1.
2.
3.
3.
1.
3.
2.
4.
5.
5.
1.
5.
2.
5.
3.
5.4.
6.
7.
7.1.
7.2.
7.3.
8.
8.
1.
8.2.
8.
3.
1.
1.
2.
3.
4.
5.
5.1.
5.2.
5.3.
5.4.
6.
7.
7.1.
7.2.
7.3.
8.
8.1.
8.2.
8.3.
1.
3.1.
3.2.
Policy
Conflicts of Interest Policy – Firmwide
Current Effective Date: 2 May 2024
TABLE OF CONTENTS
Summary or Rationale.................................................................................................. 1
Conflicts of Interest Framework.................................................................................... 2
Conflicts Types and Categories.................................................................................... 3
Conflict Types include:......................................................................................... 3
Conflict Categories............................................................................................... 3
Conflicts Risks Identification and Controls Evaluation .................................................. 4
Management of Conflicts.............................................................................................. 4
Policies, Standards and Procedures .................................................................... 5
Training................................................................................................................ 5
Management and Oversight................................................................................. 5
Other Controls ..................................................................................................... 6
Defined Terms.............................................................................................................. 7
Appendix A: MiFID II and UK Rules and Legislation..................................................... 8
Identification, Management or Prevention ............................................................ 9
Disclosure............................................................................................................ 9
Reports to Senior Management ........................................................................... 9
Appendix B: Swiss FINSA .......................................................................................... 10
Identification, Management or Prevention .......................................................... 10
Disclosure.......................................................................................................... 10
Impermissible forms of conduct.......................................................................... 11
Summary or Rationale
In the normal course of business, JPMorgan Chase & Co., its affiliates and subsidiaries
(firm or JPMC) face actual, potential and perceived conflicts of interest (Conflicts).
1
2.
The Conflicts of Interest Policy – Firmwide (this Policy) requires the firm, its Lines of
Business (LOBs), Corporate Functions (CFs), and its Workforce Members to identify and
manage Conflicts in accordance with an established Conflicts of Interest Framework
(Framework).
Standards for the appropriate management of the firm’s Conflicts are based on the
principles and requirements found in the Code of Conduct, the Supplier Code of Conduct,
and this Policy, and related LOB and CF policies.
The identification and management of Conflicts, whether actual, potential or perceived, is
critical. Some Conflicts may be impermissible as a matter of law, regulation, or firm or
LOB/CF policy. Other Conflicts may be permissible, and the firm has procedures and
controls to mitigate actual, potential or perceived Conflicts that might arise from the firm’s
or its Workforce Members’ own activities.
Where local or national law or regulatory expectations impose additional requirements to
those imposed by the Code of Conduct and this Policy, the firm, LOBs, CFs, and
Workforce Members must follow those additional requirements.
Questions about the interpretation of a law or a regulation, or regarding regulatory
expectations, should be referred to Legal or Compliance as applicable.
Failure to identify and appropriately manage Conflicts could result in adverse
consequences for the firm and its Clients. These include damage to the firm’s reputation,
Client relationships, loss of Client business, regulatory sanctions, and risk of litigation.
Conflicts of Interest Framework
A Conflict may exist when the interests of the firm, a Workforce Member or a Client
oppose one another.
Conflicts pose risks that professional decisions or actions will be unduly influenced by
personal or other motivations that have the potential to damage Client interests. Actual,
potential or perceived Conflicts may damage the firm’s Client relationships or reputation.
The firm’s Conflict of Interest Framework provides a disciplined and structured approach
for Conflicts identification and management. The Framework consists of:
• Conflicts Types and Conflicts Categories.
• Conflicts Risks Identification and Controls Evaluation for LOBs and CFs to identify and
assess Conflicts risks that could arise in the course of carrying out the firm’s business.
• Management of Conflicts, which is designed to address, mitigate and prevent, where
possible, Conflicts risks. Management of Conflicts includes:
Policies, standards and procedures.
Training.
Management and oversight.
Other controls.
2
3.
3.1.
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.2.
3.2.1.
3.2.2.
3.2.3.
3.2.4.
3.
3.1.
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.2.
3.2.1.
3.2.2.
3.2.3.
3.2.4.
Conflicts Types and Categories
LOBs and CFs must be aware of the Conflicts that may arise across the four Conflict
Types and seven Conflict Categories:
Conflict Types include:
Firm vs. Client
Conflict where the firm’s interests may be opposed to one or more Clients’ interests.
Workforce Member vs. Client
Conflict where a Workforce Member’s interests may be opposed to one or more Clients
interests.
Client vs. Client
Conflict where a Client’s interests may be opposed to the interests of one or more other
Clients.
Workforce Member vs. Firm
Conflict where a Workforce Member’s interests may be opposed to the firm’s interests.
Conflict Categories
Conflict Categories set out the general substantive issue that a particular Conflict raises.
Conduct
An individual action or decision by a firm Workforce Member (for example, in managing
gifts and entertainment, complaints, personal political activities, their engagement in
outside activities, or business dealings with those with whom they have a personal
relationship) may conflict with the interests of the firm or the Client. For more information,
please refer to the Code of Conduct.
Client management
Conflict arising in the management of the Client account (including providing
recommendations, advice, setting fees, or conditioning products/services offerings) in a
manner that is potentially not in the best interests of the Client.
Dealings between related parties and interests, and Client accounts
Conflict arising from transactions between related parties/interests of the firm and Client
accounts potentially represent self-dealing.
Dealings with affiliates, and related parties and interests
Conflicts in which the firm, acting on the Client’s behalf, engages with affiliates, or related
parties and interests of the firm, which potentially may not be in the Client’s best interest.
3
3.2.5.
3.2.6.
3.2.7.
4.
5.
3.2.5.
3.2.6.
3.2.7.
4.
5.
Dealings with third parties/Suppliers that result in financial benefits to related parties
and interests
Conflict in which the firm receives financial benefit, in the form of either direct or indirect
compensation, from a third party and/or Supplier for an agreed arrangement (for example,
obtaining services, outsourcing services, directing trading to exchanges) that could affect
the firm’s ability to exercise its best judgment and, therefore, potentially may not be in the
Client’s best interest.
Trading and portfolio management
Conflict may arise in the management of the firm’s trading activities, whether proprietary or
on behalf of Clients, where the firm may benefit from certain activities that are not in the
best interest of the Client, including, but not limited to, potential fraud or market
manipulation.
Material Non-Public Information
Conflict arising from the potential use of Material Non-Public Information (MNPI) by a
Workforce Member for the benefit of the firm (for example, through front-running a Client
trade) or the Workforce Member individually (for example, through trading for the benefit of
their personal account).
Conflicts Risks Identification and Controls Evaluation
LOBs and CFs must take appropriate steps to identify and assess Conflicts risks as
applicable. LOBs and CFs are required to identify scenarios giving rise to actual, potential
or perceived Conflicts in accordance with this Policy and other JPMC policies and
procedures and to implement and evaluate controls that manage, mitigate and, where
possible, prevent such Conflicts risks.
Notwithstanding the above, because of the breadth of the firm’s product and service
offerings and Client base, it is not possible to enumerate in this Policy every circumstance
that could give rise to an actual, potential or perceived Conflict. Workforce Members
should be alert to identifying situations that may give rise to a potential Conflict, including
those that fall into one or more enumerated Conflict Types and Conflict Categories.
Workforce Members must consider the nature of JPMC’s relationship with the parties
involved when identifying a Conflict. If JPMC owes a fiduciary duty to a Client, Conflicts
may arise in circumstances where none would otherwise exist.
Management of Conflicts
Management of Conflicts includes policies, standards and procedures; training;
management and oversight; and other controls. LOBs and CFs must establish the
methods by which Conflicts are addressed, mitigated and, where possible, prevented. As
detailed below, LOBs and CFs, in consultation with the control functions, must establish
and maintain policies, procedures, training, oversight, and other controls for identifying,
managing and, where possible, preventing Conflicts.
4
5.1.
5.2.
5.3.
5.3.1.
5.3.2.
5.3.3.
5.1.
5.2.
5.3.
5.3.1.
5.3.2.
5.3.3.
Policies, Standards and Procedures
LOBs and CFs are subject to firmwide policies and standards governing particular
activities that give rise to actual, potential and perceived Conflicts.
Firmwide policies and standards include, but are not limited to, the following areas:
•
Political Contributions
•
Personal Account Dealing
•
Outside Interests
•
Managing Personal Conflicts of Interest with External Parties
•
Gifts, Business Hospitality and Inducements
•
Information Safeguarding and Barriers
•
New Business Initiative Approval
•
Third-Party Oversight (TPO) Program
LOBs and CFs must adopt additional policy(ies) and or standard(s) addressing Conflicts
where required under local law or regulatory guidance.
LOBs and CFs may also adopt procedures, where relevant, to identify, manage, help
prevent, and, where appropriate, disclose actual, potential and perceived Conflicts.
Training
The firm conducts ongoing risk-based training to enhance Workforce Members’
understanding of how to identify and mitigate specific Conflict risks in their role, including
guidance on how to follow specific policies, standards and procedures.
Each LOB and CF may provide risk-based training to Workforce Members on identifying
and managing relevant Conflicts, as appropriate.
Management and Oversight
LOB and CF Committees
Each LOB and CF is responsible for the oversight of its Conflicts and associated Conflicts
risks. Each LOB and CF must establish and maintain governance
structures, including committees, as appropriate, and must determine escalation as
appropriate for Conflicts.
Firmwide Committees
The Firmwide Fiduciary Risk Governance Committee (FFRGC) provides firmwide
oversight on the governance framework for fiduciary-related Conflicts risks inherent in
each LOB.
The Global Conflicts Office
The Global Conflicts Office is an independent function with a global footprint that is
responsible for the oversight of the firm’s identification and management of transactional
Conflicts of interest. The Global Conflicts Office partners closely with senior global and
regional management, alongside LOB Legal and LOB Compliance, to manage potential
5
5.3.4.
5.4.
5.4.1.
5.4.2.
5.3.4.
5.4.
5.4.1.
5.4.2.
Conflict situations from both a transaction and a Client relationship standpoint.
Transactions reviewed by the Global Conflicts Office include corporate finance, merger
and acquisition advisory assignments, acquisition financings, private placements or
underwritten debt, equity offerings, banking financings, certain markets-related
transactions, and strategic acquisitions undertaken for the benefit of the firm.
The Global Conflict Office reviews information about proposed transactions, together with
information concerning other transactions or relationships within the firm, to determine if
an actual, potential or perceived Conflict exists. The Global Conflict Office then either:
• Approves
Where no Conflicts exists.
• Approves with conditions
Where a Conflict can be appropriately managed with the imposition of additional
controls, or
• Rejects the transaction
Where a disabling Conflict exists that cannot be managed.
The Global Conflicts Office also oversees deal team staffing on specific transactions and,
in consultation with LOB Legal and LOB Compliance, approves or rejects individuals as
members of deal teams based on a review of other transactions on which they are
currently or have previously been staffed and their Client relationships.
LOBs and CFs must contact and/or report activities to the Global Conflicts Office.
Reputation Risk Offices/Firmwide Reputation Risk Governance
Each LOB, CF and Workforce Member must consider the reputation of the firm, and not
just business benefits and regulatory requirements, in deciding whether to pursue any new
product, transaction, Client relationship, business process, or any other matter.
Any activity that has the potential for material reputation risk must be escalated to the
relevant LOB Reputation Risk Offices (RROs) or the Firmwide Reputation Risk
Governance (FRRG), as appropriate.
Other Controls
Separation of Job Functions
If a business with two or more job functions/responsibilities within a LOB would lead to
Conflicts, the LOB must institute appropriate controls to manage and, where possible,
prevent the possible Conflicts. Controls may include splitting the job
functions/responsibilities into separately managed businesses, having the job
functions/responsibilities managed by different senior members of staff, or providing
appropriate training to senior staff and the job functions’/responsibilities’ Workforce
Members in managing Conflicts.
Compensation
The firm’s governance and management structure delineates responsibility and
accountability for incentive compensation arrangements so that such arrangements are
designed to appropriately consider Conflicts as a component of conduct risk management,
6
5.4.3.
5.4.4.
5.4.3.
5.4.4.
6.
including to incentivize Workforce Members to act in a manner that builds long-term,
sustainable Client relationships and does not incentivize behavior that would create a
Conflict between themselves and the firm or Clients.
Disclosure
LOBs and CFs must disclose actual, potential or perceived Conflicts to third parties where
required by law or regulation. When appropriate, LOBs should also consider disclosure to
enable affected third parties to make an informed decision (e.g., when the means of
managing a Conflict are limited or mitigation is insufficient).
Conflict disclosures must be clear, appropriately specific, reasonably prominent, and,
when feasible, provided with prior notice to permit the third party an opportunity to review
the disclosure before proceeding with the service. If the Conflict relates to Conflicts
between Clients, disclosures that contain reference to the firm’s other Clients must adhere
to any contractual or regulatory restrictions about sharing Client information.
Affirmative third-party acknowledgement of the Conflict is not required under this Policy for
the firm to continue with the activity that originally gave rise to the actual, potential or
perceived Conflict. However, business-specific policies, procedures and local law may
require such acknowledgement in certain circumstances.
For further information about whether disclosures are required or for questions regarding
their format, content, timing, or other aspects, LOBs and CFs should contact Legal or
Compliance.
Workforce Member Escalation
Workforce Members have a responsibility to appropriately escalate instances of Conflicts
per LOB and CF procedures to allow the LOB or CF to consider the potential Conflict.
Failure to escalate could expose the firm to regulatory non-adherence, as well as
reputation risk.
Workforce Members must escalate actual, potential or perceived Conflicts to their
manager and Compliance or any other method set out under the firm’s Code of Conduct.
In consultation with LOB or CF Compliance, a manager is responsible for appropriately
assessing, mitigating and/or disclosing a Conflict, when possible, or should escalate to
their supervisor/manager. LOBs and CFs are responsible for escalation of Conflicts in
committees as set out in LOB and CF Committees.
Defined Terms
Client Refers collectively to clients, potential clients and counterparties, including existing and
prospective clients of the firm where the firm is actively seeking to enter into a relationship for
the provisions of firm services.
In Appendix A Only
Refers to professional, retail or eligible counterparty to whom Investment Services and Activities
are provided.
CF Corporate Function.
7
7.
7.
Conflict(s) Actual, potential or perceived conflict(s) of interest.
CORE
Control and Operational Risk Evaluation process.
Engagement
An Engagement is a transaction, or a set of closely related transactions, where a Supplier is
providing goods and/or services to, or on behalf of JPMC. Most commonly, an Engagement is
represented by a unique contract, which may be a schedule, statement of work, or a task order
under a master, or other agreement document(s).
Investment Services
and Activities
European Economic Area (EEA)
As defined in Section A (Investment services and activities) and B (Ancillary services) of Annex I
of MiFID II:
U.K.
As defined in Part 3 of Schedule 2 to the Regulated Activities Order and Ancillary Services as
defined in Part 3A to the Regulated Activities Order.
JPMC or firm JPMorgan Chase & Co., and its affiliates and subsidiaries.
LOB Line of Business.
MNPI Information that is not known by the public, but if it were, would likely affect the market price of
the financial instruments to which the information relates or a reasonable investor would
consider important in making, or would be likely to be used as part their investment decision
regarding those financial instruments, as applicable.
For the purpose of this Policy, the terms Material Non Public Information (MNPI) and Inside
Information (collectively known as “Inside Information” or “MNPI”) are synonymous and used
interchangeably.
Reputation Risk The risk that an action or inaction reduces trust in the firm’s integrity or competence by its
various constituents, including Clients, counterparties, customers, investors, regulators,
Workforce Members, communities, or the broader public.
Supplier A Supplier is any external non-affiliated entity (company or individual) that supplies goods and/or
services to or on behalf of JPMC, including those that conduct business in the firm’s name and
utilize the firm’s regulated entity status.
Workforce Member Includes (i) any person directly employed by JPMC, or its direct and indirect subsidiaries and (ii)
any person, not directly employed by JPMC, who is provisioned with unescorted access to JPMC
facilities and/or internal JPMC systems.
Appendix A: MiFID II and UK Rules and Legislation
In addition to the requirements detailed in this Policy, the following requirements are
articulated in this Appendix A for the purposes of adherence with the Markets in Financial
Instruments Directive (MiFID II) and U.K. Rules and Legislation and must also apply with
respect to Conflicts related to the firm’s regulated EEA and U.K. legal entities (LE)
providing investment services and activities and, where relevant, ancillary services
(collectively, “Investment Services and Activities”). For the purposes of this Appendix A,
the term “Client” means a professional, retail or eligible counterparty to whom Investment
Services and Activities are provided.
8
7.1.
7.2.
7.3.
7.1
7.2.
7.3.
Identification, Management or Prevention
The requirements detailed in this Policy in respect of the identification, management or
prevention of Conflicts apply in respect of the firm’s carrying out of Investment Services
and Activities.
Disclosure
Each LOB and CF must adopt procedures and controls for appropriate disclosure to the
Client where the arrangements to prevent or manage its Conflicts are not sufficient to, with
reasonable confidence, prevent the risk of damage to the interests of the Client. That
disclosure must be provided to the Client before undertaking (or continuing to undertake)
Investment Services and Activities on their behalf.
For Investment Services and Activities, the firm should not place an overreliance on
disclosure to manage Conflicts. Disclosure of Conflicts to Clients is permitted to be used
only as a measure of last resort.
Where disclosure of the Conflict to the Client is both required and permitted, it must be
made in a durable medium and take into account the nature of the Client, so that the Client
can make an informed decision, and include all of the following:
• Description of the general nature or sources of the Conflict.
• Description of the risks to the Client that arise as a result of the Conflict and the steps
taken to mitigate those risks.
• Clear statement that the organizational and administrative arrangements established
by the firm to prevent or manage that Conflict are not sufficient to, with reasonable
confidence, prevent the risks of damage to the interests of the Client will be prevented.
• Description of the Conflict that arises in the provision of the Investment Services and
Activities.
Reports to Senior Management
For Investment Services and Activities carried out by or on behalf of the firm, each LOB
and CF must adopt procedures and arrangements that provide senior management with,
on at least an annual basis, written reports on situations where:
• Detrimental Conflicts entailing a risk of damage to the interests of one or more Clients
have arisen or may arise in respect of a particular Investment Services and Activities
carried on by the firm, or, in the case of an ongoing Investment Service and Activities
such a detrimental Conflict may arise.
For the purposes of identifying a ‘detrimental Conflict’, the firm must take into account, by
way of minimum criteria, whether as a result of providing the Investment Services and
Activities:
• The firm is likely to make a financial gain, or avoid a financial loss, at the expense of
the Client.
9
8.
8.1.
8.2.
8.
8.1.
8.2.
• The firm has an interest in the outcome of a service provided to the Client, or a
transaction carried on behalf of the Client, which is distinct from that Client’s interest in
that outcome.
• The firm has a financial or other incentive to favor the interest or another Client or
group of interests over the Client.
• The firm carries on the same business as the Client; or
• The firm receives or will receive an inducement from a person other than the Client or
an inducement in relation to a service provided to the Client, in the form of monetary or
non-monetary benefits services.
Appendix B: Swiss FINSA
In addition to the requirements detailed in the Policy and for purposes of adherence to the
Swiss Financial Services Act (FinSA), the requirements contained in the Identification,
Management or Prevention and Disclosure sections below are also articulated and also
apply to the firm’s regulated Legal Entity (LE) providing financial services, as defined in
Article 3(c) FINSA and Article 3 (2) and (3) of the Swiss Financial Services Ordinance
(FINSO), through a Swiss-regulated entity or to Clients in Switzerland served on a cross
border basis (collectively, FINSA Business). For the purposes of this Appendix B, the term
Client means a professional, retail or eligible counterparty to whom FINSA business is
provided.
Identification, Management or Prevention
The requirements detailed in the Policy in respect of the identification, management or
prevention of Conflicts applies in respect of the firm’s carrying out FINSA Business.
Disclosure
Each LOB and CF must adopt procedures and controls to make certain that, where the
firm is required to do so under the ‘Conflict of Interest’ section of FINSA (Article 25, 26, 27
FINSA and Article 24-30 FINSO), the appropriate disclosure regarding a Conflict is
provided to the Client before undertaking (or continuing to undertake) FINSA business on
their behalf.
For FINSA business, the firm should not place an overreliance on disclosure to manage
Conflicts. Disclosure of Conflicts to Clients is permitted to be used only as a measure of
last resort, when the other arrangements that the firm has put in place to prevent or
manage its Conflicts are not sufficient to ensure, with reasonable confidence, that the risk
of damage to the interests of the Client will be prevented.
Where disclosure of the Conflict to the Client is both required and permitted, it must be
made in a durable medium and must adhere to the level of detail and content prescribed
under FINSA so that the Client can make an informed decision, including:
• Description of the general nature or sources of the Conflict.
• Description of the risks to the Client that arise as a result of the Conflict and the steps
taken to mitigate those risks.
10
8.3.
8.3.
• Clear statement that the organizational and administrative arrangements established
by the firm to prevent or manage that Conflict are not sufficient to ensure, with
reasonable confidence, that the risks of damage to the interests of the Client will be
prevented; and
• Description of the Conflict that arises in the provision of FINSA Business.
Impermissible forms of conduct
For purposes of FINSA business, Art. 27 FINSO provides for the following forms of
conduct, which are declared always impermissible and which may already be captured by
general principles, but are stated here for transparency reasons and the good order:
• The restructuring of Client custody accounts with no economic justification in the
Client's interest.
• The exploitation of information, in particular the exploitation of knowledge of Client
orders by executing beforehand, in parallel or afterwards identical transactions for the
account of staff or the financial service provider.
• The manipulation of services provided in connection with issues and placements of
financial instruments; and
• The invoicing of a price at variance with the effective closing price when processing
Client orders.
11
