Morgan Stanley MUFG Securities Co., Ltd. (hereinafter referred to as “Morgan Stanley”) establishes policies for client-oriented business conduct as set out below based on the “Principles for Customer-Oriented Business Conduct” (the “Principle(s)”) and the “Supplementary Principle for Product Governance” (the “Supplementary Principle (s)”) published by the Financial Services Agency and the notes thereto.
We will provide periodic disclosures regarding the status of our compliance with such policies. Also, we will review the policies on a periodic basis and make a constant effort to provide our services in a client-oriented manner (corresponding to Principle 1).
1. Our Core Value to Put Clients First (Corresponding to Principle 2, Supplementary Principle 1)
At Morgan Stanley, we are committed to fostering and maintaining a culture based on our five core values as set out below. Living these values means, above all, conducting ourselves as directors, officers and employees and our business activities in accordance with the letter and spirit of applicable laws and regulations and our policies, and acting with integrity to deliver first-class business in a first-class way. As directors, officers and employees, we have a shared responsibility to perform our duties with integrity and with strict professional ethics in our dealings with our clients and communities.
Morgan Stanley’s Five Core Values
- Do the Right Thing
- Act with integrity
- Think like an owner to create long-term shareholder value
- Value and reward honesty and character
- Put Clients First
- Keep the client’s interests first
- Work with colleagues to deliver the best of the Firm to every client
- Listen to what the client is saying and needs
- Lead with Exceptional Ideas
- Win by breaking new ground
- Leverage different perspectives to gain new insight
- Drive innovation
- Be vigilant about what we can do better
- Commit to Diversity & Inclusion
- Value individual and cultural differences as a defining strength
- Champion an environment where all employees feel a sense of belonging – are heard, seen and respected
- Expect everyone to challenge behavior counter to our culture of inclusion
- Attract, develop and retain talent reflecting the full diversity of society
- Give Back
- Serve our communities generously with our expertise, time and money
- Build a better firm for the future by contributing to our culture
- Develop our talent through mentoring and sponsorship
Please refer to our Code of Conduct available on Morgan Stanley website for greater detail.
2. Our Policy on Proper Management of Conflict of Interest (Corresponding to Principle 3)
Our core value to Put Clients First requires us to place our clients’ interests first and manage conflicts appropriately between their interests and ours. As set forth in our global policy such as our Code of Conduct, officers and employees must be sensitive to whether the actions they take could create an actual or potential conflict of interest, or even the situation of the appearance of a conflict of interest.
Conflicts of interest can arise in a number of circumstances, including between Morgan Stanley and one or more clients or between two or more clients. If we become aware of a conflict of interest (including potential conflict of interest), we must act in accordance with regulatory requirements and our policies and procedures. Our global policy stipulates that, pursuant to our policies and procedures, we are required to identify, and where appropriate, address, disclose and/or restrict, business conduct and practices that may pose a conflict (including potential conflict of interest) involving the interests of Morgan Stanley, its clients and/or its officers and employees.
Please refer to our Code of Conduct and Summary of Our Policy on the Management of Conflict of Interests available on Morgan Stanley website for greater detail.
3. Our Policy on Clarification of Pricing and Applicable Fees for the Financial Products and Services (Corresponding to Principle 4)
We will seek to determine the terms and conditions of the financial products or services we offer to our clients in a fair manner in compliance with the applicable laws and regulations and our internal policy on pricing for the financial products and services. Our global policy stipulates that the pricing and fees for financial products or services should be reasonable and fair taking into consideration various factors including, but not limited to, the nature, volume and maturity of the relevant transaction, type of transaction execution, market conditions (including market events and volatility), cost of capital and certain client characteristics.
We will provide an appropriate explanation with respect to the fees for the financial products or services when we deliver information regarding such products or services in compliance with the applicable laws and regulations and our policies and procedures. Also, we will seek to ensure transparency of pricing for the financial products or services so that our clients can make appropriate investment decisions based on sufficient information.
4. Our Policy on Providing Important Information in an Understandable Manner (Corresponding to Principle 5, Supplementary Principle 5)
When we conduct a transaction with our client, we will understand the asset status, investment experience and financial goal as well as the level of risk tolerance of our client, confirm the intention and needs of our client and offer a transaction suitable for such conditions in accordance with the applicable laws and regulations and our policies and procedures. Also, we will endeavor to provide a plain and clear explanation necessary for our clients to make an informed investment decision, such as the terms and conditions of the financial product or services, risk embedded in such products or services, relevant market conditions and conflicts of interest (including potential conflicts of interest) between Morgan Stanley and our clients, if any, in light of our clients’ investment experience and nature of the products and in accordance with the applicable laws and regulations and our policies and procedures.
Since we do not trade with individual clients directly, we currently do not prepare the Important Information Sheet. In case financial products originated by Morgan Stanley are distributed by other financial business operators, we will endeavor to provide information on the investment and characteristics of the structured products originated by Morgan Stanley through such distributors upon their request.
5. Our Policy on Providing Suitable Financial Products / Service for Clients (Corresponding to Principle 6, Supplementary Principle 2, Supplementary Principle 3, Supplementary Principle 4)
We will strive to develop a system to offer financial products and services suitable to our clients as described below.
Upon initiating transactions with our clients, we will scrutinize whether a transaction is suitable for a particular client under the particular circumstances by taking into account multiple factors including but not limited to their asset status, investment experience and financial goal and, if there are any issues or concerns, strive to address them appropriately through dialogue with the client.
When we introduce a new or complex product, we will determine such introduction upon conducting sufficient analysis such as on the potential risk our clients may take in accordance with our internal policies and offer the product to clients who are deemed suitable for such product.
Furthermore, we do not trade with individual clients directly; however, in case other financial business operators distribute structured products originated by Morgan Stanley to individual investors, we will assess the suitability of such distributors in accordance with policies in a manner designed to ensure that proper solicitation and marketing is conducted by such distributors. Additionally, we will provide expected client attributes that we consider appropriate as an originator, when dealing with distributors.
The suitability of distributors is verified regularly even after the commencement of new transactions. Through the verifications and coordination among originating firm and distributing firm as a whole, we will closely communicate with the distributors for archiving the best interests of the clients. Such verifications include the check of whether the expected client attributes and the sales targeted clients that the distributors actually distributed to are consistent, and review of the occurrence of complaints regarding structured products.
The above mentioned internal rules stipulate that meeting body including infrastructure departments, etc., to be held on a regular basis, and the origination, provision, and management of products will be verified. In addition, both at the time of structuring and after structuring, the above mentioned meeting body will verify sustainability and rationality of the structured products originated by Morgan Stanley, by checking the distribution status, risk/return/costs, and the status of complaints, etc.
In the case where Morgan Stanley distributes financial products originated by other financial business operators, we strive to provide appropriate services to clients by cooperating with financial business operators involved in the origination of financial products.
In order to ensure a structure for providing better products to clients, we will review relevant operations, products, and internal rules as necessary based on the above mentioned information coordination, verification, and changes in the market and regulatory environment, etc. By utilizing the results to improve the process of product origination, provision and management, we will endeavor to continuously ensure the effectiveness of product governance and quality management.
Please refer to our Solicitation Policy available on Morgan Stanley website for greater detail.
6. Our Policy on Proper Training and Incentives for Employees (Corresponding to Principle 7)
We strive to adhere to the highest standards of ethical conduct. Our commitment to ethical conduct means that we abide by the letter and the spirit of applicable laws and regulations. These principles are hallmarks of Morgan Stanley’s culture and reflect our pledge to Do the Right Thing and Put Clients First.
In order to prevail the aforementioned core values and a corporate culture in accordance therewith within Morgan Stanley, we will deliver mandatory training to all the employees on a regular basis and strive to ensure thorough compliance with our policies and procedures.
A breach of Morgan Stanley’s five core values and above mentioned policies including the Code of Conduct may result in disciplinary action. Also, we regularly review our incentive compensation programs. We have implemented an employee performance evaluation and compensation determination processes designed to ensure that each employee’s compliance with the five core values and the policies will be reviewed and considered during those processes.
*If there is any inconsistency between the Japanese and English versions, the Japanese version will take precedence, except for the Code of Conduct and Policies referred to herein.