Policy on Customer-Oriented Business Conduct
Updated: June 2023
The BNP Paribas Group (hereinafter, “BNP Paribas”, or the “Group”), to which both BNP Paribas, Tokyo Branch and BNP Paribas Securities (Japan) Limited belong, sets our values – or the “BNP Paribas Way” – upon which all BNP Paribas employees base our business operations. This policy on Customer-Oriented Business Conduct is based on such values.
The values, which guide our day-to-day activities, were developed based on contributions invited and collected from BNP Paribas employees and are listed in BNP Paribas’s Code of Conduct (accessible via the following link: BNP Paribas Group Code of Conduct).
Stability / Responsibility / Expertise / Good Place To Work
Our Driving Forces:
Agility / Compliance Culture / Customer Satisfaction / Openness
One of the key concepts that we seek to uphold, is that we act in the best interests of our customers – i.e. the philosophy of “customers first”.
At BNP Paribas, Tokyo Branch and BNP Paribas Securities (Japan) Limited, business is done through addressing our customers’ needs in an open and responsible manner, with the highest standards of compliance and ethics, collectively building on our expertise to achieve excellence in the businesses we chose to operate, and considering the consequences of our actions on the wider society.
Please note that as a Bank and a Financial Instruments Business Operator in Japan, in principle, we carry out business with corporate and institutional customers. The way we deal with our customers reflects their nature and their level of sophistication, and we provide products or services as well as required information etc. in relation to such products or services, considering factors such as the client’s investment purpose, experience, knowledge, expertise and financial status etc.
We are well aware that we play a part in the investment chain, and, as per the Code of Conduct, that we must strive to carry out our business with utmost consideration for the interests of the end investors.
We will review this policy on a periodic basis. The implementation of this policy will be confirmed within the framework of our daily business processes, and we will aim to continuously improve the level of the services that we provide to our customers.
We hereby confirm that we shall adopt all seven principles laid out in the “Principles on Customer-Oriented Business Conduct”, announced by FSA in March, 2017, and that we intend to take the actions as we mention below, in line with “BNP Paribas Way”. We hope for your continued support going forward.
1. Pursuit of the Customers’ Best Interests
In the Code of Conduct (the section titled “The rules of conduct”), seven conduct themes are focused upon, and the first of the conduct themes listed is “Customers’ Interests”. The values (Our Strengths and Our Driving Forces) identified within the Group for this theme are:
- Customer satisfaction; and
- Compliance culture.
We have a strong commitment to protect the customers’ best interests, which requires us to:
- Know and comply with the rules protecting customers’ rights in markets where the Group operates;
- Design products with customers’ interests in mind;
- Ensure the products sold are easy to explain;
- Ensure products can be understood by customers;
- Apply fair and transparent pricing in accordance with applicable laws and regulations;
- Ensure that the activities comply with applicable laws and regulations, including tax rules; and
- Never act on behalf of a customer without authorization (e.g. a mandate, or customer instruction).
BNP Paribas puts its responsibility towards our customers at the very heart of its strategy. Protection of interests of our customers is a fundamental component of the corporate culture within the Group and it is a shared responsibility of all its employees.
2. Appropriate Management of Conflicts of Interests
In accordance with BNP Paribas’s policies on managing conflict of interests, we have established internal rules and procedures as well as a control framework to enable appropriate identification of conflict of interest cases, and the necessary actions which should be taken for each such case, including when a conflict of interest arises (or could arise) where there is an imbalance in the information held between parties, as well as conflict of interests between our activities and our customers.
For more details, please refer to our Conflict of Interest Policy.
3. Disclosure of Commissions, Fees and Other Costs
We seek to determine the terms and conditions (including pricing and fees) of financial products and services that we offer to our customers in a fair and reasonable manner. The pricing and fees that we charge for our financial products and services are determined after taking into consideration various factors including, but not limited to, the nature, volume and tenor of the relevant financial product or service, execution method, market conditions, liquidity, capital costs, market, credit and other relevant risks, technology and labour costs and ongoing or post-execution services. Additionally, in cases where we are acting in the capacity of structuring financial products to be sold through distributors to the end investors (such as the structured bond distribution business for our distributor clients), we strive to ensure that transactions are executed at fair fee levels, following internal procedures.
In accordance with the Code of Conduct, which requires all BNP Paribas employees to act fairly, honestly and transparently in all professional actions to gain the trust of customers, we endeavour to ensure that our customers are able to make informed investment decisions by providing them with adequate and easy-to-understand explanations of the pricing and fees that we charge for our financial products and services which takes into account each customer’s knowledge and investment experience. By adopting this approach, we strive to achieve clarity and transparency in the pricing and fees that we charge for our financial products and services. Within business such as our structured bond distribution business for our distributor clients, we provide, upon the request of distributors, what we as the manufacturer consider as fair value of the product, and through this we provide information regarding manufacturing cost etc.
4. Provide Important Information About Financial Products/Services in a Way Which Customers Can Easily Understand
All commercial communications addressed to customers aim to be transparent with respect to the services and products offered, and we follow the below, as and when required, considering the fact that, we carry out business mainly with corporate and institutional customers, and the way we deal with our customers reflects their nature and their level of sophistication, and we provide products or services as well as required information etc. in relation to such products or services, considering factors such as the client’s investment purpose, experience, knowledge, expertise and financial status etc.
- Aim to ensure that all customer communications are fair, honest, transparent understandable and not misleading;
- Provide the required information below in order to enable customers to understand the financial products and services:
- The basic return, pricing and risk characteristics, transaction terms etc. of the product or service which the customer is purchasing;
- What the customer is paying for, including the cost of the products, services and advice chosen;
- What they are paying for, including the cost of the products, services and advice chosen.
- Where we are conducting sales or solicitation to the customer, information such as the reason we select such product or service, conflict of interest (if any) etc. as and when required,;
- Where we are acting as the manufacturer of structured notes, the type of target clients’ to whom the product is expected to be sold.
- Carry out sales and marketing of the Group’s products and services with integrity; and
- Answer customer’s questions to the best of our ability and in a timely manner.
Additionally, we do not transact with individual clients, and therefore we do not create nor provide the Important Information Sheet. (Reflecting this point, we have indicated “not conducted” with regard to Principle 5, Notes (2) and (4) in the correspondence chart below.)
5. Provide Suitable Financial Products/ Services to Customers
We have a duty to understand customers’ needs and we have a responsibility to seek always to understand the needs, expectations and interests of customers in order to provide them with appropriate products and services.
We follow our product governance process established locally and globally, in order to ensure that we provide customers with appropriate products and services meeting our customers’ needs, based on each customer’s business, assets, knowledge regarding financial products and experience in transactions thereof, as well as the customer’s preference (for example, risk appetite) etc. Additionally, new transactions and products are subject to review and validation by all control departments (Legal department, Risk department, Compliance department, etc.) and firm management.
We value all communications with our customers, and will continue to endeavour to achieve better understanding of our customers on a long term basis, through our daily business operations for better service provision going forward, as well, by providing information regarding products and services, as well as by conducting appropriate follow up.
Additionally, for cases where we are in the capacity of structuring financial products to be sold through distributors to the end investors, in response to the latest “Principles on Customer-Oriented Business Conduct” issued by FSA, we provide the required information of target clients’ investor type to whom the product is expected to be sold. Regarding our distributor clients, we conduct due diligence upon initiating business with them, such as through conducting interviews etc. regarding the distributor clients’ process for suitability analysis, and together with the Compliance department, ensure that our distributor clients have a framework in place which enables them to provide services suitable for the end investors, who are the ultimate beneficiaries. Additionally, we also periodically check the business situation and selling framework etc. of the distributor clients with whom we have continuous business relationships.
To note, in principle, we carry out business with corporate and institutional customers, and the way we deal with our customers reflects their nature and their level of sophistication, and we provide products or services as well as required information etc. in relation to such products or services, considering factors such as the client’s investment purpose, experience, knowledge, expertise and financial status etc. Additionally, we do not transact with individual clients, and therefore we do not propose financial products or services based on customers’ life plan. (Where we have indicated “partially conducted” with regard to Principle 6, Notes (1) and (3) in the correspondence chart below, it means that we will take the necessary action, as and when required, as set out in the Note, as per explained in the previous sentences.)
6. Protecting Customers’ Confidentiality
Needless to say, it is important that customers’ confidentiality remains protected, which means to:
- Treat all customers relationships as strictly confidential;
- Keep customer information confidential at all times unless disclosure and/or use of the information is permitted by applicable law and/or with the expressed consent of the customer;
- Share customer information within the BNP Paribas Group with those colleagues who genuinely need to see it to serve the customers’ best interests in accordance with the applicable law and internal rules;
- Only collect data necessary for a specific professional purpose; and
- Comply with the Group’s system of information barriers.
7. Appropriate Incentives Provided to Employees
The Code of Conduct provides clarity regarding what is expected from employees while exercising their roles and responsibilities.
Mandatory trainings regarding our Code of Conduct and Conduct principles are provided to staffs at onboarding and on regular basis (minimum yearly).
The annual performance appraisal process for each employee is also considered to be an important process that reinforces the importance of “living the Values” and highlights appropriate behaviours as described within the Code of Conduct. This annual performance review incorporates Conduct objectives that are assessed by managers based on the Conduct behavior of their staffs.