sou · GUB350d2 · 2007-01-01 00:00:00 — (d)a statement of the fact that the investment firm is authorised and the name and contact address of the competent authority that has authorised it; (e)where the investment firm is acting through a tied agent, a statement of this fact specifying the in which that agent is registered; (f)the nature, frequency and timing of the reports on the performance of the service to be provided by the investment firm to the client in accordance with Article 19(8) of Directive 2004/39/EC; (g)if the investment firm holds client financial instruments or client funds, a summary description of the steps which it takes to ensure their protection, including summary details of theany relevant investor compensation andor deposit guarantee scheme which applyapplies to the firm by virtue of its activities in a Member State; (h)a description, which may be provided in summary form, of the conflicts of interest policy maintained by the firm in accordance with Article 22 and, where the client so requests, further details of that policy in a durable medium. (i)at any time that the client requests it, further details of that conflicts of interest policy in a durable medium or by means of a website (where that does not constitute a durable medium) provided that the conditions specified in Article 3(2) are satisfied. 2.Member States shall ensure that, when providing the service of portfolio management, investment firms establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on the investment objectives of the client and the types of financial instruments included in the client portfolio, so as to enable the client for whom the service is provided to assess the firm's performance. 3.Member States shall require that where investment firms propose to provide portfolio management services to a retail client or potential retail client, they provide the client, in addition to the information required under paragraph 1, with such of the following information as is applicable: (a)information on the method and frequency of valuation of the financial instruments in the client portfolio; (b)details of any authorised delegation of the discretionary management of all or part of the financial instruments or funds in the client portfolio; (c)a specification of any benchmark against which the performance of the client portfolio will be compared; (d)the types of financial instrument that may be included in the client portfolio and types of transaction that may be carried out in such instruments, including any limits; (e)the management objectives, the level of risk to be reflected in the managers exercise of discretion, and any specific constraints on that discretion. (second indent of Article 19(3) of Directive 2004/39/EC) Information about financial instruments 1.Member States shall require investment firms to provide clients or potential clients with a general description of the nature and risks of financial instruments, taking into account, in particular, the clients classificationcategorisation as either a retail client or a professional client. That description must explain, in sufficient detail, the nature of the specific type of instrument concerned, as well as the risks particular to that specific type of instrument in sufficient detail to enable the client to take investment decisions on an informed basis. 2.The description of risks shall include, where relevant to the specific type of instrument concerned and the status and level of knowledge of the client, the following elements: (a)the risks associated with that type of financial instrument including an explanation of leverage and its effects and the risk of losing the entire investment; (b)the volatility of the price of such instruments and any limitations on the available market for such instruments; (c)the fact that an investor might assume as a result of transactions in such instruments financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the instruments; (d)any requirements or similar obligations, applicable to instruments of that type. Member States may specify the precise terms, or the contents, of the description of risks required under this paragraph. 3.If an investment firm provides a retail client or potential retail client with information about a financial instrument that is the subject of a current offer to the public and a prospectus has been published in connection with that offer in accordance with Directive 2003/71/EC, that firm shall inform the client or potential client where that prospectus is made available to the public. 4.Where the risks associated with a financial instrument composed of two or more different financial instruments or services are likely to be greater than the risks associated with any of the components, the investment firm shall provide an adequate description of the components of that instrument and the way in which those components interactits interaction increases the risks. 5.In the case of financial instruments that incorporate a guarantee by a third party, the information about the guarantee shall include sufficient detail about the guarantor and the guarantee to enable the retail client or potential retail client to make a fair assessment of the guarantee. (secondfirst indent of Article 19(3) of Directive 2004/39/EC) Information requirements concerning safeguarding of client financial instruments or client funds 1.Member States shall ensure that, where investment firms hold financial instruments or funds belonging to retail clients, they provide those retail clients or potential retail clients with such of the information specified in paragraphs 2 to 7 as is relevant. 2.The investment firm shall inform the retail client or potential retail client where the financial instruments or funds of that client may be held by a third party on behalf of the investment firm and of the responsibility of the investment firm under the applicable national law for any acts or omissions of the third party and the consequences for the client of the insolvency of the third party. 3.Where financial instruments of the retail client or potential retail client may, if permitted by national law, be held in an omnibus account by a third party, the investment firm shall inform the client of this fact and shall provide a prominent warning of the resulting risks. 4.The investment firm shall inform the retail client or potential retail client where it is not possible under national law for client financial instruments held with a third party to be separately identifiable from the proprietary financial instruments of that third party or of the investment firm and shall provide a prominent warning of the resulting risks. 5.The investment firm shall inform the client or potential client where accounts that contain financial instruments or funds belonging to that client or potential client are or will be subject to the law of a jurisdiction other than that of a and shall indicate that the rights of the client or potential client relating to those financial instruments or funds may differ accordingly. 6.An investment firm shall inform the client about the existence and, where possible, the terms of any security interest or lien which any personthe firm has or may have over the client's financial instruments or funds, or any right of set-off it holds in relation to those instruments or funds. Where applicable, it shall also inform the client of the fact that a depository may have a security interest or lien over, or right of set-off in relation to those instruments or funds. 7.An investment firm which proposes to enter into securities financing transactions in relation to financial instruments held by it on behalf of a retail client, or otherwise to use such financial instruments for its own account or the account of another client, shall in good time before the use of those instruments provide the retail client, in a durable medium, with clear, full and accurate information on the obligations and responsibilities of the investment firm with respect to the use of those financial instruments, including the terms for their restitution, and on the risks involved. (fourth indent of Article 19(3) of Directive 2004/39/EC) Information about costs and associated charges Member States shall require investment firms to provide their retail clients and potential retail clients with information on costs and associated charges that includes such of the following elements as are relevant: (a)the total price to be paid by the client in connection with the financial instrument or the investment service or ancillary service, including all related fees, commissions, charges and expenses, and all taxes payable via the investment firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify it; (b)where any part of the total price referred to in point (a) is to be paid in or represents an amount of foreign currency, an indication of the currency involved and the applicable currency conversion rates and costs; (c)notice of the possibility that other costs, including taxes, related to transactions in connection with the financial instrument or the investment service may arise for the client that are not paid via the investment firm or imposed by it; (d)the arrangements for payment or other performance. For the purposes of point (a), the commissions charged by the firm shall be itemised separately in every case. Article 34 [Deletion of Article to be considered] (Article 19(2) and third and fourth indents of Article 19(3) of Directive 2004/39/EC) Information drawn up in accordance with Directive 85/611/EEC 1.Member States shall ensure that information is regarded as fair, clear and not misleading for the purposes of Article 19(2) of Directive 2004/39/EC if, in the case of information relating to units in a collective investment undertaking covered by Directive 85/611/EEC, that information is provided in a full prospectus, a simplified prospectus, or in an annual and half yearly report and that prospectus or report complies with Directive 85/611/EEC. 2.Member States shall ensure that in respect of units in a collective investment undertaking covered by Directive 85/611/EEC, a simplified prospectus complying with Article 33 of that Directive is regarded as appropriate information for the purposes of the second indent of Article 19(3) of Directive 2004/39/EC. However, Member States shall ensure that such a simplified prospectus is regarded as appropriate information for the purposes of the fourth indent of Article 19(3) of Directive 2004/39/EC only to the extent that it includes the information specified in Article 33 of this Directive.] Article 35 [Deletion of Article to be considered] (Article 19(2) and (3) of Directive 2004/39/EC) Information drawn up in accordance with Directive 2003/71/EC Member States shall ensure that where a prospectus provided by an investment firm to a client has been approved by a competent authority in accordance with Article 13 of Directive 2003/71/EC, that information is treated as satisfying the requirements laid down in Article 19(2) of Directive 2004/39/EC, and the investment firm concerned is responsible under Article 6 of that Directive for the information included in that prospectus,requirements of the second indent of Article 19(3) of that Directive in respect of the financial instruments that information is treated as satisfying the requirements laid down in Article 19(2) or (3) of Directive 2004/39/EC, are the subject of that prospectus , as well as any related requirement under this Directive.] ASSESSMENT OF SUITABILITY AND APPROPRIATENESS (Article 19(4) of Directive 2004/39/EC) 1.Member States shall ensure that investment firms obtain from clients or potential clients such information as is necessary for the firm to understand the essential facts about the 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 recommended, or entered into in the course of providing a portfolio management service, satisfies the following criteria: (a)it meets the investment objectives of the client in question; (b)it is such that the client is able financially to bear any related investment risks consistent with his investment objectives; (c)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 his portfolio. 2.Where an investment firm provides an investment service to a professional client it shall be entitled to assume that, in relation to the products, transactions and services for which it is so classified, the client has the necessary level of experience and knowledge for the purposes of paragraph 1(c). Where that investment service consists in the provision of investment advice to a professional client covered by Section 1 of to Directive 2004/39/EC, the investment firm shall be entitled to assume for the purposes of paragraph 1(b) that the client is able financially to bear the risk of any loss that related investment risks consistent with the investment may causeobjectives of that client. 3.The information regarding the financial situation of the client or potential client shall include, where relevant, information on the source and extent of his regular income, his assets, including liquid assets, investments and real property, and his regular financial commitments. 4.The information regarding the investment objectives of the client or potential client shall include, where relevant, information on the length of time for which the client wishes to hold the investment, his preferences regarding risk taking, his risk profile, and the purposes of the investment. 5.Where, when providing the investment service of investment advice or portfolio management, an investment firm does not obtain the information required under Article 19(4) of Directive 2004/39/EC, the firm shall not recommend investment services or financial instruments to the client or potential client. (Article 19(5) of Directive 2004/39/EC) Member States shall require investment firms, when assessing whether an investment service as referred to in Article 19(5) of Directive 2004/39/EC is appropriate for a client, to determine whether that client has the necessary experience and knowledge in order to understand the risks involved in relation to the specific type of product or investment service offered or demanded. For those purposes, an investment firm 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. (Article 19(4) and (5) of Directive 2004/39/EC) Provisions common to the assessment of suitability or appropriateness 1.Member States shall ensure that the information regarding a clients or potential clients 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 type of product or transaction envisaged, 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, frequency of the clients transactions in financial instruments and the period over which they have been carried out; (c)the level of education, profession or relevant former profession of the client or potential client. 2.An investment firm shall not encourage a client or potential client not to provide information required for the purposes of Article 19(4) and (5) of Directive 2004/39/EC. 3.An investment firm shall be entitled to rely on the information provided by theits clients or potential clients unless it is aware or ought to be aware that the information is manifestly out of date, inaccurate or incomplete. (the first indent of Article 19(6) of Directive 2004/39/EC) Provision of services in non-complex instruments A financial instrument which is not specified in the first indent of Article 19(6) of Directive 2004/39/EC shall be considered as non-complex if it satisfies the following criteria: (a)it does not fall within Article 4(1)(18)(c) or points (4) to (10) of Section C of to Directive 2004/39/EC; (b)there are frequent opportunities to dispose of, redeem, or otherwise realise that instrument at prices that are publicly available to market participants and that are either market prices or prices made available, or validated, by valuation systems independent of the issuer; (c)it does not involve any actual or potential liability for the client that exceeds the cost of acquiring the instrument; (d)adequately comprehensive information on its characteristics is publicly available and is likely to be readily understood so as to enable the average retail client to make an informed judgment as to whether to enter into a transaction in that instrument. (Article 19(7) of Directive 2004/39/EC) Member States shall prohibit investment firms from providing an investment service other than investment advice to a retail client for the first time after the date of application of this Directive without a document agreed between the firm and the client [a written agreement] setting out their respective rights and obligations [in relation to the service in question], and the other terms governing the provision by the firm of services to the client. The rights and duties of the parties to the agreement may be incorporated by reference to other documents or legal texts. (Article 19(8) of Directive 2004/39/EC) Reporting obligations in respect of execution of orders other than for portfolio management 1.Member States shall ensure that where investment firms have carried out an order, other than for portfolio management, on behalf of a client, they take the following action in respect of that order: (a)the investment firm must promptly provide the client, in a durable medium, with the essential information concerning the execution of that order; (b)in the case of a retail client, the investment firm must send the client a notice in a durable medium confirming execution of the order no later than the first business day following execution or, if the confirmation is received by the investment firm from a third party, no later than the first business day following receipt of the confirmation from the third party. Point (b) shall not apply where the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the retail client by another person. 2.In addition to the requirements under paragraph 1, Member States shall require investment firms to supply the client, on request, with information about the status of his order. 3.Member States shall ensure that, in the case of orders for a retail clients relating to units or shares in a collective investment undertaking which are executed periodically, investment firms either take the action specified in point (b) of paragraph 1 or provide the retail client, at least once every six months, with the information listed in paragraph 4 in respect of those transactions. 4.The notice referred to in point (b) of paragraph 1 shall include such of the following information as is applicable and, where relevant, in accordance with Table 1 of to [the Implementing Regulation]: (a)the reporting firm identification; (b)the name or other designation of the client; (c)the trading day; (d)the trading time; (e)the nature of the order; (f)the venue identification; (g)the instrument identification; (h)the buy/sell indicator; (i)the quantity; (j)the unit price; (k)the total consideration; (l)a total sum of the commissions and expenses charged and, where the retail client so requests, an itemised breakdown; (m)the client's responsibilities in relation to the settlement of the transaction, including the time limit for payment or delivery as well as the appropriate account details where these details and responsibilities have not previously been notified to the client; (n)if the clients counterparty was the investment firm itself or any person in the investment firms group, the fact that this was the case unless the order was executed through a trading system that facilitates anonymous trading. For the purposes of point (j), where the order is executed in tranches, the investment firm may supply the client with information about the price of each tranche or the average price. Where the average price is provided, the investment firm shall supply the retail client with information about the price of each tranche upon request that facilitates anonymous trading. 5.The investment firm may provide the client with the information referred to in paragraph 24 using standard codes if it also provides an explanation of the codes used. (Article 19(8) of Directive 2004/39/EC) Reporting obligations in respect of portfolio management 1.Member States shall require investments firms which provide the service of portfolio management to clients to provide each such client with a periodic statement in a durable medium of the portfolio management activities carried out on behalf of that client. 2.In the case of retail clients, the periodic statement required under paragraph 1 shall include, where relevant, the following information: (a)the name of the investment firm; (b)the name or other designation of the retail client's account; (c)a statement of the contents and the valuation of the portfolio, including details of each financial instrument held, its market value, or fair value if market value is unavailable and the cash balance at the beginning and at the end of the reporting period, and the performance of the portfolio during the reporting period; (d)the total amount of fees and charges incurred during the reporting period, itemising at least total management fees and total costs associated with execution, and including, where relevant, a statement that a more detailed breakdown will be provided on request; (e)a comparison of performance during the period covered by the statement with the investment performance benchmark (if any) agreed between the investment firm and the client; (f)the total amount of dividends, interest and other payments received during the reporting period in relation to the client's portfolio; (g)information about other corporate actions giving rights in relation to financial instruments held in the portfolio; (h)for each transaction executed during the period, the information referred to in Article 40(4)(c) to (e) and (g) to (jk) where relevant, unless the client elects to receive information about executed transactions on a transaction-by-transaction basis, in which case paragraph 4 of this Article shall apply. 3.In the case of retail clients, the periodic statement referred to in paragraph 1 shall be provided once every 6 months, except in the following cases: (a)where the client so requests, the periodic statement must be provided every 3 months; (b)in cases where paragraph 4 applies, the periodic statement must be provided at least once every 12 months; (c)where the agreement between an investment firm and a retail client for a portfolio management service authorises a leveraged portfolio, the periodic statement must be provided at least once a month. Investment firms shall inform retail clients that they have the right to make requests for the purposes of point (a).