Practice Note 2.6.3(1)(g) — Procedures for Separation of Key Functions

Issue Date Cross Reference Enquiries
Added on
22 September 2006 and amended on 15 March 201315 March 2013.
Rule 2.6.3(1)(g) Please contact Member Supervision:

Facsimile No : 6538 8273
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1. Introduction

1.1 This Practice Note explains the circumstances, conditions and operational procedures pursuant to the requirement to separate the credit control, trading, dealing and marketing departments of the Members, as set forth in Rule 2.6.3(1)(g).

2 Separation of Key Functions

2.1 The purpose of separating the Member's various key functions is to mitigate conflicts of interests among these functions, and ensure that there are sufficient checks and balances.
2.2 Examples of proper separation include:
(a) access into the dealing or trading room to be restricted to authorised personnel only;
(b) setting and authorising credit limits on Customers by senior management staff who are independent of trading or marketing functions, and are not related to the Customer in question; and
(c) setting and authorising trading limits on House Traders by senior management staff other than the House Trader himself.

Amended on 15 March 201315 March 2013.