This document is intended to give a thorough understanding of the process by which Blue Suisse Limited (the “Company”) categorises its clients, in accordance with the Markets in Financial Instruments Directive (“MiFID”) and the Investment Services Act and applicable investment services rules (the “Law”). If any of the following text is unclear, you are strongly encouraged to refer to any one of our customer agents.
MiFID requires investment firms to be authorised and to comply with various regulatory requirements, including how business is conducted. One of the cornerstones of MiFID is that investors have different levels of knowledge, skill and expertise. Therefore, the regulatory requirements should reflect this, through the use of categories of client.
In terms of MiFID – there are two main categories of client: Retail and Professional. A third category - Eligible Counterparty applies only to a limited number of businesses. MiFID attaches different regulatory protections to each of these categories. 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 counterparty category.
“Client” shall mean any natural or legal person to whom the Company provides investment and/or ancillary services.
“Professional client” shall mean a client meeting the criteria laid down in paragraph 3.
“Retail client” shall mean a client who is not a Professional Client or an eligible counterparty.
2. CLIENT CATEGORISATION
MiFID affords different levels of regulatory protection are attached to each category as may be summarized below:
- Retail Clients are afforded the most regulatory protection;
- Professional Clients are considered to be more experienced, knowledgeable and sophisticated as well as able to assess their own risk and make their own investment decisions so they are afforded less regulatory protection;
- Eligible Counterparties are investment firms,
credit institutions, insurance companies, UCITS and their management companies, other regulated financial institutions and in certain cases, other undertakings. They are considered to be the most sophisticated investors or capital market participants.
3. PROFESSIONAL CLIENTS
A 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 professionals
For the purposes of this Law, the following shall be regarded as professionals in relation to all investment services and activities and financial instruments:
- 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 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;
- Investment Firms;
- 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;
- Other institutional investors.
- 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.
- National and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organisations.
- Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financial transactions. The entities mentioned above are considered to be professionals.
Any other clients are, by default, Retail Clients
It is the responsibility of the Client, considered to be a Professional Client, to ask for a higher level of protection where it deems it is unable to properly assess or manage the risks involved.
This higher level of protection will be provided when a Client who is considered to be a professional enters into a written agreement with the Company to the effect that it shall not be treated as a professional for the purposes of the applicable conduct of business regime.
- Clients who elect to be treated as professionals
- Identification criteria
Clients other than those mentioned in Part A above, including public sector bodies and private individual investors, may also be allowed to waive some of the protections afforded by the conduct of business rules.
The Company should therefore be allowed to treat any of the above Clients as professionals provided the relevant criteria and procedures mentioned below are fulfilled. These Clients should not, however, be presumed to possess market knowledge and experience comparable to that of the categories listed in Part A above.
A Client who does not fall under any of the categories in Section A above may be also be treated as a professional client upon request. The Company will forward a questionnaire in order to establish whether the client possesses sufficient experience, knowledge and expertise to enable him/her to make his/her own investment decisions and properly assess the risks that such investment incurs. In the course of this assessment two of the following criteria, as a minimum, should be satisfied:
- the Client has carried out transactions, of 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.
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;
- the Company must give them a clear written warning of the protections and investor compensation rights they may lose;
- they must state that they are aware of the consequences of losing such protections.
Notwithstanding the aforesaid, the Company may at its unfettered discretion request additional information to assess the statement and understanding of client. The final decision whether or not to accept a request by the Client to be treated as professional, shall lie with the Company.
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.
4. ELIGIBLE COUNTERPARTIES
Eligible counterparties are any of the following entities to which a credit institution or an investment firm pro-vides the services of reception and transmission of or-ders on behalf of clients and/or execution of such orders and/or dealing on own account:
- Investment Firms or other investment firms;
- Credit institutions;
- Insurance companies;
- UCITS and UCITS management companies;
- Pension funds and their management companies;
- Other financial institutions authorized by a Member State or regulated under Community legislation or the national law of a Member State;
- Undertakings exempted from the application of the Law in accordance with MIFID in terms of Article 2(1)(k) and (l) thereof (relating to those undertakings whose main or exclusive business relates to dealing on own account activities);
- National governments and their corresponding offices, including public bodies that deal with public debt;
- Central banks and supranational institutions.
5. REQUEST FOR DIFFERENT CLASSIFICATION
Retail clients have the right to request the different classification to that of Professional clients but such Clients shall be afforded a lower level of protection. The Company is not obliged to deal with these Clients on this basis.
The Professional client has the right to request the different classification to that of Retail client in order to obtain a higher level of protection. The Company is not obliged to deal with the Client on this basis.
The Eligible Counterparty has the right to request a different classification of either as a Professional client or Retail client in order to obtain a higher level of protection. The Company is not obliged to deal with the Client on this basis.
6. PROTECTION RIGHTS
Retail and Professional Clients
Where the Company treats a Client as a Retail client, the Client is entitled to more protections under the Law, than if the Client was treated as a Professional client. A non-exhaustive list of protection afforded are as follows:
- A Retail client will be given more information disclosures with regard to the Company, its services, its financial instruments and their performance, the nature and risks of financial instruments, its costs, commissions, fees and charges and the safeguarding of Client financial instruments and Client funds, including summary details of any relevant investor compensation or deposit guarantee scheme, as applicable.
- Where the Company is providing the services of Reception & Transmission of orders and/or Execution of Client orders, 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 Company 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 the Law as per MiFID Article 19(6) thereof (relating to execution only services and/or reception and transmission of orders in non-complex financial instruments).
Conversely, 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.
- When executing Client orders, the Company shall 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 its Clients. Please refer to the Order Execution Policy of the Company.
- Retail clients may be entitled to and eligible for
compensation under the Investor Compensation Fund (ICF) available for Clients of Investment Firms, while Professional clients are not entitled to compensation under the ICF.
Eligible Counterparties are entitled to fewer protections than those afforded to Retail or Professional Client. In particular (the list may not be exhaustive):
- The Company is not required to implement procedures and arrangements which provide for the prompt, fair and expeditious execution of its Client orders, relative to other Client orders or its trading interests.
- The Company is not required to assess the appropriateness of a product or service that it provides to the Client but can assume that the Client has the expertise to choose the most appropriate product or service for itself.
- The Company is not required to provide the Client with information about the Company, its services, financial instruments and proposed investment strategies, execution venues, the arrangements through which the Company will be remunerated and other relevant information.
- The Company is not required to provide reports to the Client on the execution of its orders or the management of his investments.
- The Investor Compensation Fund does not cover Eligible Counterparties.
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Documents and question can be sent either by e-mail, fax or post to:
E-Mail : email@example.com
Phone : +49 30 243 4200 Fax : +49 30 243 4229
Postal address : Cornerstone Business Centre, 16th September Square Mosta, MST 1180, Malta
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