Following the
incorporation of MiFID to the Cyprus legislation through the Investment
Services and Activities and Regulated Markets Law of 2007 (Law 144(I)/2007,
global Capital is required to reclassify its Clients into one of three
predetermined categories: retail, professional or eligible counterparties.
Categorisation Criteria
1. Professional Clients
Professional Clients are assumed to possess the experience, knowledge and expertise to make its own investment decisions and properly assess the risks they incur. Large companies that satisfy at least two of the following criteria, are automatically categorised as “Professionals”:
a. Balance Sheet Total: at least €20.000.000
b. Net Turnover at least €40.000.000
c. Own Funds: at least €2.000.000.
Request for Different Classification
The Professional Client has the right to request to be classified as a Retail Client in order to obtain a higher level of protection. Global Capital is, however, not obliged to deal with the Client on this basis.
2. Eligible Counterparties
Eligible Counterparties are defined by the Law as being any one of the following entities:
a. Investment Firms
b. Credit Institutions
c. Insurance companies
d. Collective investment schemes and management companies of such schemes
e. Pension funds and management companies of such funds
f. Other authorised or regulated financial institutions
g. Commodity and commodity derivatives dealers
h. National and regional governments, including public bodies that manage public debt
i. Central Banks
j. 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.
Eligible counterparties receive the least protection under the Law. They are exempted from
important obligations relating to conduct of business, best execution and
client order handling rules. This exception, however, does not apply when the
Investment firm offers the Eligible Counterparty the service of investment advice
and portfolio management, in which case the Eligible Counterparty is treated as
a Professional Client.
Request for Different Classification
The Eligible Counterparty has the right to request to be classified either as a Professional Client or a Retail Client in order to obtain a higher level of protection. Global Capital is, however, not obliged to accept the Client’s request.
3. Retail Client
Retail Clients are all
clients who do not fall in the categories of Professional Client or Eligible
Counterparty. Retail clients receive the highest degree of investor protection.
Request for Different Classification The Retail Client has the right to request to be treated as a
Professional Client but he/she will be afforded a lower level of protection.
While Global Capital is not obliged to accept the client’s request, in order to
be considered for treatment as a Professional Client the client must fulfill
two of the following criteria:
- The client has
carried out transactions, in significant size, on the relevant market
which, on average, should amount to at least 10 per quarter in each of the
last 4 quarters;
- The size of the
client’s financial instrument portfolio exceeds €500.000;
- The client works or
has worked in the financial sector for at least 1 year, in a professional
position that requires knowledge of the transactions or services envisaged
