Regulation (EU) No 600/2014 of the European Parliament and of the CouncilShow full title

[F1 PART 3 U.K. Clients who may be treated as professionals on request

Textual Amendments

F1 Schs. 1, 2 inserted (31.12.2020) by The Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1403), regs. 1(3), 36 (with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)

5 U.K.

(1) Clients other than those mentioned in Part 2, including public sector bodies, local public authorities, municipalities and private individual investors, may also waive some or all of the protections afforded by the conduct of business rules.

(2) Investment firms may treat any of those clients as professional clients provided the relevant criteria and procedure mentioned below are fulfilled, but those clients are not to be presumed to possess market knowledge and experience comparable to that of the categories listed in Part 2.

(3) A waiver under point (1) is only valid if the investment firm has undertaken an adequate assessment of the expertise, experience and knowledge of the client (“the assessment”), and that assessment gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making investment decisions and understanding the risks involved.

(4) The fitness test applied—

(a) to managers and directors who have been approved for the purpose of section 59 of FSMA;

(b) to managers and directors of entities which are—

(i) authorised persons within the meaning of section 31(2) of FSMA; or

(ii) recognised investment exchanges, recognised clearing houses or recognised central counterparties within the meaning of section 285 of FSMA,

may be relied on for the purposes of the assessment.

(5) In the case of small entities, the person subject to the assessment must be the person authorised to carry out transactions on behalf of the entity.

(6) The assessment may not be relied on for the purposes of point (3) unless at least two of the following criteria are satisfied—

(a) the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

(b) the size of the client's financial instrument portfolio, including cash deposits and financial instruments, exceeds 500,000 euros;

(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.]