Client Categorisation Policy

This policy is the property of Skilling Ltd. Reproduction in whole or in part in any way including the reproduction in summary form, the reissue in a different manner and any changes in the original manual or any translated version (V.03) is strictly forbidden and is only allowed with the prior written consent of Skilling Ltd. This Policy was last updated as of January 2019. 

Authorized and regulated by the Cyprus Securities and Exchange Commission under CIF license number 357/18.

Skilling Ltd (hereafter the “Company”, “we”, “our”) agreeing to enter into over-the-counter (“OTC”) contracts for differences (“CFDs”) with the undersigned client (hereinafter referred to as the “ Client”, “ you”, “ your”). The Client hereby acknowledges, understands and agrees to the below.

Legal and Regulatory Framework

Following the implementation of the applicable (EU) Commission Delegated Regulations, Markets in Financial Instruments Directive (MiFID) in the European Union and in accordance with the Law 87(I)/2017 titled Investment Services and Activities and Regulated Markets Law, the Company is required by law to categorise its Clients into one of the following three categories: retail, professional or eligible counterparty.

A. CLIENT CLASSIFICATION

The Company shall initially treat all clients as ‘Retail clients’ as notified in the Client Agreement and provided the provisions of the applicable Regulation are fulfilled. The Company, prior to engaging in a business relationship with its potential clients, notifies the potential clients of the clients’ classification in use by the Company, and about any limitations to the level of client protection that a different categorisation would entail. 

A Retail client may submit a written request to the Company, that it wishes to be treated as a professional client either generally or in respect to a particular service or transaction or type of transaction or product.  Currently, the Company does not classify any clients as ‘Eligible counterparties’ and ‘Per se professional client’.

If, in the future, we were to treat any clients as an Eligible counterparty and/or Per Se Professional clients, in accordance with the provisions of the present Policy, an agreement would be provided.

In accordance with the Law 87(I)/2017, Clients shall be categorised as follows, based on the criteria outlined below:  

1. 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: 

1.1. Categories of clients who are considered to be Per Se Professionals:

The Company shall regard the following as professionals in relation to all investment services and activities and financial instruments:

1. 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 authorized 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: 

o   Credit institutions

o   Investment firms (IFs)

o   Other authorised or regulated financial institutions

o   Insurance undertakings

o   Collective investment schemes and management companies of such schemes

o   Pension funds and management companies of such funds

o   Commodity and commodity derivatives dealers

o   Locals

o   Other institutional investors

 

2. Large undertakings meeting any two (2) of the following size requirements, on a company basis:

o   total balance sheet

EUR 20,000,000

o   net turnover at least

EUR 40,000,000

o   own funds at least

EUR 2,000,000

 

3. National and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the Internal Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organisations.

4. Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions.

5. The entities mentioned above are considered to be professionals. They must however be allowed to request Non-professional treatment and the Company may agree to provide a higher level of protection. Where the client of the Company is an undertaking referred to above, the Company must inform it prior to any provision of services that, on the basis of the information available to the Company, the client is deemed to be a professional client, and will be treated as such unless the Company and the client agree otherwise. The Company must also inform the customer that he can request a variation of the terms of the agreement in order to secure a higher degree of protection.

6. It is the responsibility of the client, considered to be a professional client, to ask for a higher level of protection when it deems it is unable to properly assess or manage the risks involved.

7. 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. Such agreement should specify whether this applies to one or more particular services or transactions, or to one or more types of product or transactions.

1.2. Identification criteria (‘Elective’ professional client vs. ‘Per se’ professional client)

A ‘Professional Client’ is a client that is either a per se professional client or an elective professional client. A professional client is a client who possesses the experience, knowledge and expertise to make his own investment decisions and properly assess the risks that he incurs. 

1) ‘Elective’ professional client

Clients who have been initially classified by the Company as retail clients are allowed to request to be treated as professional clients. Where a Retail client requests to be treated as professional, our Customer support team will contact the client and request them to subsequently complete and sign the Application form along with the relevant supporting documents and return to us in both electronic and/or hard copy(s)  in order for us to assess the client’s request.

In addition, clients who have been initially classified by the Company as Retail clients are allowed to request to be treated as Professional clients, provided that at least two of the following criteria are satisfied:

1)    The client has carried out transactions, in significant size, at an average frequency of 10 per quarter over the previous four quarters.

2)     The size of the client’s financial instrument portfolio exceeds EUR 500.000.

3)  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 Management body and the compliance officer will be responsible to assess the Application Request Form and take appropriate measures to categorise the client as Professional (from Retail client).  We will obtain additional documentation in order to complete the assessment. 

The client must state in writing to the firm that it wishes to be treated as a professional client either generally or in respect of a particular service or transaction or type of transaction or product.

2) ‘Per se’ professional client 

The company shall initially categorise all its clients as Retail clients unless, and to the extent it is an eligible counterparty or is given a different categorisation under the provisions of the Part I of the Appendix II of the Law. 

Where the client satisfied the abovementioned requirements, the Company will communicate such decision to client before treating their account as  Per Se Professional. The client will be allowed to waive some protections afforded under the Business Terms and state in writing, in a separate document from the agreement, that it is aware of the consequences of losing such protections.

2. Eligible Counterparties

2.1. Categories of clients who are Eligible counterparties

Eligible counterparties may be considered to fall within the following categories:

o   Investment firms

o   Insurance companies

o   Credit institutions

o   National governments and their corresponding offices including public bodies which manage public debt

o   Central Banks

o   Pension funds and their management companies 

o   Supranational organisations

o   Other financial institutions authorised or regulated under community or national law

o   UCITS and their management companies

o   Third country entities equivalent to the categories mentioned above

2.2. Transactions with Eligible counterparties

i) In cases the Company receives and transmits orders on behalf of clients, may bring about or enter into transactions with Eligible counterparties without being obliged to comply with the obligations under above in respect of those transactions or in respect of any ancillary service directly related to those transactions.

ii) The Company, when entering into transactions with Eligible counterparties, obtains the express confirmation form the prospective counterparty that it agrees to be treated as an Eligible counterparty. This confirmation may be obtained either in the form of a general agreement or in respect of each individual transaction.

iii) The relevant request to the Company must be made in writing and shall indicate whether the treatment as retail client or professional client refers to one or more investment services or transactions, or one or more types of transaction or product.

iv) Where an Eligible counterparty requests treatment as a client whose business with the Company is subject to the Company’s business obligations when providing investment services to clients but does not expressly request treatment as a retail client, and the Company agrees to that request, the Company shall treat that Eligible counterparty as a professional client. This confirmation may be obtained either in the form of a general agreement or in respect of each individual transaction.

Where the Company treats the Client as an eligible counterparty, the Client will be entitled to fewer protections under the law than he/she/they would be entitled to as a professional client. In particular, and in addition to the above:

a) The Company is not required to provide the Client with the best execution the Client’s orders;

b) The Company is not required to disclose to Client information regarding any fees or commissions that the Company pays or receives;

c) The Company is not required to assess the suitability or appropriateness of a product or service that it provides to Client but can assume that the Client have the expertise to choose the most appropriate product or service, and that Clients are able financially to bear any investment risks consisted with their investment objectives;

d) The Company may, in some cases with the client’s agreement, provide less detailed/comprehensive information on aggregated costs and charges related to financial instruments and investment or ancillary service provided to the Client;

e) The Company is not required to provide the Client with risk disclosures on the products or services that the client receives from the Company; and

f)   The Company may enter into agreements with eligible counterparties with respect to the content and timing of the reports to be provided to the Client on the execution of orders or the management of the client’s investments.

g) When handling orders of eligible counterparties, the Company is not required to comply with the client order handling rules, which provide for the prompt, fair and expeditious execution of client orders relative to other client orders or the trading interests of the Company.

h) The product governance obligations of the Company in relation to target market identification and compatibility do not apply to eligible counterparties.

The Company does not classify any clients as Eligible counterparties. If, in the future, we were to treat any clients as an Eligible counterparty an agreement would be provided. 

3. Retail clients

A Retail client is every client that is not a professional client. 

A. OPTION TO CHANGE CLASSIFICATION 

1).  It should be noted that an Eligible counterparty or professional client have the right to request non-professional treatment and the Company may agree to provide a higher level of protection. In this respect, the Company notifies its clients in a written form of their option to be classified as retail clients. The Company proceeds in this action, in order to offer a uniform level of protection to all of its clients.  

2). The level of protection provided may vary according to whether the client is a retail client Eligible counterparty or a professional client, so does the level of detail in the information provided to the client on nature and risk profile of the financial product, investment services or ancillary activities that are being offered by the company. 

3)The higher level of protection will also be provided to professional clients by the Company when the client enters into a written agreement with the Company, to the effect that it shall not be treated as a professional. It is the responsibility of the client who is classified as a professional client to ask for a higher level of protection when he is not in a position to properly assess and manage the risks involved in the transactions.

4).   In the event the Client wishes to change classification, the Company will obtain a Written Consent by requesting the client to complete and submit a Request Form that is provided to the Client upon submission of application to us. 

5).  The Company implements appropriate written internal policies and procedures to categorise clients. Professional clients have the responsibility to inform us regarding any change, which would affect their current categorisation. Should we become aware that the Professional client no longer fulfils the initial conditions, which made the client eligible for such treatment, the Company will take appropriate action. 

B. REQUEST FOR DIFFERENT CATEGORISATION

In order to apply for a different client categorisation, the client must meet satisfy any one of the following:

i) a Retail Client requesting to be categorised as a Professional Client. In that case the Client will be afforded a lower level of protection.

ii) a Professional Client requesting to be categorised as a Retail Client. In that case the Client seeks to obtain a higher level of protection.

iii) an Eligible Counterparty requesting to be categorised as a Professional Client or Retail Client. In that case the Client seeks to obtain a higher level of protection.

In the event the client is unable to satisfy the requirements under the applicable laws, we reserve all rights to decline any of the above requests for different categorisation and/or seize business with the client if different client categorisation is requested.  If a new client category is applied by the Company a new written agreement will be issued.

A Retail Client may waive the benefits of the defined rules of business conduct only where the below procedures are followed:

1)  the Client must state in writing to the Company that you wish to be treated as a Professional Client, either generally or in respect of investment service, or type of transaction or product.

2)  the Company will give you a clear written warning of the protection and Investor Compensation rights you might lose.

3)   the Client must state in writing, in a separate document from the contract, that you are aware of the consequences of losing such protection.

“In the event the client is unable to satisfy the requirements under the applicable laws, we reserve all rights to decline any of the above requests for different categorisation and/or cease business with the client if different client categorisation is requested.  If a new client category is applied by the Company a new written agreement will be issued.”

C. PROTECTION RIGHTS

Different levels of protection of Professional Clients and Retail Clients

Where the Company treats the Client as a retail client, he/she/they will be entitled to more protections under the law than if the Client was entitled to be a professional client. In summary the additional protections retail clients are entitled to are as follows:

1) Where the Company provides investment services other than investment advice (in the form of personal recommendations) or discretionary portfolio management, 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 investment firm 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. We are not required to assess appropriateness in certain cases specified by law.

2) 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.

3) The Company shall 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.

4)     When executing orders in relation to investment services offered to clients, the Company must 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 their clients. 

5) Where the Company executes an order on behalf of a retail client, the best possible result shall be determined in terms of the total consideration, representing the price of the financial instrument and the cost related to execution, which shall include all expenses incurred by the client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

6) When providing professional clients with best execution the Company is not required to prioritise the overall cost of the transaction as being the most important factor in achieving best execution for them.

7) In addition, under certain circumstances, the Company shall be entitled to assume that a professional client is able financially to bear any investment risks consisted with its investment objectives.

8) The Company must inform retail clients of material difficulties relevant to the proper carrying out of their order(s) promptly upon becoming aware of such difficulty(s).

9) The Company may consider the classification of the client in following its Best execution policy, as well as in providing information, but not limited to information on its products. We are not obliged to provide a summary that complies with these specific requirements to professional clients. Information on the Company’s order handling and Best execution policy shall be made available to both retail and professional clients on our official website.

10) When providing information or disclosure to clients, the Company shall take account of the status of a client as either retail, professional or eligible counterparty to ensure a proportionate balance between investor protection and the disclosure obligations as required by the Law. Where appropriate the Company will establish less stringent specific information and disclosure requirements with respect to professional clients than to retail clients.

11) Where the Company provides a retail client with information which contains an indication of the past performance of a financial instrument, a financial index or an investment service, and the indication relies on figures denominated in a currency other than that of the Member State in which that retail client is resident, the Company must clearly state the relevant currency and provide enhanced warnings that returns may increase or decrease as a result of currency fluctuations. This requirement does not apply in respect of professional clients.

12) The Company must take all steps to obtain the best possible results for its clients when executing orders. The execution factors will vary depending on whether the client is a retail, where execution of order is based on total consideration that must be the overriding factor and professional client, where execution of order is based on range of factors may be considered in determining best execution. 

13) The Company must not enter into title transfer financial collateral arrangements in respect of money belonging to a retail client. This requirement does not apply in relation to professional clients.

14) Professional clients are responsible for keeping the Company informed about any change, which could affect their current categorisation.

15) Professional clients have the right to request to be classified as a retail Client in order to obtain a higher level of protection. 

16) Professional clients are not eligible complainants to the Financial Ombudsman Services, provided the complaint relates to services offered by the Company, unless they are consumers. 

17) Retail clients may be entitled to initial margin protection, negative balance protection and leverage limits on trading CFDs, and where the Company is required to provide protection for retail client to reduce the complexity of product and/ or risk warning associated for losing capital rapidly due to leverage, which is not applicable to a professional client.

18) Retail clients may be entitled to compensation under the Investor Compensation Fund for Bank Clients or the Investor Compensation Fund for Clients of Investment Firms, as the case may be.

19) In relation to retail clients, the Company is specifically required not to make any arrangement by way of remuneration, sales targets or otherwise that could provide an incentive to staff to recommend a particular financial instrument to a retail client when the Company could offer a different financial instrument which would better meet that client’s needs. For all clients, the Company is nonetheless required to ensure that it does not remunerate or assess the performance of staff in a way that would conflict with their duty to act in the best interests of their client.

D. Procedural Requirements

In accordance with Part II of the Second Appendix of the Law the retail clients who may be treated as Professional client on Request, in the event the client wishes to change categorisation to be treated as a Professional, we will consider the following procedures: 

i) Retail Clients other than those clients mentioned in Section (A)2.2 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 of the Company.

ii) The company shall allow clients to request non-professional treatment, and we also reserve the right to assess whether to provide a higher level of protection.

iii) The Company shall treat any of the above clients as professionals provided the relevant criteria mentioned in section A(1) above, as well as procedures mentioned below are fulfilled. We shall not presume that these clients possess market knowledge and experience comparable to that of the categories listed throughout section A(1) above.

iv) Any such waiver of the protection afforded by the standard conduct of business regime shall be considered valid only if an adequate assessment of the expertise, experience and knowledge of the client, undertaken by the Company, gives reasonable assurance, in relation to the nature of the transactions or services envisaged, that the client is capable of making his own investment decisions and understands the risks associated.

v) The fitness test applied to managers and directors of entities licensed under European Directives in the financial field shall be regarded as the assessment of expertise and knowledge. In the case of small entities, the person subject to the above assessment should be the person authorised to carry out transactions on behalf of the entity.

vi) Retail clients may waive the benefit of the detailed rules of conduct only where the following procedure is followed:

o   they must state in writing to the Company that they wish to be treated as professional clients, either generally or in respect of a particular investment service or transaction, or type of transaction or product,

o   the Company must give them a clear written warning of the protections and investor compensation rights they may lose,

o   they must state in writing, in a separate document from the contract, that they are aware of the consequences of losing such protections.

vii) Prior deciding to accept any request for waiver, the Company will take all reasonable steps to ensure that the client requesting to be treated as a professional client meets the relevant requirements stated in section 1.1.(1)A above.

viii) 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.

 ix) Retail client who elect to be treated as a professional client must satisfy any  two of the following criteria and provide the relevant additional documentation:

 a) the client has traded, in significant size, in the Forex/CFD markets or other leveraged products (e.g. indices, shares, spot FX, futures, options, other derivatives etc.) at an average frequency of 10 transactions per quarter over the previous four quarters. A significant sized trade is classified as having a notional value of €10,000 for equities and €50,000 for forex, indices and commodities or equivalent in local currency.

The client must us provide us with Account statements issued for the previous four (4) quarters by another Investment firm. When assessing significant size, we shall assess whether each transaction was considered large to provide the client with meaningful exposure to the relevant market so that it contributed to the client’s acquiring the required expertise, experience and knowledge of the potential transactions or services.  

 b) the size of the client's financial instrument portfolio, defined as including cash deposits and financial instruments exceeds €500,000 (or equivalent in your local currency). Acceptable examples of savings and investments: Cash savings, stock portfolio, stocks and shares ISA, trading accounts, mutual funds, SIPP (excluding non-financial instruments).

The client must provide us with a Recent bank statement issued for the last 3 months or/ a Recent statement of accounts. The Company shall take into consideration the size of the client’s financial instruments portfolio at the time of the client’s request to be treated as a professional. Where investment portfolio contains leveraged positions, or financial instruments for which a margin is deposited, the net equity of the specific position or positions (including the margin deposited for the financial instrument plus any unrealised profits or unrealised losses due to changes in the value of the underlying), it shall be used in order to determine the size of the financial instrument as part of the portfolio. But, we shall not use notional value of financial instruments as such value does not reflect the actual size of the client’s portfolio.

c) 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 client must provide us with a recent payslip issued for the last 2 months from current employment. The Company may request the client to provide evidence to support the assertion that the client has the relevant work experience for at least one year. In this respect, the client will provide us with a Recent letter confirming the client’s work experience, including time period, position and responsibilities in the current or/ previous employment.

In addition, the Company maintains internal procedure and arrangements regarding client reclassification to Elective professional  (from Retail client) upon request. 

F. Jurisdiction

Trading CFDs are not eligible for sale in certain jurisdictions or countries. This Document is not directed to any jurisdiction or country which is included in the Company’s Banned Jurisdictions as these are defined in the Agreement. This Document does not constitute an offer, invitation or solicitation to buy or sell CFDs.

 G. Monitoring and Review

The Company shall monitor on a regular basis the effectiveness of the internal policy and procedures related to client categorisation and, where appropriate, correct any deficiencies. 

The Company’s Policy is assessed and periodically reviewed, at least on an annual basis, or more frequently, should the need arise and any amendments to which may materially affect the way in which the Company would handle client categorisation shall be approved by the Company’s Board of Directors, the client shall be notified in writing of the nature of the changes deemed appropriate by law, and the revised Policy will be available on the Company’s Website.  

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