Hi all, confused about q below.
"One of SZR’s clients is president of Sastre International. Because of SZR’s success, this client hires SZR to manage $800 million of Sastre International’s corporate cash in a separate account, but asks that its hiring of SZR not be made public. Sastre’s board asks Ronoldo to direct all of the Sastre account trades through a local financial advisor, to thank the advisor for selecting SZR. Ronoldo is concerned that this direction may limit SZR’s ability to achieve best execution, but after Sastre acknowledges in writing that this is their preference, Ronoldo agrees to follow Sastre’s direction.
By agreeing to Sastre’s direction, does Ronoldo violate the CFA Institute Asset Manager Code of Professional Conduct?
- No.
- Yes, only with respect to best execution.
- Yes, only with respect to fair and equitable trade allocation.
A is correct. The Sastre board requests directed trading for its discretionary account and acknowledges, in writing, that trading through the local financial advisor may limit best execution. As this is a discretionary (not pension) account, the client has the right to direct to a less-than-optimal trading venue"
There seems to be a distinction between discretionary account and pension account made here. Does this mean if its a pension account the cllient cannot direct to less than optimal trading even if the client requests for it?