2.3. Client Agreements and Information Provision

Ancillary Services are activities which...?

which are passportable only if the firm is already passported in relation to a core investment service.

A firm is required to categorise its clients if it is carrying on...?

designated investment business.

If a firm provides a mix of MiFID and non-MiFID services, it must categorise clients in accordance with...

with the MiFID requirements.

The term Client includes potential clients and people acting as...?

as agent for another person.

Under COBS, clients may be categorised as...?

Professional client*. | Retail client. | Eligible counterparty.

"

Note: the term customer is an umbrella term covering both retail clients and professional clients.

Per se professional clients definition:

An entity required to be authorised to operate in the financial markets.

Per se professional clients examples:

Pension fund. | Investment firm.| Governments.

Large undertakings are companies whose...?

... whose balance sheet meet certain levels.

Large Undertakings thresholds. For MiFID they meet any two of the following size requirements on a company basis: a balance sheet total of ___; a net turnover of ___n; or own funds of ___.

20 | 40 | 2

Large Undertakings thresholds. For non-MiFID business. A company whose called-up share capital is at least __?

at least £5 million.

Large Undertakings thresholds. For non-MiFID business. A company which meets any two of: a balance sheet total of ___; a net turnover of ___; an average of ___ employees

12.5 | 25, | 250 employees.

Large Undertakings thresholds. For non-MiFID business. A Trustee which has at any time during the past two years had assets of at least...?

of at least £10 million.

Eligible counterparties (ECPs) examples:

Pension fund. | Investment firm.| Governments.

Eligible Eounterparty activity example. Dealing on ...?

on own account.

Eligible Eounterparty activity example. Any _____ directly related Dealing on own account.

ny ancillary service

Eligible Eounterparty activity example. Arranging in relation to business which not __?

which is not MiFID

When will a firm acting for another person not be treated as that person’s agent (i.e. when is the normal agency rule overridden)?

to reduce duties

What are the exceptions where a firm acting for another person is not treated as that person’s Agent?

if Written specific agreement. | if purpose is duties reduction.

A retail client may be treated as an ‘elective professional client’ when: the firm has assessed their expertise, and believes that they can make their ____?

can make their own investment decisions

A retail client may be treated as an ‘elective professional client’ when any of three conditions are true. Tthis is called the ____?

the quantitative test.

Elective professional client Quantitative test. the client carried out, on average, ten significantly sized transactions on the relevant market in each of the past ___?

in each of the past four quarters

Elective professional client Quantitative test. The size of the client’s financial portfolio exceeds __?

€ 500,000

Elective Eligible Counterparties. A professional client may be treated as an Elective ECP if it is an undertaking and it is a____?

a per se professional client

Elective Eligible Counterparties. According MiFID II local authorities must, by default be classified as...?

as retail clients.

Elective Eligible Counterparties. Local authorities by default are classified as retail clients. They can be reclassified as an elective professional client if meet both the...?

the Qualitative test, | the Quantitative test.

Elective Eligible Counterparties. Local authorities the Qualitative test. The firm undertakes an adequate ____?

assessment of the expertise.

Elective Eligible Counterparties. Local authorities the Quantitative test. The size of the authority’s financial instrument portfolio exceeds __?

£10 million.

Local authorities the Quantitative test. It has carried out transactions at an average frequency of __ per quarter.

10 per quarter

Local authorities the Quantitative test. The authority is an '__ authority'

an ‘administering authority’.

Firms must allow professional clients and ECPs to request recategorisation if ...?

if they wish to be.

A firm can classify a client under a different classification for different financial instruments, however, most firms will classify a client ...?

just once for all financial instruments.

In the event a RETAIL Client has requested to be classified as an ‘elective professional client’, they will lose the many investor protections, for example:...

Suitability.| Appropriateness. | Dealing orders.

Where a PROFESSIONAL Client has requested to be classified as an ‘elective eligible counterparty’, they will lose the following investor protections:

Package Products.| Appropriateness. | Order Handling.

If a UK MiFID firm business receives an instruction to provide investment through another UK MiFID firm, it can rely on information & recommendations related to __?

to third-party firm.

If a UK MiFID firm business receives an instruction to provide investment through another UK MiFID firm it can rely on information & recommendations related to to third-party firm, which has responsibility for the__?

the accuracy of client information.

Reliance on third-party firm. For non-MiFID investment firms, they can rely on information provided to it __?

in writing