CFA Level I Exam · Application of the Code and Standards: Level I

Global Application of the CFA Code and Standards

Updated 7 October 2026 · Fact-checked

The Code and Standards apply to members and candidates in every country. When local law and the Standards differ, you follow the stricter one. Under Standard I(A), you must comply with applicable laws, rules and regulations, including the Code and Standards. If you know of a violation, you must dissociate from it.

Understand Global Application of the Code and Standards

CFA Institute members and candidates work in many countries. Laws differ from place to place. Some countries have strong securities rules. Others have weak rules or none. The Code and Standards give one common ethical floor for everyone.

The key idea is the stricter rule. Standard I(A) Knowledge of the Law says members and candidates must understand and comply with all applicable laws, rules and regulations of any government, regulatory organization, licensing agency or professional association governing their professional activities. This includes the Code and Standards. In the case of conflict, members and candidates must comply with the more strict law, rule or regulation.

Think of it as two layers. Layer one is the law, rules and regulations that apply to you. Layer two is the Code and Standards. You must satisfy both. If one asks for more, you do what the stricter one asks. If local law is stricter than the Standards, follow the law. If the Standards are stricter than local law, follow the Standards. If local law is silent, the Standards still apply.

Standard I(A) also deals with what to do when you know of a violation by others. The Standard says you must dissociate from the activity. This means distancing yourself from the conduct. If the firm will not stop the activity, dissociation may mean ceasing to participate in it. Members and candidates are encouraged, but not required by the Standard, to report the violation to the relevant authorities. Reporting may still be appropriate, and sometimes the law requires it.

Consulting legal counsel or your compliance department is a recommended action. It is a sensible step, and escalating to supervisors or compliance is the usual first move. Simply staying silent while staying involved is not enough. Reporting alone also does not replace dissociation.

Key formulas to remember

Stricter rule: If law and Standards conflict → follow the stricter; Applies under Standard I(A). Compare the two and pick the one that demands more of you.
Law silent or weak: No local law → Code and Standards still apply; The Standards set a minimum ethical level even where no securities law exists.
Law stricter: Local law stricter than Standards → follow the law; Do not use the Standards as an excuse to do less than the law requires.
Violation by others: Know of a violation → dissociate from it; Dissociation is required and may mean ceasing to participate in the activity if the firm will not stop it. Reporting is encouraged but not required by Standard I(A), though the law may require it. Consulting counsel or compliance is a recommended action.

How to solve Global Application of the Code and Standards questions

Use this method for any question about law versus the Standards, in any country.

1Identify the countries or rules involved: the local law, the firm's policy and the Code and Standards.
2Work out what each source requires or permits for the action in the question.
3Compare the sources and find which is stricter. If one is silent, the other governs.
4Pick the action that satisfies the stricter rule. Do not choose to follow the weaker one.
5If the question describes someone else's violation, look for dissociation. Consulting compliance or legal counsel is a recommended action and reporting is encouraged, but dissociation is the requirement. Avoid silence or participation.
6Check the other two options. Eliminate any that follow the weaker rule or ignore the law.

Quickest way: Stricter-rule shortcut

When to use it: Use when a stem mentions a foreign country, a conflict of rules, or an absence of local regulation.

Underline the conflict in the stem: law versus Standards, or one country versus another.
Ask: which rule asks me to do more?
Choose the option that follows that rule.
Reject any option that says the local law always wins or that the Standards always win.
If the question is about a violation by others, prefer the option with dissociation.

Common mistakes in Global Application of the Code and Standards

Thinking local law always overrides the Standards.
Students assume a legal country rule is the final word.
Fix: Local law wins only when it is stricter. If the Standards ask for more, follow the Standards.
Thinking the Standards always override local law.
Students overweight the exam's ethics focus.
Fix: The rule is the stricter of the two. Sometimes that is the law.
Believing no law means no obligation.
Students treat the Standards as only applying where regulation exists.
Fix: The Standards apply anywhere. A country with no securities law does not lower your duty.
Assuming Standard I(A) requires reporting every violation to the authorities.
Students confuse dissociation with mandatory reporting.
Fix: The Standard requires dissociation and encourages reporting. Reporting may be appropriate and may be required by law, but I(A) itself does not mandate it.
Following the firm's lower practice because everyone locally does it.
Local custom feels like a rule.
Fix: Custom is not law. Compare actual legal requirements with the Standards and follow the stricter.

Worked examples

Example 1

An analyst based in Country X, where there is no law against trading on material nonpublic information, learns confidential merger details about a listed company. Her colleagues say trading is fine locally. What should she do?

Show the solution

Identify the sources: Country X law is silent, so it imposes no restriction.
The Code and Standards still apply and Standard II(A) prohibits acting on material nonpublic information.
Compare: the Standards are stricter than the absent law.
Follow the stricter rule, so she must not trade on or cause others to trade on the information.
Local custom is not a legal defence under the Standards.

Answer: She must not trade on the information. The Standards apply even where local law is silent, and she follows the stricter rule.

Example 2

A candidate works at a firm in Country Y where law requires the firm to disclose a certain conflict to clients within 5 days. The Standards require reasonable and prompt disclosure but give no fixed number of days. The firm plans to disclose in 10 days. Does disclosure at 10 days meet the stricter requirement, and what must the candidate do under Standard I(A)?

Show the solution

Identify the two sources: Country Y law with a 5-day limit, and the Standards with a general prompt-disclosure duty.
Compare: the law gives a firm, shorter deadline, so it is the stricter requirement.
Under Standard I(A) the candidate must comply with the stricter law.
Disclosure at 10 days misses the 5-day deadline, so the firm's planned disclosure does not meet the stricter requirement.
The candidate must comply with the law and cannot knowingly participate in the late disclosure. If the firm proceeds, she should dissociate from it.

Answer: No. The 5-day legal deadline is the stricter rule, so disclosure at 10 days does not meet it. The candidate must comply with the law and cannot knowingly participate in the late disclosure.

Exam tips

Expect stems set in a named foreign country. The answer almost always turns on which rule is stricter.
Reject options that say one source always wins. Correct answers say the stricter one governs.
If a stem describes a colleague's or client's violation, favour dissociation over silence or continued participation. Involving compliance or counsel is a recommended action, but dissociation is the requirement.
Name the Standard in your head: I(A) Knowledge of the Law. Questions on global application often link to it.
With no penalty for wrong answers, always answer. Eliminate any option that follows the weaker rule or ignores the law, then pick between the rest.

Practice questions from Application of the Code and Standards: Level I

Global Application of the Code and Standards in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Global Application of the Code and Standards: frequently asked questions

What happens when local law conflicts with the CFA Standards?

Under Standard I(A) you follow the stricter of the two. If the law demands more, follow the law. If the Standards demand more, follow the Standards.

Do the CFA Standards apply in countries with no securities laws?

Yes. The Code and Standards apply to all members and candidates wherever they work. A lack of local regulation does not lower your ethical duty.

Must I report a violation to the authorities under Standard I(A)?

Standard I(A) requires you to dissociate from the violation, which may mean ceasing to participate in the activity. Members and candidates are encouraged, but not required by the Standard, to report it, though the law may require reporting. Consulting compliance or legal counsel is a recommended action.