) No 231/2013 Articles 30 to 36), UCITS management companies (Directive 2010/43/EU Articles 17 to 20) and SEC-registered investment advisers (fiduciary duty under Advisers Act Section 206, disclosure through Form ADV Part 2A). UK firms map the same content to the FCA Handbook SYSC 10 (reference only). The example firm, Kestrel Bay Capital, and its EU affiliate Kestrel Bay Capital Europe are fictional. Replace every [bracketed] value and every row marked Example. Obtain the law or rule for the normative text. This is a document format, not legal, compliance or investment advice.

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Revision history

Contents

• 1. Purpose, scope and regulatory basis
• 2. Governance and responsibilities
• 3. Identification process
• 4. Conflict types
• 5. Assessment and rating
• 6. Conflicts register
• 7. Prevention and management measures
• 8. Disclosure to clients
• 9. Inducements and benefits
• 10. Specific situations
• 11. Escalation and breaches
• 12. Monitoring, management information and review
• 13. Training and attestations
• 14. Records
• 15. Traceability matrix
• 16. Glossary and references
• Standard and licence note

1. Purpose, scope and regulatory basis

This policy sets out how [Kestrel Bay Capital] identifies conflicts of interest that could damage the interests of clients, prevents them where it can, manages the rest, discloses them where required and keeps a record. It applies to every relevant person: directors, partners, employees, tied agents, secondees and contractors who take part in the firm's regulated services, and to any person linked to the firm by control.

The policy covers conflicts between:

• the firm (including its managers, employees and linked persons) and a client or fund;
• one client or fund and another client or fund;
• an employee's personal interests and a client's interests; and
• a group entity's business and the interests of a client of another group entity.

1.1 Regulatory basis (as of 2026-10; check local law)

Proposals are not in force: the EU Retail Investment Strategy package (provisional agreement December 2025) will change inducement and value for money rules once published and applied. Track it and update sections 8 and 9 when it applies.

1.2 Out of scope

Personal data protection, market abuse surveillance and generic operational risks are covered elsewhere. A conflict that also creates operational or legal risk is recorded here and cross-referenced in the Risk Register (compliance/risk-register).

2. Governance and responsibilities

The management body is responsible for the policy and for being satisfied that conflicts are managed. Business heads own the conflicts that arise in their areas. Compliance designs the framework, keeps the register, challenges ratings and reports.

R = responsible, A = accountable, C = consulted, I = informed.

2.1 Conflicts Committee

A member who has a personal interest in an item declares it and does not take part in the decision on that item. The declaration is minuted.

3. Identification process

The firm identifies conflicts through standing triggers and an annual top-down review. Each trigger has an owner and produces a register entry or a documented "no conflict" conclusion.

A situation is a conflict for this policy when a relevant person or the firm faces an interest or duty that competes with the duty owed to a client, whether or not damage has occurred. Potential conflicts are recorded as well as actual ones.

4. Conflict types

4.1 Minimum criteria (EU test)

For each service, ask whether the firm, a relevant person or a person linked by control is in one of the following situations. The labels paraphrase points (a) to (e) of Article 33.

4.2 Business taxonomy

Every register entry carries one primary type and the applicable Article 33 criteria.

5. Assessment and rating

Rate likelihood (L) and impact on clients (I) on a five-point scale. The score is the product:

The bands and frequencies are the firm's choice. Set them to the firm's risk appetite and record the rationale. Residual risk uses the same scale after taking credit only for controls that are designed, operating and tested.

6. Conflicts register

6.1 Field definitions

6.2 Register

KBC = Kestrel Bay Capital. Scores recomputed on entry: each S equals L times I, and bands follow section 5.

Write each register row so that a reader outside the business can understand it: who is conflicted, which clients could be harmed, how the harm would happen and which tested control prevents it. Re-rate a row whenever its trigger recurs, a control fails, or the business changes, and keep the earlier rating in the history so that the annual review can show the trend.

6.3 Closed entries

Closed entries stay in the register for the retention period in section 14.

7. Prevention and management measures

The fourth column names the Article 34(3) point a measure serves, or another legal basis when the control is not one of the Article 34(3) independence measures (personal transactions fall under Articles 28 and 29 of Delegated Regulation (EU) 2017/565; research payment under Delegated Directive (EU) 2017/593 Article 13). Point (c) of Article 34(3) is about removing pay links between people in different activities, so CTL-15 cites it; fee offsets do not.

The firm documents why any Article 34(3) measure that does not appear above is not needed for its business. For [Kestrel Bay Capital Europe] (Example), the firm records that it does not underwrite or place issues, so Articles 38 to 43 do not apply, and revisits this if the business changes.

When no measure is enough to manage a conflict with reasonable confidence, the preferred response is to decline or exit the activity. Disclosure (section 8) is used only when declining is not appropriate and the client can make an informed choice.

8. Disclosure to clients

8.1 EU investment firms

Disclosure under Article 23(2) of MiFID II is a last resort. It is used only when the organisational and administrative arrangements cannot ensure, with reasonable confidence, that the risk of damage to the client is prevented. Article 34(4) of Delegated Regulation (EU) 2017/565 sets the content. A disclosure made by the firm:

1. Is given in a durable medium before the firm acts for the client.
2. States clearly that the firm's arrangements are not sufficient to ensure, with reasonable confidence, that risks of damage to the client will be prevented.
3. Describes the specific conflict, its general nature and its sources.
4. Explains the risks to the client and the steps taken to reduce them.
5. Gives enough detail, for the type of client, to support an informed decision.

Over-reliance on disclosure is treated as a deficiency in the policy. The annual review counts how many disclosures were made and asks whether any could be replaced by a control.

8.2 US investment adviser

The adviser owes a fiduciary duty that includes a duty of loyalty. The adviser either eliminates a conflict or makes full and fair disclosure of all material facts so that the client can give informed consent, express or implied. Disclosure must be specific: saying that the adviser "may" have a conflict is not adequate when the conflict exists. Where the adviser cannot make disclosure specific enough for informed consent, it eliminates the conflict or changes the practice.

The main disclosure channels are Form ADV Part 2A (fees in Item 5, performance-based fees and side-by-side management in Item 6, affiliations in Item 10, code of ethics and participation in client transactions in Item 11, brokerage practices in Item 12, referral compensation in Item 14, voting in Item 17), fund offering documents, investment management agreements and specific transaction consents.

8.3 Disclosure log

9. Inducements and benefits

9.1 Rules applied

Detailed research arrangements belong in the Research and Soft Dollar Policy (compliance/research-and-soft-dollar-policy).

9.2 Inducements log

10. Specific situations

11. Escalation and breaches

Any relevant person who becomes aware of an unrecorded conflict or a failed control reports it to Compliance on the same business day. Reports may also be made under the Whistleblowing Policy (compliance/whistleblowing-policy).

Client compensation is calculated from the difference between the allocation the client should have received and the one it did receive, valued at the first available market price after the error was found.

12. Monitoring, management information and review

12.1 Management information

The profiles above follow from section 6.2. Inherent: COI-001 is Very high (16); COI-002, COI-004, COI-007, COI-008 and COI-011 are High (12 each); the other six rows are Medium (scores 6 to 9). Residual: COI-001, COI-002, COI-007, COI-008 and COI-011 are Medium (scores 8, 6, 6, 8 and 6); the other seven rows are Low. The attestation rate is 214 / 218 = 98.2%.

12.2 Reports

12.3 Annual policy review

The review assesses whether the policy still covers every service and group entity, whether ratings are realistic, whether each control was tested and worked, whether any disclosure could be replaced by a control, and whether regulatory changes require updates. Deficiencies become actions with owners and dates, and the management body approves the result.

13. Training and attestations

Each relevant person signs an annual attestation that they have read the policy, have disclosed all outside activities, directorships, close relationships with clients or suppliers and financial interests that could conflict, and have reported any breach they know of.

14. Records

Retention rules: EU firms follow MiFID II Art. 16(6), Delegated Regulation (EU) 2017/565 Art. 72 and Annex I, and national law. US advisers keep required books and records for at least five years from the end of the fiscal year of the last entry, the first two years in an appropriate office of the adviser, under Rule 204-2(e)(1); check which specific records the rule lists for each conflict area.

15. Traceability matrix

16. Glossary and references

16.1 Glossary

16.2 References

Standard and licence note

Based on Directive 2014/65/EU, Commission Delegated Regulation (EU) 2017/565, Commission Delegated Directive (EU) 2017/593, Directive 2011/61/EU with Delegated Regulation (EU) No 231/2013, Directive 2010/43/EU and Directive (EU) 2017/828 as published on EUR-Lex (reuse with acknowledgement), and on the Investment Advisers Act of 1940, SEC rules in 17 CFR Part 275 and SEC Form ADV instructions (US federal works, public domain). The FCA Handbook is cited by reference only. Article and rule numbers are cited and requirements are described in original wording; no legal text is reproduced. Kestrel Bay Capital, Kestrel Bay Capital Europe and all example data are fictional. Check the current consolidated texts, national transposition and any later rulemaking before use. This is a document format, not legal, compliance or investment advice. Template licence: MIT.