Regulatory Authority for Securities Regulations No. 18: Code of Professional Conduct

Regulations of the Securities Authority for the Year 2022 Regulatory No. (18) Code of Professional Conduct

Introduction:
The continuous development in the interactions of human life necessitates the application of ethical practices for social and professional behavior. From this arises the need for laws, rules, and regulations to organize and facilitate these interactions. Within this framework, the Code of Professional Conduct and Ethics, known as the "Charter of Trust," for securities brokerage companies, is based on the general law of the state and the effective laws regulating the operation of financial markets and trading in securities and bonds. These laws embody the commitment of activities related to securities brokerage companies to perform their duties with the highest ethical standards. The Charter aims to preserve the status and dignity of the profession for employees, in addition to striving to raise the level of professional performance and promote employees. It is expected that all members of the Board of Directors, executive management, and employees adhere to the highest standards of professional etiquette and civilized behavior, maintaining high ethical standards in both their work and personal lives. It was decided to issue these standards:

(1) Definitions
The following words and phrases have the meanings specified below:
The Authority: The Iraqi Securities Authority.
The Market: The securities market licensed by the Authority.
The Association: The Association of Securities Brokers in Iraq.
The Member: Securities brokerage companies licensed by the Authority.

(2) Scope
These standards apply to:
a. Brokerage companies operating in financial markets licensed by the Authority. b. Brokers, their agents, and their employees.

Obligations of the Member towards the Market
(3) a. The Member is committed to the Securities Law and the regulatory regulations issued pursuant to it, including the trading principles and rules contained in the securities trading system, market rules, and any amendments thereto. b. Refraining from any act that would harm the reputation of the Market and its participating members.
c. Directly reporting to the Market any illegal or non-compliant act or activity related to trading in securities carried out by any employee in these companies.
d. The company is committed to opening its books and records for audit by the Market and providing them with copies of records and documents related to the company's activity upon request. e. Maintaining the records and documents stipulated by law, including those related to transactions executed by the Member in the Market. f. Not exchanging any currencies exceeding the limits prescribed by the Market's regulatory regulations. g. The company is responsible for any violation by its employees of the law and market systems.

(4)
The Member is prohibited from giving direct or indirect guarantees to investors against losses that may arise from trading, or agreeing with them on a profit share.

(5)
The Member is committed to executing transactions in the Market in a manner consistent with the integrity of trading, and is prohibited from performing any of the following acts:
a. Sham or fictitious (non-genuine) transactions intended to mislead participants into believing there is an active market for securities. b. Any statement or act intended to provide misleading or incorrect data, rumors, or information regarding the rise or fall of security prices.
c. Damaging the reputation of any member or diminishing their status.
d. Using securities registered in investors' names to achieve a private interest. e. Executing fictitious transactions for investors' portfolios solely to obtain commissions. f. Executing transactions that do not conform to sound market practices or that do not conform to the existence of a fair and transparent market basis. g. Spreading or assisting in spreading fake or misleading news, as well as news regarding the imminent change in the price of a security, in order to influence its price and trade on it. h. Providing inaccurate or misleading information or providing advice to investors that leads them to trade excessively or without justification to achieve a private interest or to obtain commissions.

Obligations of the Member towards Investors
(6)
The Member shall not trade in the investor's securities except after concluding an agreement in accordance with effective regulatory regulations, which must include at least the following:
a. The investor's name and address. b. A statement of the services to be provided to the investor.
c. A statement of the commission charged for services according to the agreement.

(7)
The Member is prohibited from:
a. Providing financial facilities to investors for purchasing securities except in accordance with issued regulatory regulations. b. Executing multiple buy and sell transactions for investors without written authorization.
c. Informing the investor immediately of the details of transactions executed on their behalf, or as agreed in the signed contract, and providing them with a detailed account statement.

Preserving Confidentiality in Work
(8)
Employees of the Member are committed to doing the following:
a. Preserving the confidentiality of information and activities related to the Market, or using it for their own benefit or for the benefit of others. b. Keeping confidential documents in a secure place when not in use to ensure they are not accessed by others.
c. Taking necessary measures and precautions to ensure the integrity and security of trading in the Market, specifically:
First: Protecting their own private information that grants them access to systems.
Second: Not allowing unauthorized persons to use the systems.
Third: Not using any programs on Market systems and devices before verifying their integrity with the designated employee.
Fourth: Immediately informing the designated employee in the Information Technology Department upon learning of a breach of intellectual property rights for software or related materials in the Market, or any misuse of Market systems, or the possibility of any programs affecting information stored on devices.

Protecting Investors' Interests
(9) a. The Member is committed to exerting sufficient effort and care to do the following:
First: Familiarizing themselves with the details and characteristics of each investor, trading account, or sell/buy order.
Second: Ensuring the acceptance of their investors' orders in accordance with procedures.
Third: Giving priority to sell or buy orders based on the sequence of their receipt and refraining from favoring one investor's interest over another. Fourth: Not using investors' funds and securities for the Member's private purposes or for other investors. Fifth: Prioritizing investors' interests over their own personal interests and taking necessary measures to protect their interests and the integrity of trading in securities.

(10)
The Member or any of their employees is prohibited from accepting any gifts or donations, regardless of their type, as encouragement or reward, directly or indirectly, from their investors.

Conflict of Interest
(11)
If the Member has an interest in the transaction to be executed for the investor's account, which may lead to a conflict of interest, they are prohibited from executing it except in accordance with issued regulatory regulations.

General Matters
The Member is committed to the following towards investors:
a. Verifying the identity, status, and eligibility of investors and their agents to trade and place sell or buy orders, and verifying the authenticity of signatures contained in these orders. b. Respecting investors' rights regarding their accounts, particularly concerning any returns according to the contract concluded with them.
c. Completely separating their accounts from their investors' accounts, and not using any investor's account to cover another investor's account, while keeping supporting documents for the aforementioned procedures to ensure verification of proper implementation and making them available to the Market and the Authority upon request.
d. Notifying the investor of any material information disclosed in the Market that is relevant to their specific sell and buy orders.

(13)

1. The Member and their employees are prohibited from using insider information in any way when trading in securities for their own benefit or for others before disclosure.
2. The Member must comply with procedures for disclosing transactions by insiders according to issued regulatory regulations.

(14)
The Member or any of their employees is prohibited from exploiting an order or group of orders issued by an investor or group of investors, which are likely to move the price of a security, by trading in the same direction before executing them to achieve personal benefit or for others. It is also prohibited to reach an agreement or direct others to move in the same direction as these orders before executing them.

Combating Money Laundering and Terrorist Financing (15) The Member must take specific procedures regarding combating money laundering and terrorist financing, and at a minimum, do the following:

1. Identify the investor or their agent and their activity, and verify it before and during their interaction.
2. Review investor data periodically and update it.
3. In case of doubt regarding the accuracy and sufficiency of data obtained regarding the identification of the investor or their agent, they must not open an account or contract with them.
4. Not dealing with persons of unknown identity, those with fictitious or fake names, or fake companies.
5. Cash amounts from non-Iraqi investors or their agents must not be received or paid directly, but must be transferred through authorized banks in Iraqi Dinar.
6. Notifying the Anti-Money Laundering and Terrorist Financing Unit at the Central Bank of Iraq in case of suspicion of a process related to money laundering or terrorist financing, regardless of the value of the transaction.

(16)
All employees must comply with the professional conduct standards (Charter of Trust). Violators will be subject to professional and disciplinary liability.