The Association of Investment and Asset Management (BVI) has produced standards which provide an interpretation of Section 9 of the Investment Act (InvG) which sets out general rules of conduct applicable to management companies. These standards are known as the "BVI Rules of Good Conduct”.
On 20 January 2010, the Federal Financial Supervisory Authority (BaFin) announced that the BVI Rules of Good Conduct shall be generally binding and used for the interpretation of the InvG with immediate effect.
The BVI Rules of Good Conduct formulate standards for responsible dealing with capital and investors' rights. In particular, the rules cover:
- The requirement that the management company has to act in the sole interest of its investors and market integrity (e.g. acting independently, avoiding time zone arbitrage, ensuring equal treatment of investors, setting up procedures for handling investors’ complaints and requests).
- The requirement that the management company has to avoid conflicts of interest by having appropriate organisational measures and procedures to identify and avoid, and where necessary solve, such conflicts.
- The requirement to set-up and follow guidelines that ensure that the execution of transactions for investment funds, individually managed portfolios and the management company’s own funds is in line with market practice and the equal treatment of investors.
The BVI Rules of Good Conduct apply to all management companies and to all investment stock corporations, as defined in the InvG. However, the rules do not apply to German branches of foreign management companies with their registered office in another Member State operating under the management company passport.