MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4811.12.31various investment undertakings of theinvestment manager done in behalf of theclient.iii. Internal policies on trade allocation.Defines the institution’s policies in ensuringtimely, fair and equitable allocation ofinvestments across investing portfolios.iv. Diversification of discretionaryinvestments. The TE shall have a policyon the general diversification requirementsfor asset administration, as well as theprocess implemented to monitor andcontrol deviations from policy guidelines.v. A TE shall have access to timelyand competent economic analyses andforecasts for the capital markets and otherproducts in which its clients will beinvesting. TEs engaged in more complextransactions may consider providing aneconomic and securities research unit thatcontinually monitors global trends andcapital markets. This unit providesnecessary forecasts of capital marketexpectations, currency relationships,interest rate movements, commodityprices, and expected returns of assetclasses and individual investmentinstruments, which help the TE establishappropriate investment policies andstrategies, select appropriate investments,and manage risks effectively.vi. The TE shall have a process thatwill confirm trust personnel withinvestment functions know and follow theBOD-approved investment policies andprocesses.c. Selection and use of brokers/dealers. The quality of execution is animportant determinant in broker selection.In selecting brokers/dealers, a TE mustconsider the following minimum standardsand criteria:i. Execution capability and ability tohandle specialized transactions;ii. Commission rates and othercompensation;iii. Financial strength, includingoperating results and adequacy of capitaland liquidity;iv. Past record of good and timelydelivery and payment on trades;v. Value of services provided,including research; andvi. Available information about thebroker from other broker customers,regulators, and self-regulated organizationsauthorized by the SEC.The TE with large portfolio may opt toevaluate broker performance using aformalized point scoring system. A list ofapproved brokers shall be made availableby the TE, reviewed periodically andupdated at least annually.d. Best practices. The TE shalldocument best practices policies andprocesses to institutionalize propersafeguards for the protection of its clientsand itself. At a minimum, the policies mustinclude the following standards:i. Best execution. The TE shall usereasonable diligence to ensure thatinvestment trades are executed in atimely manner and on the best availableterms that are favorable to the clientunder prevailing market conditions ascan be reasonably obtained elsewherewith an acceptable counterparty. Forrelated counterparties, no purchase/salemust be made for discretionary accountswithout considering at least two (2)competitive quotes from other sources. Thepolicy on best execution must documentprocesses to warrant such execution isreadily and operationally verifiable.ii. Chinese wall. A clear policy onChinese Wall aims to protect the institutionfrom conflict of interest arising fromvarying functions carried by the TE inrelation to credit (debt), shareholder, andinvestment position taking. The policyshall state the duties and responsibilitiesof the TE and each department includingthat of the bank proper and subsidiariesand affiliates should transactions involvethe concerned departments and entities.iii. Personnel investment policies.Manual of Regulations for Non-Bank Financial Institutions App. Q-48 - Page 9