Contents FXORO MCA Intelifunds Ltd,

Transcription

1 Contents Client Classification... 2 Retail clients... 2 Professional Clients... 2 Eligible counterparties (ECP)... 3 Opt-down... 4 Opt-up... 4 Changes to professional client / eligible counterparty categorisation... 4 Important Notes for Prospective / Existing Clients/ Clients who may be treated as professionals on request... 4 Procedure... 5 Main differences in treatment between retail and professional clients

2 Client Classification Following the implementation of the Markets in Financial Instruments Directive (MiFID) in the European Union and in accordance with the Investment Services and Activities and Regulated Markets Law of 2007 (Law 144(I)/2007) in Cyprus, all Cypriot Investment Firms (hereinafter called CIF s) are required to categorize their Clients according to their investment experience and overall knowledge on the Financial markets. The Law categorises clients as retail, professional and/or eligible counterparties (ECP). MiFID attaches different regulatory protections to each of these categories with the result that those falling within the retail category - the less experienced, knowledgeable and sophisticated investors will be afforded a higher level of protection than that afforded to investors in the professional or eligible counterparties category. Retail clients Retail clients are those who fall neither in the eligible counterparty nor in the professional clients categories, and include those who have applied for "opt-down" status, i.e. professional clients who have requested in writing to be treated as non-professional (retail) clients. Professional Clients Professional client is a client who possesses the experience, knowledge and expertise to make its own investment decisions and properly assess the risks that it incurs. In order to be considered a professional client, the client must comply with the following criteria: A. Categories of client who are considered to be professionals: Entities which are required to be authorized or regulated to operate in the financial markets. The list below should be understood as including all authorised entities carrying out the characteristic activities of the entities mentioned: entities authorised by a member state under a European Community Directive, entities authorised or regulated by a member state without reference to such Directive, and entities authorised or regulated by a non-member State: Credit institutions; IFs; Other authorised or regulated financial institutions; Insurance undertakings; Collective investment schemes and management companies of such schemes; Pension funds and management companies of such funds; Commodity and commodity derivatives dealers; Locals Investment firms; Other institutional investors 2

3 B. Large undertakings meeting two of the following size requirements, on a proportional basis: Total balance sheet: EUR 20,000,000 Net turnover: EUR 40,000,000 Own funds: EUR 2,000,000 National and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the Internal Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organisations. Eligible counterparties (ECP) An eligible counterparty (ECP) is a client that is either a per se ECP or an elective ECP. ECPs can be any of the following: investment firms credit institutions insurance companies UCITS and management companies of such schemes pension funds and management companies of such funds other financial institutions authorised or regulated under Community legislation or the national law of a Member State undertakings exempted from the application of MiFID under Section 4 (j) and (k) national governments and their corresponding offices including public bodies that dealt with public debt central banks and supranational organisations Meeting pre-determined proportionate requirements, including quantitative thresholds Third country entities equivalent to those categories of entities as stated above 3

4 Opt-down A client who has been categorised as an Eligible Counterparty may, at any time, request to be treated as a Professional Client. If the Company accepts such request, the client shall enter into a written agreement with the Company. The agreement will specify the particular services or transactions, or the types of products or transactions to which the opt-down applies. Opt-up Opt-up for professional clients that have been categorised as professional clients and that meet the opt-up conditions may, with their express consent, be treated as eligible counterparties either for all services for which such opt-up is permitted by law and/or in respect of a particular investment service and/or transaction and/or type of transaction and/or product. The Company must satisfy various requirements set out in CySEC Rules and Regulations and in accordance to the Law 144(I)/2007, including to obtain express written request/confirmation from the client. In relation to MiFID business, at least two of the following quantitative criteria should be satisfied: the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters, the size of the client s financial instrument portfolio, defined as including cash deposits and financial instruments exceeds EUR 500,000, the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.. Changes to professional client / eligible counterparty categorisation Professional clients and eligible counterparties are responsible for keeping the Company informed of any change which could affect their categorisation as professional clients and/or eligible counterparties. If the Company is made and/or becomes aware that a professional client/eligible counterparty no longer fulfils the initial conditions that made him eligible for a professional client/eligible counterparty treatment, it may take appropriate action, including recategorising the client where applicable and/or terminating the business and/or trading line with the Client. Important Notes for Prospective / Existing Clients/ Clients who may be treated as professionals on request Retail clients can request treatment as professional clients Any waiver from a Client to be treated as professional on request and in relation to the protection afforded by the standard conduct of business regime shall be considered valid by the company only if an adequate assessment of the expertise, experience and knowledge of the client, undertaken by the company, gives reasonable 4

5 assurance, in light of the nature of the transactions and/or services envisaged, that the Client is capable of making his/her own investment decisions and/or understanding the risks involved. Procedure The clients defined above may waive the benefit of the detailed rules of conduct only where the following procedure is followed: they must state in writing to the Company that they wish to be treated as professional clients, either generally or in respect of a particular investment service or transaction, or type of transaction or product, the Company must give them a clear written warning of the protections and investor compensation rights they may lose, they must state in writing, in a separate document from the contract, that they are aware of the consequences of losing such protections. Professional clients are responsible for keeping the Company informed about any change, which could affect their current categorisation. Should the Company become aware however that the client no longer fulfils the initial conditions, which made him eligible for a professional treatment, the Company must take appropriate action Main differences in treatment between retail and professional clients Clients wishing to apply for opt-up professional status must be warned that the Company s duties of diligence are less when dealing with a professional client, in particular with regard to the following: The duty of inform: under the MiFID, supplementary information about the company s structure, services and financial products on offer is mandatory only for retail investors; When the Company is providing professional clients with investment services it is authorised to assume that the clients possess the requisite level of experience and knowledge to understand the risks inherent in a given transaction or the management of their portfolio; The Company is only obliged to inform retail clients of any serious difficulties it may encounter that could affect order-execution. 5