“Under Markets in Financial Instruments Directive 2004/39/EC (known as "MiFID") law we are required to classify our clients and counterparties into one of three regulatory categories, (1) Retail Clients, (2) Professional Clients and (3) Eligible Counterparties.
Retail Clients
A Retail Client is an individual investor who will buy and sell securities for their personal account, and not for another company or organization. Also known as an "individual investor" or "small investor". A Retail Client is a client who is neither a Professional Client nor an Eligible Counterparty.
A Retail Client is a client who is neither a Professional Client nor an Eligible Counterparty. Under MiFID, Professional Clients and Retail Clients may move between categories. In particular, Retail. Clients can request to be treated as Professional Clients. Under MiFID, Constance Investment Ltd must take reasonable care to ensure that a Retail Client requesting treatment as a Professional Client is able to meet similar qualitative criteria and, a separate quantitative test. Clients have the right to request a different classification in order to benefit from a higher degree of regulatory protection should they require it
Professional Clients
A Professional Client is an entity which is required to be authorised or regulated to operate in the financial markets. It includes credit institutions, investment firms, insurance companies, collective investment schemes and pension funds and their management companies, and other institutional investors.
Professional Clients are entities which are required to be authorised or regulated to operate in the financial markets, including credit institutions, investment firms, insurance companies, collective investment schemes and pension funds and their management companies, commodities and commodity derivative dealers, and other institutional investors; As companies, they must have large undertakings meeting two of the following size requirements on a company basis:
- Balance sheet total of €20 million;
- Net turnover of €40 million;
- Own funds of €2 million;
National and regional governments, public bodies that manage public debt, central banks and international and supranational institutions; or other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions can also be considered professional clients. For the professional client to be a person, at least two of the following quantitative criteria must be met:
- The client has carried out transactions, in significant size, on the relevant market at an average frequency of ten per quarter over the previous four quarters;
- The size of the client's financial instrument portfolio, defined as including cash deposit and financial instrument, exceeds €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.
- Clients have the right to request a different classification in order to benefit from a higher degree of regulatory protection should they require it
Eligible Counter Party
An Eligible Counter Party is similar to a Professional Client, however you are required to be: an investment firm, a credit institution, an insurance company, a UCIT or UCITS management company, a pension fund company, an authorised or regulated financial institution, etc.
- Investment Firm
- Credit institution
- Insurance company
- UCITS or UCITS management company
- Pension fund or pension fund management company
- Other authorised and regulated financial institution
- Certain undertakings exempted from the application of MiFID
- National government and public body that deal with public debt; and
- Central bank or supranational institutions
The greatest level of regulatory protection is afforded to Retail Clients, and the lowest level to Eligible Counterparties. Clients have the right to request a different classification in order to benefit from a higher degree of regulatory protection should they require it.
