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Trading CFDs involves significant risk of loss

CLIENT CATEGORISATION

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.

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:

 

Categories of client who are considered to be professionals:

1.            Entities which are required to be authorised 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 authorized 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:

(a)          Credit institutions;

(b)          IFs;

(c)           Other authorised or regulated financial institutions;

(d)          Insurance undertakings;

(e)          Collective investment schemes and management companies of such schemes;

(f)           Pension funds and management companies of such funds;

(g)          Commodity and commodity derivatives dealers;

(h)          Locals;

(i)            Other institutional investors

2.            Large undertakings meeting two of the following size requirements, on a proportional basis:

-balance sheet total at least         20 000 000 euro

-net turnover at least     40 000 000 euro

-own funds at least          2 000 000 euro

3.            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 organizations.

4.            Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitization of assets or other financing transactions.

5.            Clients who may be treated as professionals on request meeting certain criteria.

 

Eligible Counterparties

 

The Company may recognize an undertaking as an eligible counterparty if that undertaking falls within a category of clients who are to be considered professional, excluding institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitization of assets or other financing transactions.

Categories of client who are considered to be eligible counterparties:

  1. investment firms,
  2. credit institutions,
  3. insurance companies,
  4. UCITS and their management companies,
  5. Portfolio Management Companies,
  6. pension funds and their management companies
  7. other financial institutions authorised by a Member State or regulated under Community legislation or the national law of a Member State,
  8. Commodity and commodity derivatives dealers,
  9. national governments and their corresponding offices, including public bodies that deal with public debt,
  10. central banks
  11. supranational organisations
  12. Third country entities equivalent to the categories mentioned above.

 

The Company when enters into transactions with eligible counterparties, obtains the express confirmation form the prospective counterparty that it agree to be treated as an eligible counterparty. This confirmation may be obtained either in the form of a general agreement or in respect of each individual transaction.

 

 

Retail Clients

 

Retail client is every client that is neither a professional client nor an eligible counterparty.

 

 

Opt-down

A client who has been categorised as a professional client may, at any time, request to be treated as a retail client (and hence benefit from the higher level of protection of retail clients). Likewise, an eligible counterparty may, at any time, request to be treated as a professional client or as a retail 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 and/or transactions and/or the types of products and/or transactions to which the opt-down applies.

Opt-up

Opt-up for retail clients

A client who has been categorised as a retail client by the Company may ask in writing to be treated as a professional client (and hence may lose certain protection and investor compensation rights), either generally or in respect of a particular investment service or transaction, or type of transaction or product. The Company may, at its discretion, decide not to take into consideration such treatment.

Any such waiver of the protection afforded by the standard conduct of business regime shall be considered valid only if an adequate assessment of the expertise, experience and knowledge of the client, undertaken by the Company, gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making his own investment decisions and understanding the risks involved.

The fitness test applied to managers and directors of entities licensed under European Directives in the financial field shall be regarded as the assessment of expertise and knowledge. In the case of small entities, the person subject to the above assessment should be the person authorised to carry out transactions on behalf of the entity.

In the course of the above assessment, as a minimum, two of the following 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 500 000 euro

-              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.

Opt-up for professional clients

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.

The Company reserves the right to decline any of the above requests for different categorisation.

PROTECTION RIGHTS

Retail Clients/ Professional Clients

Where the Company treats the Client as a retail client, he/she/they will be entitled to more protections under the law than if the Client was entitled to be a professional client. In summary the additional protections retail clients are entitled to are as follows:

 

 

The Company shall be entitled to assume that a professional client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a professional client.

 

Consequently, and unlike the situation with a retail client, the Company should not generally need to obtain additional information from the client for the purposes of the assessment of appropriateness for those products and services for which they have been classified as a professional client.

 

  1. A retail client will be given more information/disclosures with regard to the Company, its services and any investments, its cost, commissions, fees and charges and the safeguarding of client financial instruments and client funds.
  2. Under the law, where the Company provides investment services other than investment advice (in the form of personal recommendations) or discretionary portfolio management, the Company shall ask a retail client to provide information regarding his knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded so as to enable the investment firm to assess whether the investment service or product envisaged is appropriate for the client. In case the Company considers, on the basis of the information received, that the product or service is not appropriate to a retail client, it shall warn the client accordingly. Please note that the Company is not required to assess appropriateness in certain cases specified by law.
  3. When executing orders, investment firms and credit institutions providing investment services must take all reasonable steps to achieve what is called “best execution” of the client’s orders that is to obtain the best possible result for their clients.


  4.  

Where the Company executes an order on behalf of a retail client, the best possible result shall be determined in terms of the total consideration, representing the price of the financial instrument and the cost related to execution, which shall include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to the third parties involved in the execution of the order.

 

When providing professional clients with best execution the Company in not required prioritise the overall cost of the transaction as being the most important factor in achieving best execution for them.

 

  1. Investment firms and credit institutions providing investment services must obtain from clients such information as is necessary for the firm or credit institution, as the case may be, to understand the essential facts about the client and to have a reasonable basis for believing giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of providing a portfolio management service, satisfies the following criteria:

 

  1. It meets the investment objectives of the client in question;
  2. It is such that the client is able financially to bear any related investment risks consisted with his investment objectives;
  3. It is such that the client has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of his portfolio.

Where the Company provides an investment service to a professional client it shall be entitle to assume that, in relation to the products, transactions and services for which it is so classified, the client has the necessary level of experience and knowledge for the purposes of paragraph (iii) above.

 

In addition, under certain circumstances, the Company shall be entitled to assume that a professional client is able financially to bear any investment risks consisted with its investment objectives.

 

  1. The Company must inform retail clients of material difficulties relevant to the proper carrying out of their order(s) promptly upon becoming aware of the difficulty.

 

  1. The Company is required to provide retail clients:
  1. with more information than professional clients as regards execution of orders, other than for portfolio management.
  2. With periodic statements in respect of portfolio management activities carried out on their behalf, more frequently than for professional clients,

 

  1. Where the Company provides portfolio management transactions for retail clients or operate retail client accounts that include an uncovered open position in a contingent liability transaction, it shall also report to the retail client any losses exceeding any predetermined threshold, agreed between the Company and the client, no later than the end of the business day in which the threshold is exceeded or, in case where the threshold is exceeded on a non-business day, the close of the next business day.

 

  1. If the Company provides an investment service other than investment advice to a new retail client, the Company must enter into a written basic agreement with the client, setting out the essential rights and obligation of the firm and the client.

 

 

  1. The Company shall not use financial instruments held by the Company on behalf of a client for its own account or the account of another client of ourselves, without the client’s prior express consent to the use of the instruments on specified terms, as evidenced, in the case of a retail client, by his signature or equivalent alternative mechanism.
  2. Retail clients may be entitled to compensation under the Investor Compensation Fund for Bank Clients or the Investor Compensation Fund for Clients of Investment Firms, as the case may be.

 

Eligible Counterparties

Where the Company treats the Client as an eligible counterparty, the Client will be entitled to fewer protections under the law than he/she/they would be entitled to as a professional client. In particular, and in addition to the above:

  1. The Company is not required to provide the Client with the best execution the Client’s orders;
  2. The Company is not required to disclose to Client information regarding any fees or commissions that the Company pays or receives;
  3. The Company in not required to assess the suitability or appropriateness of a product or service that it provides to Client but can assume that the Client have the expertise to choose the most appropriate product or service for him/her/them and that he/she/they is/are able financially to bear any investment risks consisted with his/her/their investment objectives;
  4. The Company is not required to provide the Client with information about the Company, its services and the arrangements through which the Company will be remunerated;
  5. The Company is not required to provide the Client with risk disclosures on the products or services that he/she/they select/s from the Company; and
  6. The Company is not required to provide reports to the Client on the execution of his/her/their orders or the management of his/her/their investments.