CMFAS RES 2B Derivatives Dealing Practices & Skills question: Pereira works for a listed commodity trading group

Mr Pereira works for a listed commodity trading group whose staff policy bars him from dealing in derivatives on the commodities his employer trades. He also tells his dealer he wants no exposure to any market that restricts the repatriation of funds. The dealer proposes a strategy that includes a swap on one of those commodities, observing that the employer is unlikely to find out. Which statement is CORRECT?

• A The restriction is satisfied if the client signs a written waiver accepting responsibility for any breach of his employer's policy
• B The dealer should treat the repatriation point as a liquidity constraint and disregard the commodity restriction
• C He must check and comply with legal restrictions on the portfolio and respect the foreign exposure limit, so the plan cannot proceed
• D Employer restrictions are a matter between the client and his employer, so the dealer may implement the strategy on his instruction