Regulatory Information
- Selection policy
- Conflict of interest management policy
- Voting policy
1. Best selection policy for financial intermediaries
Since 1 November 2007, pursuant to the EU’s Markets in Financial Instruments Directive (MiFID), new legal and regulatory provisions have governed the provision of investment services. As a result, the provision of portfolio management services for third parties has been affected.
Within this framework, because of its provision of portfolio and mutual fund management services, Metropole Gestion is required to pursue a “best selection” policy concerning the brokers to which it transmits its clients’ orders for execution.
For this reason, Metropole Gestion has developed a policy for selecting the intermediaries to which it transmits the orders resulting from its decisions to trade financial instruments on behalf of its clients or the mutual funds it manages.
The intermediaries are selected by Metropole Gestion on the basis of, in particular, their recognised experience, reputation and skills concerning financial instruments and their responsiveness and human and technical resources, in order to be able to obtain the best possible result for executing the orders transmitted, mainly in consideration of criteria such as:
- price,
- transaction costs,
- timeliness of order transmission,
- execution and settlement probability,
- order size and type.
Additional criteria involved in Metropole Gestion’s selection of intermediaries include the various execution markets to which the chosen intermediary has access in order to execute the orders transmitted. As a result, Metropole Gestion gives its explicit consent to execution other than on regulated and futures markets in order not to deprive itself of the full extent of the offer available and to be in a position to obtain from its intermediaries the best possible result for its clients.
On a regular basis, Metropole Gestion checks the effectiveness of its established policy and in particular the execution quality of the intermediaries selected within the framework of this policy.When necessary, Metropole Gestion corrects any observed deficiencies.
2. Conflict of interest management policy
In accordance with its principles and the prevailing regulations resulting from the transposition of MiFID, Metropole Gestion has defined a policy for identifying, preventing and managing conflicts of interest.
A conflict of interest may arise when an investment services provider carries out activities either on behalf of a client or on a proprietary basis, which come or may come into conflict with the interests of another client or group of clients if these activities are not organised and verified in an appropriate manner.
The purpose of this policy is to:
- establish formal procedures for identifying situations giving rise to or likely to give rise to a conflict of interest involving an appreciable risk of harming clients’ interests,
- define the procedures to be followed and the steps to be taken with a view to managing these conflicts.
These mechanisms are characterised by, inter alia:
- a business line organisation devised to avoid giving rise to conflicts of interest and decisions being made by the company contrary to clients’ interests,
- procedures based on the principles of fairness in the processing of the orders placed with financial intermediaries, in particular in terms of the allocation of assets or financial instruments,
- an employee remuneration policy not based on purely commercial objectives.
If the organisational and administrative measures taken by Metropole Gestion to manage conflicts of interest do not suffice to guarantee with reasonable certainty that the risk of harming the client’s interests will be avoided, prior to acting in its name Metropole Gestion will inform the client clearly of the general nature and/or the source of the conflict of interest. This information will be provided to the client on a durable medium and will be sufficiently detailed so that the client can make an informed decision.
Metropole Gestion will maintain an effective conflict of interest management policy that is appropriate with respect to the size, organisation, nature, importance and complexity of its activity.
3. Voting policy
Metropole Gestion believes that the exercise of voting rights represents an essential aspect of the relationship between a company and its shareholders.
The voting policy defines the principles applied by Metropole Gestion when exercising its voting rights. We examine all the resolutions submitted to a shareholder vote and determine our vote with the objective of defending our clients’ exclusive interest by following the principles and recommendations of the French investment management association (AFG) or generally accepted local best practices (with the assistance of RiskMetrics).
We reserve the right not to vote in specific cases where voting would be contrary to our clients’ interest.
In accordance with the AMF’s General Regulations, a report describing the votes exercised during the year ended is provided annually within four months following the end of the financial year. This report is available on request from the development department.
Organisation of the exercise of voting rights
Since early February 2005, Metropole Gestion has been a subscriber to the voting rights service provided by RiskMetrics.
This service covers the entire range of the mutual funds that Metropole Gestion manages and is applicable to all custodians.
Through this service Metropole Gestion currently benefits from a 100% coverage rate.
Metropole Gestion provides its defined voting policy to RiskMetrics which applies it systematically to all resolutions submitted to the vote of ordinary and extraordinary general shareholders’ meetings both in France and abroad.
Metropole Gestion’s internal organisation considers questions relating to the exercise of voting rights at weekly management committee meetings.
This body may decide on a case-by-case basis to vote differently from what is indicated in the procedure for exercising voting rights when the clients’ exclusive interest is involved.
Possible voting rights restrictions
In order not to penalise investment dynamics and in the interest of unit holders, voting rights will not be exercised for portfolio lines whose cumulative stock market value for all our mutual funds in less than €2 million.
Similarly, market and local rules in certain countries entail blocking shares for several days, which may be prejudicial to unit holders.
When the blocking of shares is applicable, Metropole Gestion will exercise its voting rights only up to 100 shares per mutual fund and security.
Other than the abovementioned restrictions, Metropole Gestion will exercise all its voting rights exclusively in the interest of unit holders.
Method of exercising voting rights
METROPOLE Gestion exercises its voting rights by correspondence through the service provided by RiskMetrics.
Nonetheless, Metropole Gestion reserves the possibility of directly attending shareholders’ meetings, mainly for securities listed in France and depending on its assessment of the advantages of attending.
4. Report on intermediation fees in 2011
In fiscal year 2011, METROPOLE Gestion used investment decision-making and order execution services for the purpose of carrying out equity transactions.
In accordance with the provisions of Article 314-82 of the General Regulations of the Autorité des Marchés Financiers (French securities regulator), the breakdown of fees applied to investment decision-making and order execution services is as follows:
- 60% of total intermediation fees for investment-decision making services;
- 40% of total intermediation fees for order execution services.
In 2011, METROPOLE Gestion did not enter into shared fee agreements with market intermediaries.
The measures implemented to prevent or handle any conflicts of interest in the choice of service providers are defined and governed in the Intermediary Selection Policy and the Conflicts of Interest Management Policy.