16 Key contract management of investment portfolios

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Regulation contract management and individualized discretionary investment portfolios has its importance because non-compliance can apply to the courts allow compensation for the losses that may have caused.

This contract, referred to in Article 63.1.d of LMV.

This is a contract that governs the discretionary management by a specialized institution values, Cash and client financial instruments, made available to the company, as well as the returns generated. It should take into account the Circular 2/2000 of 30 May the CNMV, on standardized contract for these models and the order 7-10-1999 on general code of conduct and standards of practice in the management of investment portfolios.

The contract should establish the criteria that will be applied management of the portfolio.

For customers Retailers, to use a "standard contract" whose model-type current is passed through Circular 2/2000 of 30 May.

Supplementary to the provisions of the contract and the special legislation, apply commission rules and commercial deposit. The implementation of the agency contract is expressly excluded.

As to the form, The contract should translate into a standard contract (art. 5 OM 1665/2010), but the use of this "model" does not avoid the obligations imposed by the LMV and the LGDCU (if the customer is a consumer).

The following duties for the agent:

  1. Register financial assets under contract.
  2. Report customer prior to the use of global accounts (omnibus accounts).
  3. Inform client quarterly or monthly if losses or if the customer profile is "risky" or "too risky".
  4. Provide the necessary information for tax returns.
  5. Inform client if the value of its portfolio falls over a 25% since the last report.
  6. Reply by damage caused to the customer for breach of contractual obligations or due to misconduct or negligent.
  7. Accountability when the contract ends.

Moreover, the investor has the following obligations and rights:

  1. Make available Management of financial instruments to which the portfolio.
  2. Pay rates management and brokerage costs.
  3. Management is limited to equity contributed more credits earned by the customer.
  4. Decide preferred investment profile: "Conservative", "Moderate", "Risky" or "very risky". Has signed off the alternative chosen and you can only choose one of the alternatives. If you lack the firm, be considered that the profile is conservative. If firms appear in several squares, an entity should consider which is the less risky option.
  5. Decide if used derivatives, requiring express signature.
  6. Decide horizon temporary investment.
  7. Right to reserve the express permission to perform operations for an amount exceeding 25% Portfolio.
  8. Right to expressly designated by signature and, the type of financial instruments in which investment is placed. If left blank, considered fixed income.
  9. Right to withdraw cash, limit the powers of management and give directions consider the manager.

In summary, managing investment portfolios have a strict regulation. If you are not satisfied with the results of their manager, is possible to recover damages, if there has been any breach of the rules.

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