CFA Level I · CFA Level I Exam · Guidance for Standard III: Duties to Clients
Under Standard III(A) Loyalty, Prudence, and Care, a member who acts only as a trade execution professional for a client is most likely required to:
A member acting only as a trade execution professional must use skill and diligence to execute trades on the most favorable terms achievable and operate within the client's trading instructions. Standard III(A) does not make every member a legal fiduciary, and it does not require unsolicited investment advice.
- Aexecute trades on the most favorable terms that can be achieved within the client's instructionsCorrect
- Brecommend alternative securities to the client even if none were requested
- Cact as a legal fiduciary to the client in every jurisdiction
Explanation
Trade execution professionals must work prudently in the client's interest, using skill and diligence to obtain the most favorable terms achievable while staying within the client's trading instructions. Standard III(A) does not render all members fiduciaries, so the third option is wrong. Nothing requires unrequested advice, so the second option is wrong.
Did you get it right without looking?
One question tells you little. A timed set on Guidance for Standard III: Duties to Clients shows your real accuracy, how long you take and where you lose marks.
More Guidance for Standard III: Duties to Clients questions
- Morris's institutional clients oversubscribe a hot IPO. He fills all orders, including his own, but cuts the institutional blocks. To best m…
- Two years ago, Priya Nair, a CFA charterholder, ended her advisory relationship with a client, Mr. Okafor. A journalist now asks her about t…
- Carlos Mendes, a CFA candidate, receives a request from CFA Institute Professional Conduct for client records relevant to an investigation i…
- A member manages a trust under an investment management agreement that limits equity exposure to 40%. Local law imposes a fiduciary duty tha…
- An analyst, Wei Tan, works in a jurisdiction where law prohibits disclosing client information, even when it concerns the client's illegal a…
- An analyst at a brokerage firm changes a published recommendation on a stock from buy to sell. Which action is most consistent with Standard…