Trade Errors, Omissions, & Breaches – Pursuing Operational Excellence
It is important to remember that errors, omissions, and breaches may occur in the normal course of an investment business. However, they can affect the overall performance and integrity of investment portfolios – so managers and investors should be united in seeking to mitigate these operational risks. To achieve this, a more constructive and open-minded approach to engaging on this topic is required to protect both the investor and the manager from losses.
This memo explores:
- Defining trade errors: broad vs. narrow interpretations
- Regulatory considerations across jurisdictions
- Key features of a robust trade error framework
- Approaches for compensating for trade errors, and
- Questions for due diligence teams to discuss with managers.
