CLIENT CATEGORISATION

1. INTRODUCTION

Royal Forex Limited (hereinafter the «Company»), operating under the name ROinvesting is an investment firm incorporated in Cyprus (HE HE336694) and regulated by the Cyprus Securities and Exchange Commission (hereinafter «CySEC»), authorized to operate as a Cyprus Investment Firm (CIF) with license No. 269/15.

In compliance with the Law 87(I)/2017 (the Law), each Client is categorised by the Company as a “Retail Client” or a “Professional Client”. In addition, certain professional Clients may be further categorised as “Eligible Counterparties”. Categorisation is undertaken on the basis of objective criteria. A Client may be placed in different categories for particular investment services or transactions or types of transactions or products. The Company notifies each Client of his categorisation as a Retail Client or Professional Client or, as the case may be, Eligible Counterparty via email. In addition, the Client Agreement which the Client is bound during the registration procedure informs the Client about his/her categorisation.

It is stressed that different rules and different levels of protection apply to Clients depending on their categorisation.

2. GENERAL

For the provision of investment services to its Clients, the Company requires the submission of information, prior to the provision of services, which is vital for the Company to understand the principal circumstances associated with the potential Client. Moreover, such submission of information is necessary for the Company to be provided with reasonable grounds to believe that the Client has the necessary knowledge and background experience to enable him to understand the risks associated with the product or investment service offered or requested by the Client.

This Client categorization policy (hereinafter, the “Policy”) is provided to the Company’s Clients and potential Clients in accordance to the Law.

The Policy forms part of the Client’s agreement, namely, the Terms and Conditions with the Company, thus the Client is also bound by the terms of the Policy, as set out herein.

2.1 Submission of Information

For the determination of the investment knowledge and experience of the Client, the Company shall request and obtain information, which shall at least cover the following aspects to the extent that is relevant in terms of the Client’s categorization, the scope and nature of the services provided, the complexity and type of the envisaged service, transaction and product, and the risks involved:

  1. the types of the investment services, transactions and securities of which the Client has sufficient knowledge;
  2. the nature, volume and frequency of the Client’s transactions in securities and the period over which they were conducted;
  3. the Client’s level of education, profession and, where necessary, previous profession of the Client.

3. Client Categorization

3.1 Retail Client

A person who is not a Professional Client or Eligible Counterparty shall be considered by the Company to be a Retail Client.

3.2 Professional Client

Professional Client is the person who possesses the experience, knowledge and expertise to make his own investment decisions and properly assess the risks that he incurs. In order for a Client to be categorized as a Professional Client, the following criteria must be met:

The entities mentioned above from (a) - (d) are considered to be professionals by default in relation to all investment services and activities and financial instruments.

The Clients mentioned in (e) may be treated as professionals generally or in respect of a particular investment service or transaction, or type of transaction or product (see Section 4.2.3 below of the Policy). Professional Clients are responsible for keeping the Company informed about any change, which could affect their categorisation. Should the Company become aware that the Client no longer fulfils the initial conditions which made him eligible for a professional treatment, the Company will take appropriate action.

It is the responsibility of the Client, considered to be a Professional Client, to request for a higher level of protection when it seems unable to properly assess or manage the risks involved in various transactions. 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 will specify whether this applies to one or more particular services or transactions, or to one or more types of product or transaction.

3.3      Eligible Counterparty

An Eligible Counterparty is an undertaking which falls within categories (a), (b) and (c) of the Clients who are considered to be Professionals by default (of Section 3.2 above).

Further, the Eligible Counterparty category is applicable only for the following investment services that the Company is authorised to provide:

On request, the Company may also recognise as an Eligible Counterparty which fall within a category of Clients who are to be considered professional Clients in accordance to the fitness test (see Section 4.2 below). In such cases, however, the undertaking concerned shall be recognised as an Eligible Counterparty only in respect of the services or transactions for which it could be treated as a Professional Client.

In the event of a transaction where the prospective counterparty is located in another EU Member State, the Company shall defer to the status of the other undertaking as determined by the legislation of the said Member State in which that undertaking is established.

4. Request for different categorization

4.1 Professional Client Request to be treated as a Retail Client

The entities mentioned above in paragraphs (a) – (d) of Section 3.2 above are considered professionals by default. They are however 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 shall inform him 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 Client may request a variation of the terms of the agreement in Order to secure a higher degree of protection. 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. 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 transaction.

4.2 Retail Client Request to be treated as a Professional Client

4.2.1 General

Upon a request in writing, a Retail Client can request to be treated as a Professional Client, either generally or in respect of a particular investment service or transaction, or product. The Company is not obliged to deal with the Client under a different categorization, unless it is fully satisfied that the Client can be classified as such on the basis of documents to be collected.

4.2.2 Criteria

The Company is allowed to treat any of the Retail Clients as Professional provided the relevant criteria and procedure mentioned below are fulfilled. Any waiver of the protection afforded by the standard conduct of business regime will be effected only if an adequate assessment of the expertise, experience and knowledge of the Client, undertaken by the Company, gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the Client is capable of making his own investment decisions and understanding the risks involved.

The fitness test applied to managers and directors of entities licensed under Directives in the financial field could be regarded as an example of 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.

In the course of the above assessment, a retail client to be considered as professional should deposit at least 5000 (base currency of his/her account) and as a minimum, two of the following criteria should be satisfied:

Before deciding to accept any request for waiver, the Company is required to take all reasonable steps to ensure that the Client requesting to be treated as a Professional Client meets the relevant requirements stated above.

In this respect, below is a list of required documents that the client should submit in order to be assessed whether the respective client indeed qualifies to be treated as a Professional client. All documents should be submitted within 2 weeks, otherwise the Company may reject the application.

To prove that the client has carried out transactions in significant size , on the relevant market, at an average frequency of 10 per quarter over the previous one year, the client should provide us with one of the below documents:

It is noted that the significant size is defined as the average trading size of the Company’s clients, by also considering the relevant Underlying Asset. 

In order to prove that the client works or has worked in the financial sector for a year in a professional position, which requires knowledge in the financial instruments offered by the Company the client should provide us with one of the below documents, accompanied by CV showing the client’s experience and knowledge in the financial sector:

For proving that the size of the client’s portfolio including cash deposits and financial instruments exceeds the amount of €500,000 the client should provide us with one of the below documents:

All 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 professional treatment, then the Company will take appropriate action.

4.2.3 The Procedure

The following procedure should be followed by Clients who wish to be treated as Professional Clients:

However, if the above-mentioned criteria are not met, the Company reserves the right to choose whether to provide services under the requested categorized. The Company will notify the Client if and when it agrees to categorise the Client as a Professional Client.

5 Types of Requests for Different Categorisation

The following requests may be submitted to the Company should a Client wish to change its categorisation:

It is noted that the Company is not required to agree with a request for non-professional or non-Eligible Counterparty treatment. In addition, the Company may, on its own initiative, treat as a Professional or Retail Client an Eligible Counterparty or treat as a Retail Client a Professional Client.

Clients wishing to change their Client Categorisation have to inform the Company in writing, at their own initiative.

6. Protection Rights

6.1 Retail and Professional Clients

Where the Company treats a Client as a Retail Client, the Client is entitled to more protections under the Law, than if the Client was treated as a Professional Client or Eligible Counterparty Client. In summary, the protection Retail Clients are entitled to is as follows (the list may not be exhaustive):

On the other hand, the Company shall be entitled to assume that a Professional Client or Eligible Counterparty 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. Consequently, and unlike the situation with a Retail Client, the Company should 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.

Where the Company executes an order 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 costs 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. The Company shall also send a notice to a Retail Client confirming execution of the order as soon as possible and no later than the first business day following execution or, if the confirmation is received by the Company from a third party, no later than the first business day following receipt of the confirmation from the third party, as applicable. It is noted that the

6.2 Eligible Counterparties

Where the Company treats the Client as an Eligible Counterparty, the Client will be entitled to fewer protections under the Law than it would be entitled to as a Retail or Professional Client. In particular and in addition to the above of paragraph 6.1 (the list may not be exhaustive):

7. GENERAL INFORMATION

The above information is based on the Law L87(I)/2017 issued from the Cyprus Securities and Exchange Commission. For more detailed information, you can visit the Cyprus Securities and Exchange Commission website.