FAIS Conflict of Interest Policy Statement

Introduction

The scope of the BlackRock FAIS Conflict of Interest Policy Statement (the “Policy Statement”) is limited to conflicts of interest as they relate to the South African branch of BlackRock Investment Management (UK) Limited (“BlackRock”) as an authorised Financial Services Provider (“FSP”) with the Financial Sector Conduct Authority (“FSCA”)

The General Code of Conduct for FSPs and Representatives (the “FAIS Code”), requires FSPs to have a Conflicts of Interest Policy in place to ensure that conflicts of interest are managed appropriately.

This Policy Statement sets out the measures to appropriately identify and mitigate, or manage, potential and actual conflicts of interest. 

The FAIS Code provides the following principles:

  • FSPs must avoid, and where this is not possible, mitigate conflicts of interest.
  • FSPs must act with circumspection and treat clients fairly in a situation of conflicting interests.
  • FSPs must disclose, in writing, to a client any conflict of interest in respect of that client at the earliest reasonable opportunity.

About BlackRock and its Services

This Policy Statement relates to the South African branch of:

BlackRock Investment Management (UK) Limited

Since 2012, BlackRock has offered a range of financial services and solutions for institutions, financial professionals, and individuals in South Africa.

Conflicts of Interest

What is a Conflict of Interest and when may it occur?

A conflict of interest is any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client:

  1. influence the objective performance of his, her or its obligations to that client; or
  2. prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the interests of that client.

Conflicts of interest may occur when the interests of BlackRock, or its employees, are inconsistent with or diverge from those of a client or potential client or where the interests of two or more clients may be inconsistent with each other, and in consequence, there is a risk of damage to the interests of one or more of those clients.

Examples of potential conflicts of interest applicable to the South African branch of BlackRock Investment Management (UK) Limited may include, but are not limited to:

  • Employee Third-Party Relationships
  • Providing benefits to a Third-Party (which may or may not amount to a financial interest)
  • Personal Trading
  • Receipt of Gifts and Entertainment
  • Outside Activities
  • Inside Information (Material Non-Public Information)
  • Insider Trading
  • Ownership Interest

Managing Conflicts of Interest

This Policy Statement supplements the BlackRock Global Conflicts of Interest Policy (the “Global Conflicts Policy”) which has been issued to ensure the interests of BlackRock clients are placed first and to identify and manage any conflicts of interest inherent in the specific investment services and activities in which BlackRock engages. In addition, the BlackRock Code of Business Conduct & Ethics (the “BlackRock Code”) sets out basic principles designed to guide employees in the course of their business activities and practices. 

All BlackRock employees must conduct themselves in accordance with the Global Conflicts Policy and the BlackRock Code and seek to avoid even the appearance of improper behaviour. 

BlackRock has policies and procedures which are designed to prevent conflicts of interest for employee activities in several areas including Outside Business Activities, Personal Trading, Gifts & Entertainment, Inducements, Insider Trading, managing Material Non-Public Information and Information Barriers amongst others.

Where new conflicts are identified, they are to be reported to the BlackRock Legal and Compliance Department and relevant departmental supervisor. Conflicts are to be avoided and, if not, appropriate action taken to prevent the risk of detriment to the interests of BlackRock clients. Where necessary, certain conflict matters are also required to be escalated to an Executive Conflicts Management Committee and to any relevant BlackRock entity board. The key steps taken to manage each identified conflict are also required to be recorded in a conflicts of interest register.

Disclosure of Conflicts

Where the risk of detriment to the interests of BlackRock clients may not, within reasonable confidence, be prevented and prior to the provision of services, the conflict is disclosed by BlackRock to its clients.

Disclosure of Associates and Ownership Interests

Associations or ownership interests in other companies may create potential conflicts of interests with clients. The FAIS Code requires the disclosure of all association and ownership interests that BlackRock has with or in other companies through this Policy Statement. The disclosure of BlackRock Associated Companies and BlackRock Ownership Interests are appended hereto as Appendix A and Appendix B respectively.  

Glossary

The FAIS Code must be consulted for detailed definitions of terms. The following key definitions are intended as reference for the purpose of this Policy Statement only:

Conflict of interest means any situation in which a provider or a representative has an actual or potential interest that may, in rendering a financial service to a client either:

  • influence the objective performance of his, her or its obligations to that client; or
  • prevent a provider or representative from rendering an unbiased and fair financial service to that client, or from acting in the best interests of that client, including, but not limited to financial interest, an ownership interest or any relationship with a third party.

Employees include any full-time, temporary, contract, outsourced, partners, agents and any representatives of BlackRock.

A third party is:

  • a product supplier,
  • another FSP,
  • an associate of a product supplier or an FSP,
  • a distribution channel; or
  • any person, who in terms of an agreement or arrangement with a person referred to above, provides a financial interest to an FSP or its representatives.

Financial interest (“FI”) is defined as any cash, cash equivalent, voucher, gift, service, advantage, benefit, discount, domestic or foreign travel, hospitality, accommodation, sponsorship, other incentive or valuable consideration, other than:

  • an ownership interest; or
  • training, that is not exclusively available to a selected group of providers or representatives, on:
  • products and legal matters relating to those products,
  • general financial and industry information; or
  • specialized technological systems of a third party necessary for the rendering of a financial service; but excluding travel and accommodation associated with that training.

Ownership interest (“OI”) is defined as:

  • any equity or ownership interest, for which fair value was paid by the owner, other than equity or an ownership interest held as an approved nominee on behalf of another person; and
  • includes any dividend, profit share or similar benefit derived from that equity or ownership interest.

Appendix A: BlackRock Associated Companies (in South Africa)

The South African branch of BlackRock Investment Management (UK) Limited does not currently have any reportable associated companies.

Appendix B: BlackRock Ownership Interests

 

Name

Ownership

Parent Name

BlackRock Investment (UK) Management Limited

100%

BlackRock, Inc.

 

Appendix C: BlackRock South Africa Conflicts of Interest Register

BlackRock maintains a conflict register, where potential and/or actual conflict scenarios identified by the business, and the relevant controls, which manage and/or mitigate these potential conflict scenarios are recorded.

A list of potential conflicts, where the risk to clients’ interests cannot be reasonably managed or mitigated, is disclosed via the Supplemental Disclosure Document (“SDD”). Where required, a list of relevant potential conflicts of interests can be provided upon request.