1. Introduction
Ebury Partners Markets Cyprus Limited (hereafter the 'EPM CY' or 'Company') is authorised as a Cyprus Investment Firm with licence number 459/25 and regulated by the Cyprus Securities and Exchange Commission ('the Commission', 'CySEC'). EPM CY is a limited liability company incorporated under the laws of the Republic of Cyprus with incorporation number HE 439971, registered at DOMS Assets Business Centre, 33 Neas Engomis Street, 2409 Engomi, Nicosia, Cyprus.
2. Purpose and Scope
The new ESMA's 2018 Supervisory guideline on MiFID II Appropriateness Rules in relation to when providing investment services, is meant to give market participants indications of compliant implementation of the MiFID II appropriateness provisions.
Hence when EPM CY is providing investment services (Execution Only), EPM CY must ask their client or potential client to provide information regarding their knowledge and experience relevant to the specific type of product or service provided, so as to enable Ebury Partners Markets to assess whether the service or product is appropriate for the client.
When assessing appropriateness, EPM CY must determine whether the client has the necessary experience and knowledge in order to understand the risks involved in relation to the MiFID II product and/ or service provided.
In accordance with the law the Company must, when providing investment and ancillary services to clients, act honestly, fairly and professionally in accordance with the best interest of its clients and comply, inter alia, to obtain the relevant information regarding the client's or potential client's knowledge and experience in the investment field so as to enable the Company to assess whether the investment service or product envisaged is appropriate for the client. In addition to the aforementioned, and if applicable, the Company must request information regarding the client's financial situation and investment objectives so as to be able to recommend the investment services and financial instruments that are suitable to its situation.
In accordance with the provisions of Paragraph 21 of the Directive DI144-2007-08, the Company is required to collect data and information, before the establishment of the business relationship, with the aim of constructing the customer's economic profile. In particular, the respective data and information shall include, as a minimum, the purpose and the reason for requesting the establishment of a business relationship, the anticipated account turnover, the nature of the transactions, the expected origin of incoming funds to be credited in the account and the expected destination of outgoing transfers/payments; and the customer's size of wealth and annual income and the clear description of the main business/professional activities/operations.
As per the aforementioned requirements, the purpose of the Assessment of Appropriateness and Suitability Policy (hereafter the 'Policy') is to present the procedures, controls and functions established by the Company for the effective and adequate collection of information, the performance and the actions in accordance with the outcome of the assessment of appropriateness and suitability.
3. Common Provisions to the assessment of appropriateness and suitability
The Company shall ensure that the information regarding a client's or potential client's knowledge and experience in the investment field includes the following, to the extent appropriate to the nature of the client, the nature and extent of the service to be provided and the anticipated type of product or transaction, including their complexity and the risks involved:
A. the types of service, transaction and financial instrument with which the client is familiar;
B. the nature, volume, and frequency of the client's transactions in financial instruments and the period over which they have been carried out;
C. the level of education, and profession or relevant former profession of the client or potential client.
The Company shall be entitled to rely on the information provided by its clients or potential clients unless it is aware or ought to be aware that the information is manifestly out of date, inaccurate or incomplete.
EPM CY may use information they already have in their possession regarding the client, when assessing appropriateness. If EPM CY is satisfied that the client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or service, there is no duty to communicate this to the client.
4. Assessment of Appropriateness
The potential clients of the Company are required to submit relevant information regarding the assessment of appropriateness during the account opening procedure in the case where no portfolio management services will be provided. In particular, the following information is requested from clients (non-exhaustive):
1. Trading experience
2. Frequency of the client's transactions in financial instruments.
3. Volume of the client's transactions in financial instruments.
4. Investment horizon (period over which they have been carried out).
5. Types of services, transactions and financial instruments with which the client is familiar.
6. Level of education.
7. Previous work experience or relevant qualifications.
8. Profession or relevant former profession.
In accordance with the outcome of the assessment of appropriateness, one of the following actions shall be taken by the Company:
1. In cases where the potential client has none or insufficient experience and knowledge in trading Binary Options, the client shall be initially declined. Therefore, the Company may send to the relevant client a proper warning and an invitation for further education and / or training shall be provided to the client.
2. In the case where based on the client information the Company's assessment showed that the potential client has sufficient experience and knowledge in EPM CY's products and services, no further actions are required to be taken by the Company in relation to the assessment of appropriateness and the client may proceed with the opening of his/her account.
5. When Assessment of appropriateness is not needed
In accordance with Article 25(4a) of MiFID II, EPM CY are not required to ask their client to provide information or assess appropriateness if:
1. The service only consists of execution or reception and transmission of client orders and relates to particular financial instruments
2. The client has been clearly informed that, in the provision of this service, Ebury Partners Markets are not required to assess the appropriateness of the financial instrument or service provided or offered and that therefore the client does not benefit from the protection of the rules on assessing appropriateness
3. EPM CY complies with its obligations in relation to conflicts of interest.
The financial instruments referred to above are any of the following:
1. Shares admitted to trading on a regulated market or on an equivalent third-country market or on a MTF, excluding shares that embed a derivative;
2. Bonds or other forms of securitised debt admitted to trading on a regulated market or on an equivalent third country market or on a MTF, excluding those that embed a derivative or incorporate a structure which makes it difficult for the client to understand the risk involved;
3. Money-market instruments, excluding those that embed a derivative or incorporate a structure which makes it difficult for the client to understand the risk involved;
4. Structured deposits, excluding those that incorporate a structure which makes it difficult for the client to understand the risk of return or the cost of exiting the product before term;
5. Other non-complex financial instruments.
6. Assessment of Suitability
In addition to the common provisions of the assessment of appropriateness and suitability, the Company obtains from clients or potential clients such information as is necessary for the Company to understand the essential facts about the potential client and to have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be entered into in the course of providing a portfolio management service satisfies the following criteria:
1. it meets the investment objectives of the client in question;
2. it is such that the client is able financially to bear any related investment risks consistent with his investment objectives;
3. it is such that the client has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of the client's portfolio.
The Company should also take reasonable steps to ensure that information collected about clients is reliable. In particular, the Company should not rely unduly on clients' self-assessment in relation to knowledge, experience and financial situation, ensure that all tools employed in the suitability assessment process are appropriately designed and take steps to ensure the consistency of client information.
If the Company does not obtain sufficient information to comply with the suitability requirements under the Law, so as to assess whether the services and products offered by the Company are suitable for the client, it must not provide such service to that client.
7. Updating Information
Where the Company has an on-going relationship with the client, it should establish appropriate procedures in order to maintain adequate and updated information about the client. In this respect, the Company requests from clients to consent in relation to the submission of true and accurate information provided as well as for the updating of information. In particular, the potential clients are required to acknowledge the following statement during the account opening procedure:
I acknowledge that the information provided for the purposes of the assessment of appropriateness and/or suitability, where applicable, is true and accurate. In case where any changes took place as regards the information submitted, I will inform the Company accordingly.
Except for the client's acknowledgement, the Company performs regular reviews for the updating of information submitted in relation to the assessment of appropriateness and suitability.
8. Approval and Updating of Policy
This policy shall be regularly reviewed and updated by the Compliance Function in line with applicable legislation updates and when considered necessary and each updated version shall be approved by the Company's Board of Directors.
The Company will inform its Clients of any material changes to this procedure by posting the updated version of the policy on its Website (epm.ebury.cy).
