Client’s best interest rule: Difference between revisions
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This ''cannot'' be right. | This ''cannot'' be right. | ||
Firstly, [[treating customers fairly]] generally tilt towards ''not'' offering | Firstly, [[treating customers fairly]] rules generally tilt towards ''not'' offering customers flakey products, rather than ''being forced to''. | ||
Secondly, where a [[dealer]] ''has'' offered a product — flakey or otherwise — [[TCF]] is about ''then'' ensuring that the [[dealer]] exercises its rights against clients in that product (''ceteris paribus''<ref>If a client [[Failure to pay|fails to pay]], or can’t meet margin, different story, clearly.</ref>) fairly. So, if you have 100 clients long the same [[delta-one]] [[equity swap]] and there is a [[Market Disruption Event - Equity Derivatives Provision|market disruption]] affecting ''half'' your hedge, you close out ''all'' positions ''pro rata'', rather than closing out the small clients in full and keeping the juicy [[platinum client]] open and therefore happy, however much that is better to your long term revenue profile. | Secondly, where a [[dealer]] ''has'' offered a product — flakey or otherwise — [[TCF]] is about ''then'' ensuring that the [[dealer]] exercises its rights against clients in that product (''ceteris paribus''<ref>If a client [[Failure to pay|fails to pay]], or can’t meet margin, different story, clearly.</ref>) fairly. So, if you have 100 clients long the same [[delta-one]] [[equity swap]] and there is a [[Market Disruption Event - Equity Derivatives Provision|market disruption]] affecting ''half'' your hedge, you close out ''all'' positions ''pro rata'', rather than closing out the small clients in full and keeping the juicy [[platinum client]] open and therefore happy, however much that is better to your long term revenue profile. | ||