CFA CFA Level 3 Question of the Week: Level 3 – Ethics

Question of the Week: Level 3 – Ethics

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  • MarkMeldrum
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    Amelia Stefan works at the trading desk for a large portfolio management company.  To comply with her duty to clients under Standard III(A) Loyalty, Prudence, and Care, Stefan should most likely:

    • A. place more importance on the fees charged for trades than on the speed
      with which the trades are executed.
    • B. place more importance on the speed with which trades are executed than
      on the fees charged for the trades.
    • C. consider both the fees and the speed of execution on trades, and
      determine which is more important case-by-case.
    MarkMeldrum
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    The correct answer is Option C. 

    Standard III(A) requires Stefan to seek the best execution for each client.  For some clients, the explicit cost of the trade – the fees charged – is more important than the speed at which the trade is executed.  For other clients, the speed at which the trade is executed is more important than the explicit cost of the trade.  Best execution means getting the most appropriate combination of cost and speed for each transaction for each client.

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