Introducing Brokers - Investment Services Providers
An Introducing Broker (“Introducer”) is defined as a person who enters into a written arrangement with a Licence Holder , whereby such person introduces a potential customer to the Licence Holder. As a consequence of this introduction, the Licence Holder may remunerate the introducer by means of commission.
Responsibilities and duties of the Licence Holder
- Each Licence Holder is required to disclose the name and addresses of its Introducers to the MFSA;
- The Licence Holder is to ensure that the charges which the client/ investor will incur should not differ irrespective of whether the client approached the Licence Holder directly or through the Introducer;
- The Licence Holder must remain responsible for “Know Your Customer” checks and cannot rely on the Introducer’s opinion;
- The Licence Holder must retain records (for inspection by the MFSA’s Compliance Officers) of commissions paid to each Introducer.
Responsibilities and duties of the Introducer
- Whist Licence Holders may have several Introducers, each Introducer may only act as such for one Licence Holder at any given time;
- The Introducer is bound by confidentiality as to the means and resources of the customer if s(he) is made aware of them;
- The Introducer may not give any investment advice or perform, promote or provide assistance (on behalf of the Licence Holder) in respect of any licensable activity;
- The Introducer is not permitted to receive any funds from clients or give any commitments on behalf of the Licence Holder.
- Although the Introducer’s involvement should be limited to arranging a meeting between the Licence Holder and the customer, he may also attend the said meeting if required;
- The Introducer should not hold himself out to the general public as acting as Introducer and should not actively promote its “introducing services”.
1. It is to be noted that the term licence holder is defined in the Investment Services Act as any person who holds a collective investment scheme licence or investment services licence granted in terms of the Act.