Duty of subordination

I. Principles

The rules of professional conduct of the Industry Organisation for independent Asset Managers (hereinafter: "BOVV") were officially recognised by the Federal Financial Market Supervisory Authority (FINMA) on 23 April 2009.

II. Obligatory subordination (legal requirement) under officially recognised rules of conduct

See explanatory letter of the VQF BOVV dated 18 September 2009.

III. Voluntary subordination to the officially recognised rules of professional conduct of the VQF BOVV

In the absence of any aforementioned legal requirement pursuant to the Collective Capital Investment Act (KAG), “independent” asset managers (e.g. financial intermediaries pursuant to Art. 2 Para. 3 AMLA, see SRO heading) can voluntarily subject themselves to the rules of professional conduct of an industry organisation which is recognised by FINMA. The following reasons for joining the VQF BOVV apply to such asset managers with no terms of reference pursuant to the KAG:

• Cooperation between banks and external asset managers: In the context of private autonomy, as a necessary prerequisite for awarding a mandate on customer accounts at the bank in question, banks increasingly are demanding that external asset managers with whom they work in addition to membership of an SRO pursuant to the AMLA also hold membership of an industry organisation for asset management (including supervision of compliance with rules of professional conduct for asset managers). By doing so, banks aim to avoid being drawn into problems between asset managers and their customers or to ensure that account holders are given reliable advice when serviced by asset managers external to the bank (avoidance by the bank of risks to its reputation and any liability risks).
• Acquisition of new customers: Membership of the VQF BOVV also guarantees that not only supervision takes place as to money laundering but also as regards compliance with the asset manager’s duties of trust, information and due diligence towards his customers as well as in relation to the asset manager’s compensation.

Please note that only the German version is legally binding.