Client Classification
What does Client Classification mean?
Under FSA rules, all clients are classified as either a retail client, a professional client or an eligible counterparty.
The requirement to classify a client correctly is important because the different categories of client have different levels of regulatory protections afforded to them.
Retail Client
Any client is classified as a Retail Client unless classified as Professional or Eligible Counterparty
These clients receive the highest level of FSA protection including segregation of funds, access to the Financial Ombudsman and Financial Services Compensation scheme.
Eligible Counterparty
The following will be classified as an Eligible Counterparty, and will receive a very low level of FSA protection.
- a national government
- a central bank or other national monetary authority of any country or territory
- a State investment body
- a recognised investment exchange, designated investment exchange, regulated market or clearing house
Professional Clients
Professional clients will be entitled to fewer FSA protections than a retail client.
There are two ways in which Alpari (UK) might classify clients as Professionals:
| Per Se Professional |
Elective Professional |
- A regulated Investment firm
- A corporate meeting the following large undertaking financial criteria:
- balance sheet total of EUR20m
- net turnover of EUR40m
- own funds of EUR2m
|
- A client must pass a “qualitative test” and Alpari (UK) must assess their knowledge, experience and expertise to ensure they are capable of making their own investment decisions
- A client must pass a “quantitative test” and satisfy two of the following:
- Over 10 trades per quarter in relevant markets over the last 12 months
- Value of portfolio and cash investments over EUR500,000
- Be employed in a relevant financial sector for over a year
- Alpari (UK) must provide the client with a written notification of the consequences of opting up to professional status and the client must state in writing that he accepts this
|
