SIDC Module 18 key terms

A person who, through employment, family, or professional relationship, has access to material non-public information about a company and is therefore subject to trading restrictions and disclosure duties.

Information that a reasonable investor would consider important to an investment decision and that has not been broadly disseminated to the market; trading on it can constitute market abuse.

The offence of trading, or encouraging another to trade, in securities while in possession of material non-public information in breach of a duty of confidence.

A regulatory category of misconduct covering insider dealing, unlawful disclosure of inside information, and market manipulation, enforced through administrative or criminal sanctions.

Conduct that gives false or misleading signals about the supply, demand, or price of a financial instrument, such as wash trades or spoofing, and undermines market integrity.

An internal information barrier separating departments within a firm, such as corporate finance and trading, to prevent the improper flow of confidential or price-sensitive information.

A compliance-maintained register of securities in which a firm's staff may not trade or recommend because the firm holds confidential information about the issuer.

A confidential compliance record of issuers or securities that warrant monitoring due to potential sensitive information or unusual activity, without imposing a full trading prohibition.

The onboarding and ongoing process of collecting and verifying a client's identity, financial situation, investment objectives, and risk tolerance before providing services or advice.

The obligation to ensure that a recommendation, product, or transaction is appropriate for a specific client given their objectives, knowledge, experience, and financial capacity.

A client's willingness and ability to accept fluctuations in the value of investments, balancing emotional comfort with financial capacity to absorb losses.

A documented assessment combining a client's risk tolerance, time horizon, and financial circumstances, used to match investments to that client's needs.

The process of categorising clients as retail, professional, or eligible counterparty, which determines the level of protection, disclosure, and information owed to them.

A client who is not a professional client or eligible counterparty and therefore receives the highest level of regulatory protection, disclosure, and suitability assessment.

A client meeting specified criteria, such as size, experience, or opting up, who may receive reduced protections and to whom certain disclosure obligations are relaxed.

Situations where a firm's or employee's interests could improperly influence advice or transactions, requiring identification, disclosure, and management through policies and controls.

A fee, commission, or non-monetary benefit paid or received from a third party that may influence a firm's conduct; permitted only where it enhances service and is disclosed.

The duty to take all sufficient steps to obtain the best possible result for clients when executing orders, considering price, cost, speed, and likelihood of settlement.

The set of controls ensuring client orders are recorded, executed promptly and fairly, and allocated without preferential treatment, including aggregation and allocation rules.

An instruction from a client to buy or sell a financial instrument, which triggers record-keeping, execution, and allocation obligations owed to that client.

The provision of clear, fair, and not misleading information to clients about products, costs, risks, and conflicts, enabling informed decision-making before and during the relationship.

The framework of laws, procedures, and controls designed to detect, prevent, and report the laundering of criminal proceeds through financial systems.

The process of identifying and verifying a customer's identity, understanding the nature of their business, and monitoring their activity to manage money-laundering risk.

Additional, more rigorous checks applied to higher-risk customers, such as politically exposed persons or those in high-risk jurisdictions, beyond standard identification and verification.

An individual entrusted with prominent public functions, or a close associate or family member, who poses higher corruption risk and requires enhanced scrutiny.

A confidential report filed with the relevant financial intelligence unit when a firm suspects money laundering, terrorist financing, or other criminal activity.

The offence of disclosing to a suspect that a suspicious activity report has been or will be made, which could prejudice an investigation.

The provision or collection of funds intended for terrorist acts, regardless of whether the funds originate from legitimate or criminal sources.

A transaction, or matched buy and sell, where there is no genuine change in beneficial ownership, often used to create misleading volume or price signals.

Placing orders with the intent to cancel them before execution, creating a false impression of supply or demand to move prices in the trader's favour.

The requirement to provide clients with key information about a financial product's nature, risks, costs, and performance before they commit to it.

The obligation to retain accurate records of client communications, orders, and transactions for a defined period to support supervision, audit, and regulatory enquiries.

The independent internal unit responsible for monitoring adherence to rules, advising staff, and reporting control weaknesses to senior management and the board.

A protected reporting channel through which employees can raise concerns about misconduct or breaches without fear of retaliation, supporting effective compliance.

The set of legal and operational requirements governing the lawful collection, use, storage, and transfer of personal data, including client and employee information.