| Categorization of ClientsA securities dealer is obliged to introduce internal rules and procedures to classify clients into particular categories as follows:- professional client (Article 8a of the Act on Securities)
- eligible counterpart (Article 73u of the Act on Securities)
- retail client
A securities dealer shall inform the client about the client´s categorization in one of the groups prior to providing any investment service. The securities dealer shall introduce internal written rules and procedures to categorize clients. In line with the Act on Securities, “profession client” means a client who possesses the expertise, experience and knowledge to make its own investment decisions and properly assess the risks that it incurs. The following shall be regarded as professional clients: - a) securities dealers, foreign securities dealers, financial institutions, commodity derivatives dealers and entities authorized to operate in the financial markets by a competent authority or whose activity is separately regulated by generally binding legal regulations,
- b) large undertakings meeting at least two of the following conditions on an individual basis:
- a balance sheet total is minimum 20 000 000 euros,
- net annual turnover is minimum 40 000 000 euros,
- own funds is minimum 2 000 000 euros.
- c) state, regional or municipal authorities, state or regional authorities of other countries, the Debt and Liquidity Management Agency, public authorities of other countries that are charged with or intervene in the management of public debt, the National Bank of Slovakia, other central banks, the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organizations,
- d) legal persons not mentioned in subparagraphs (a) to (c) whose main activity is to invest in financial instruments, including entities that carry out the securitization of credits and loans or other financing transactions,
- e) entities which may at their request be treated as professional clients provided that the conditions laid down in the following are met:
- Over the previous four quarters, the person has carried out transactions in financial instruments of a significant size on the relevant market in financial instruments at an average frequency of at least ten per quarter, whereas a transaction in financial instruments of a significant size means a transaction the volume of which exceeds 6 000 euros,
- The size of its portfolio of securities exceeds 500 000 euros,
- The natural person carries out or has carried out, for at least one year, in relation to this employment, duties in the area of financial market in a position which requires knowledge of securities investment services.
Where an entity mentioned in the above subparagraphs (a) to (d) deems that it is unable to properly assess or manage risks involved in a specific investment service or ancillary service, it may request to be treated the same as client that is not a professional client (hereinafter a „retail client“). Such treatment will be provided when the client enters into a written agreement with the securities dealer to the effect that it shall not be treated as a professional client for the purposes of applying business conduct rules vis-a-vis the client; such an agreement shall specify whether it applies to one or more investment services or ancillary services or to one or more types of financial instrument or transaction. Professional clients shall keep the securities dealers informed about any change that could affect their current categorization as a professional client. Should the securities dealer become aware that the client no longer fulfils the initial conditions which made it eligible to be categorized as a professional client, the securities dealer must take appropriate action to recategorize it. B) Eligible counterpartyIn line with the Act on Securities, the following shall be recognized as eligible counterparties: - a) securities dealer or foreign securities dealers,
- b) credit institutions and foreign credit institutions,
- c) insurance companies, foreign insurance companies and insurance companies from another Member State,
- d) asset management companies, foreign asset management companies, mutual funds, European mutual funds, foreign investment firms and foreign mutual funds,
- e) pension fund management companies, supplementary pension companies, pension funds, supplementary pension funds and similar foreign companies and funds,
- f) other financial institutions authorized or regulated under the law of the European Union or a Member State,
- g) firms that meet the following requirements:
- their main business consists of dealing on own account in commodities or commodity derivatives; this shall not apply where the persons that deal on own account in commodities or commodity derivatives are part of a group the main business of which is the provision of other investment services or investment activities or banking services,
- they provide investment services or investment activities consisting exclusively of dealing on own account on markets in financial futures, options or other derivatives, and on cash markets for the purpose of hedging positions on derivatives markets, or which deal for the accounts of other members of those markets or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets.
- h) public authorities of the Slovak Republic or other countries, including the Debt and Liquidity Management Agency, which are charged with performing certain activities related to the management of public debt and liquidity in accordance with a separated regulation,49a) and authorities of other countries that are charged with or intervene in the management of public debt,
- i) the National Bank of Slovakia, other national central banks, and the European Central Bank,
- j) international organizations,
- k) professional clients,
- l) professional clients at their request, only in respect of the investment services or ancillary services or transactions for which that client could be treated as a professional client.
A securities dealer shall obtain the confirmation from the prospective counterparty that it agrees to be treated as an eligible counterparty. This confirmation may be issued in the form of a general agreement or in respect of each individual transaction. C) Retail clients |
