JPMorgan Asset Management (Japan) Ltd
J.P. Morgan Group (“J.P. Morgan”) (of which JPMorgan Asset Management (Japan) Limited. (the “Company”) is a part of) runs businesses in Japan such as investment banking business, cash settlement business, asset management business and intermediary of global custody business which establishes a system to provide our customers with the most appropriate service to meet their various kinds of needs. In connection with the deregulation of firewall regulations, which prohibit holding the concurrent post in a bank and a securities company, J.P. Morgan will make every effort to increase the level of management of transactions that may unjustly impair the interests of our customers (“transactions that may cause conflicts of interest”) as well as improve service further. The Company has established this internal policy and procedures with the purpose of identifying and managing “transactions that may cause conflicts of interests” between J.P. Morgan and its customers, or between its customers, the outline of which is laid out below.
1. Types and Criteria of Transactions That May Cause Conflicts of Interest
The following examples may be considered as types of “transactions that may cause conflicts of interests.” However, these types are only criteria to determine whether there is any “transaction that may cause any conflict of interests,” related to the customers who should be protected or not. Therefore the satisfaction of any of these criteria does not necessarily mean a “transaction that may cause a conflict of interests” has occurred and there may also be cases not listed here which will need to be managed as transactions as “transaction that may cause a conflict of interests.” Also, please note that some additions or modifications of these types and criteria of transactions may be made in the future as necessary.
Abuse of Customer Information Type;
Breach of Duty Type;
Conflict of Interest Type;
Examples of Abuse of Customer Information Type: A case where J.P. Morgan or other customers of J.P. Morgan, based on information gained from or through J.P. Morgan, conducts a transaction of securities on the proprietary account using information regarding the securities transactions of customers who should be protected.
Examples of Breach of Duty Type: A case where J.P. Morgan, or other customers with the help of J.P. Morgan, considers an acquisition of a target company which other customers of J.P. Morgan, who should be protected, are considering acquisition.
Examples of Conflict of Interest Type: A case where J.P. Morgan or other customers with the help of J.P. Morgan conducts a transaction of securities or financial instruments with customers of J.P. Morgan who should be protected.
Examples of Others Type: A case where J.P. Morgan makes a transaction of securities issued by another company, while J.P. Morgan is hiring said other company’s officers or any other employees who are in a position that they can influence the management policy decisions of the company.
2. Conflicts of Interest Management System
The Company has established separate from the Sales Department the Conflicts of Interest Management Control Division and the Conflicts of Interest Management Control Supervisor in the Compliance Division to carry out the appropriate conflicts of interest management. The Compliance Division will collect transaction information of the “Scope of the Companies Covered by Conflicts of Interest Management”, as described below, or any other information as needed, and also identify and manage transactions that may cause conflicts of interest in an integrated fashion.
3. Method of Managing Transactions That May Cause Conflicts of Interest
The Company, with respect to the management of conflicts of interest, has by appropriately managing customer information by complying with laws / regulations and the various internal rules and the separation of departments and Segregation of Duties established a system of preventing transactions that may cause conflicts of interest from occurring. For example, in the case that the Company has been restricting the transactions between assets which the Company provides customers based on the Discretionary Investment Business and the Company’s own account and the Company’s employees’ personal dealing. Also, the Compliance Division monitors the compliance situation to make these regulations work effectively and the Company prevents transactions that may cause conflicts of interests.
Furthermore, in the case that the Company identifies any transaction that may cause a conflicts of interest, the Company will manage the transaction in order not to unjustly impair the interests of customers by selecting from any one, or combination, of the following methods or any other methods that might not be listed (the following methods are only examples, and the following measures need not be adopted):
The method of restricting information sharing between divisions or within a division
The method of amending either the conditions or method of transaction with a client if there is a possibility of a conflict of interest, or both.
The method of discontinuing the transaction that may cause conflicts of interest with such customer.
The method of properly disclosing to such customer the possibility that the interests of such customer may be unjustly impaired in connection with the transaction or receiving the consent from such customer.
The method of approving transactions in advance.
4. Scope of the Companies Covered by Conflicts of Interest Management
On the basis of the Financial Instruments and Exchange Act, in Company transactions which involve JPMorgan Chase Bank, N.A., Tokyo Branch and JPMorgan Securities Japan Co., Ltd. as well as the Company are intended to manage conflicts of interests. In principle, the Company will not share non-public information between them, so they will manage information by way of regulating the share of information between them through use of the information barrier. Also, the transactions which involve foreign affiliates of J.P. Morgan other than those which do not engage in Financial Instruments Business and Bank business are intended to manage conflicts of interest.
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