Information on Conflicts of Interest
Safello AB, in its capacity as a provider of crypto-asset services, is required to inform its customers and prospective customers, in a prominent place on its website, of the general nature and sources of the conflicts of interest that Safello has identified, as well as of the measures taken to mitigate them. Safello AB is hereinafter referred to as "Safello" or the "Company".
The Board of Directors of Safello has adopted an internal policy to identify, manage, and prevent conflicts of interest that may arise in connection with Safello's provision of crypto-asset services. The objective is to avoid conflicts of interest; however, to the extent that conflicts of interest nevertheless arise, Safello is obliged to ensure that customers' interests are not adversely affected by such conflicts.
A conflict of interest may arise, inter alia, when two or more natural or legal persons have opposing interests, for example with regard to the outcome of a transaction or the provision of a service. Conflicts of interest may, for example, arise between two or more of the following parties:
Safello
Safello's customers
direct or indirect shareholders,
members of the Board of Directors,
employees, including senior executives,
group companies, and
contractors or other agents acting on behalf of Safello.
Conflicts of interest may also arise between two or more customers whose interests conflict with each other.
A conflict of interest arises if Safello, or its employees, direct or indirect shareholders, members of the Board of Directors, group companies, or contractors have a financial or other interest that conflicts with a customer's interests. The same applies if a customer has a financial or other interest that conflicts with the interests of one or more other customers. Examples of such situations include cases where Safello or its employees may benefit financially at the expense of a customer, or where one customer may benefit financially at the expense of another customer.
To minimise the risk of conflicts of interest, Safello has established procedures to identify potential and actual conflicts of interest. Safello shall maintain an internal register of the potential and actual conflicts of interest identified in its operations. The register shall be continuously updated and include a description of the identified conflicts of interest, as well as an account of how actual conflicts of interest have been prevented or managed and how potential conflicts of interest are to be prevented or managed. When a conflict of interest has been identified, Safello takes measures to ensure that customers' interests are protected. Examples of measures taken by Safello include segregation of duties, rules governing transactions in crypto-assets by employees and their related parties, and well-designed and appropriate remuneration systems that do not create financial incentives for the Company or its employees to the detriment of the interests of the Company's customers. Safello has also introduced rules on the handling of gifts and other benefits, as well as employee training, to ensure compliance with the policy and the internal procedures, rules, and processes. To ensure fair treatment of customers, Safello does not receive remuneration from third parties (Sw. tredjepartsersättningar) in connection with the provision of crypto-asset services to its customers. Should Safello begin to receive third-party remuneration, Safello will inform its customers accordingly.
Below is an account of the potential and actual conflicts of interest that have been identified in Safello's operations, together with an explanation of how they are to be managed. What is stated below in relation to employees applies equally to contractors working within the Company's operations.
Conflict of Interest
Differential treatment of customers
Favouring one customer over another, for example in pricing, order handling, or customer service. Larger or more complex customer orders may require manual handling, and Safello's transaction fees are based on the customer's trading volume. This may give rise to a conflict of interest between different customers with regard to, for example, pricing, order handling, customer service, and speed of execution.
Measure to manage the conflict of interest
Safello's handling of customers and customer orders shall be carried out in accordance with Safello's Order Execution Policy and the principles of best execution and equal treatment of customers.
The principle of equal treatment means that comparable cases are treated equally, i.e. customers who meet objective criteria in the form of a certain trading volume are charged the same transaction fee. Manual order handling is carried out based on the size and complexity of the order and not on the identity of the customer.
Marketing
In the marketing of crypto-assets and services, the benefits may be emphasised and the risks downplayed in order to make the product or service appear more attractive to the customer and thereby increase the Company's revenues, to the detriment of the customer.
The Company's marketing shall be designed in accordance with applicable laws and regulations. To ensure this, marketing materials shall be reviewed and approved internally prior to publication.
Marketing must not, and shall not, be designed as investment advice, and Safello does not market certain crypto-assets more than other crypto-assets.
Third-party remuneration
Third-party remuneration in the form of discounts, commissions, kick-backs, or similar financial incentives for the Company to select a particular counterparty or supplier could result in Safello marketing crypto-assets or services, or executing customer orders, in a manner that benefits the Company but disadvantages customers.
Safello does not receive third-party remuneration.
Customer orders shall be executed in accordance with the Company's Execution Policy and the principle of best execution in order to ensure that the customer receives the best possible terms for its order, taking into account, inter alia, price, costs, and speed of execution.
If Safello in the future wishes to receive such remuneration, conflicts of interest related thereto shall be assessed and managed in accordance with the Company's Policy on the management of conflicts of interest. Furthermore, customers shall be informed that the Company receives third-party remuneration.
When Safello enters into agreements with third parties, the Company shall assess whether such agreements may result in Safello receiving third-party remuneration and shall manage this in accordance with the procedures and principles set out above.
Front-running or the use of non-public information about upcoming crypto assets on the platform
Employees who receive information about upcoming customer orders that could have a market-moving effect on the relevant crypto asset may use such information to benefit themselves by placing their own orders ahead of the execution of the customer order and thereby take advantage of the expected market movement, so-called front-running.
Employees who hold information about crypto-assets that the Company intends to add to its service offering may use such informational advantage to benefit themselves by placing their own orders in the relevant crypto asset and taking advantage of the market movement that occurs when the Company publicly announces that the crypto asset will be included in the service offering.
Given Safello's relatively limited trading volume in the market, the fact that Safello chooses to add a new crypto asset to its service offering is not assessed to have a market-moving effect. Nevertheless, the Company has chosen to apply restrictions and limitations on employees' personal trading in crypto-assets when they have access to information about upcoming additions of crypto-assets to the Company's service offering. As soon as the CEO has decided to add a crypto-asset to the Company's service offering, this is published on the Company's website. This means that from that point in time, employees no longer have any informational advantage.
The Company also applies restrictions and limitations on employees' personal trading in crypto-assets for employees who have access to information about customer orders.
Costs and fees
A potential conflict of interest may arise if fees vary between different crypto-assets or depending on the size of the transaction, which could create incentives for the Company to influence customers' behaviour and preferences in relation to certain crypto-assets and/or services on which the Company has higher margins.
Safello's transaction fee is based on the customer's total trading volume over the past twelve-month period and not on the size of an individual transaction or the specific crypto-asset to which an order relates.
Information about Safello's fees is presented in a prominent place on the website and in the mobile app and is shown to the customer before a transaction is executed. Detailed information about previous orders, including fees paid, is also available in the customer's user account.
Gifts and other benefits
Employees who give or receive gifts or other benefits (including hospitality) may be improperly influenced, or may improperly influence a third party, which may give rise to a conflict of interest between the employee's interests and those of the Company or its customers.
The Company applies rules governing the giving and receipt of gifts and other benefits in the Company's Anti-Corruption Policy and Code of Ethics, which must be followed by employees, members of the Board of Directors, and others acting on behalf of the Company.
Employees' side activities
Employees' side activities may give rise to a conflict of interest between the interests of the Company and those of the employee.
Employees must disclose any existing side activities before their employment begins.
During employment, side activities must be approved in accordance with the Company's Policy on the Management of Conflicts of Interest. Side activities that compete with the Company's business are not permitted.
Remuneration of employees
Employee remuneration may influence the performance of the Company's services in a manner that benefits the employee or the Company to the detriment of the customer or the Company.
The Company's remuneration system shall be designed so that employees are not rewarded in a manner that conflicts with the Company's obligation to safeguard its customers' interests.
Variable remuneration may create incentives for employees to act in a way that is not in the best interests of the customers or the Company.
At present, the Company does not offer any variable remuneration to its employees.
Employee incentive programmes
From time to time, employees are offered the opportunity to participate in the parent company's long-term incentive programmes by purchasing warrants that may be used to subscribe for shares in the parent company. A potential conflict of interest may arise if an employee who participates in an incentive programme, or who becomes a shareholder after subscribing for shares upon exercise of the warrants, in the performance of their duties prioritises short-term shareholder value over the interests of the Company or its customers.
The parent company uses only long-term incentive programmes with a term of three years in order to promote long-term incentives.
All participants in the incentive programme are required to comply with the Company's internal framework, the purpose of which is to establish rules of conduct for employees that ensure the Company's compliance with laws and regulations and the protection of customers' interests.
Close relationships between employees and employees' handling of their own or related parties' orders
Close relationships between employees may result in a conflict of interest that adversely affects the employees’ performance of their duties.
If an employee were to handle their own orders or the orders of related parties, or provide a service to themselves or a related party, this could give rise to a conflict of interest between the employee, the related party, and the Company or other customers.
If a close relationship arises between employees, measures shall be taken to ensure that the employees do not supervise, manage, or evaluate each other's work.
Employees may not handle their own orders or the orders of related parties, nor provide services to themselves or related parties. In such cases, another employee shall handle the order or service.
Board member's external engagements outside the Safello Group
Individuals who hold board positions in the Company and at the same time hold positions in other companies outside the Safello Group may have interests that conflict with the interests of the Company.
A suitability assessment, including an assessment of any potential conflicts of interest, is conducted before a new board member is appointed to the Company’s board.
Board members may not hold so many outside engagements that they are deemed unable to devote the time required to perform their duties in the Company.
Board members shall regularly report outside engagements and other commitments that may give rise to conflicts of interest.
The conflict-of-interest rules set out in the Swedish Companies Act shall be complied with.
A board member shall disclose any circumstances that may constitute a conflict of interest and shall not participate in the board's handling or decision-making in matters concerning contractual relationships or other similar situations where there are conflicting interests between the Company and the other engagement.
No board member holds any position in another company that is considered to conduct business that competes with the Company.
Board member's engagements within the Safello Group
Individuals who hold board positions in the Company and at the same time hold board positions in other companies within the Safello Group may have interests that conflict with the interests of the Company.
The nature of the business conducted by the other group companies in which the Company's board members hold positions is not assessed to give rise to conflicts of interest.
As the Company is the primary operating entity within the group, there is an alignment of interest among the group companies, which limits the risk of adverse consequences arising from conflicts of interest between group companies.
Indirect significant shareholders with board positions in the Company
Individuals who hold board positions in the Company and who at the same time have significant shareholdings in the Company's listed parent company may have interests that conflict with the interests of the Company.
The influence over the Company that may be exercised by indirect qualified shareholders through resolutions of the general meeting and board resolutions in the parent company and the Company, respectively, must comply with the rules of the Swedish Companies Act.
Under the stock exchange rules, the Company’s parent company must have at least one board member who is independent in relation to major shareholders. In the board of the parent company, two of four members are independent in relation to major shareholders.
In the Company’s board, three of four members are independent in relation to major shareholders.
As the Company is the primary operating entity within the group, there is an alignment of interests between the Company and its direct and indirect shareholders, which limits the risk of adverse consequences arising from conflicts of interest between the Company’s interests and the interests of its direct or indirect shareholders.
Intra-group service agreements
In the case of intra-group service agreements, conflicts of interest may arise in the procurement of the service, in the performance of certain tasks, or in the board's and employees' supervision of the performance.
The group to which the Company belongs is structured so that the Company is the primary operating entity, while other group companies provide support services to the Company under intra-group service agreements. As there is an alignment of interest between the group companies, the risk of adverse consequences arising from conflicts of interest between the Company’s interests and those of other group companies is limited.
Intra-group service agreements are managed in accordance with the requirements set out in the Company’s Outsourcing Policy and are subject to the corresponding requirements as external service agreements.
Parallel employment / CEO appointments in multiple group companies
The Company’s CEO also holds CEO positions in other group companies, and certain employees in the Company’s management team are simultaneously employed by the Company and its parent company. This may result in these individuals having interests that conflict with the Company’s interests in the performance of their duties for the Company.
Through delegation and additional resources in the form of other employees performing supportive roles and functions, individuals holding multiple assignments within the group (including the CEO) are assessed to have sufficient time to carry out their respective duties for the Company.
Furthermore, a specific assessment of whether the CEO is considered to have sufficient time to perform his or her duties for the Company is conducted on a regular basis. This is carried out within the framework of the Company’s Policy on the suitability assessment of the board of directors and the CEO.
The alignment of interest that exists between the group companies, and thus also among employees within the group, limits the risk of adverse consequences arising from conflicts of interest between the Company’s interests and those of its group companies.