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The Markets in Financial Instruments Directive - MiFID

MiFID is a Directive issued by the European Union (EU) which has been adopted by all member states of the EU. It was incorporated into Cyprus National Legislation via Law 144(I) 2007. MiFID is applicable to all investment firms in the EU and impacts all types of assets to a large extent, especially securities admitted for trading in regulated markets in the EU. The Directive seeks to improve investor protection, ensure efficient and transparent markets, and enhance the means available to competent authorities for supervising the activities of different types of intermediaries.

The objectives of MiFID include among other:

  • Standardizing across European jurisdictions
  • Offering investors a high level of protection
  • Ensuring high quality execution
  • Providing a coherent and risk- sensitive framework for regulating order execution
  • Enhancing transparency on liquidity

MiFID Categories

MiFID divides investors into three categories, each with different levels of protection and rights:

Professional Clients

TOB for PROFESSIONAL CLIENTS

According to MIFID a Professional Client is the one which falls in one of the following categories:

  1. Entities which require authorization or regulation to operate in the financial markets, entities authorized by a Member State or entities authorized or regulated by a non-Member State, including:
    1. Credit institutions
    2. Investment firms
    3. Insurance companies
    4. Collective investment schemes and management companies for such schemes
    5. Pension funds or associated management companies
    6. Commodity and commodity derivatives dealer
  2. Ventures meeting two of the following requirements:
    1. Total balance sheet: EUR 20,000,000
    2. Net turnover: EUR 40,000,000
    3. Own funds: EUR 2,000,000
  3. National government including public body that manages public debt
  4. Central Bank,
  5. Supranational institution
  6. Institutional investor whose main activity is to invest in financial instruments, including entities dedicated to securitizing assets or other financing transactions.

Where you are categorized as Professional Clients

  1. you will be given fewer information disclosures regarding the firm, its services and any costs, commissions, fees and charges
  2. when we assess whether a product or service is appropriate for you , we can assume that you have the necessary level of knowledge and experience to understand the risks involved
  3. if we are ever required to assess the suitability of a personal recommendation made to you, we can assume that you have the necessary experience and knowledge to understand the risks involved, and can sometimes assume that you are financially able to bear any investment risks consistent with your investing objectives
  4. when providing best execution, we are not required to prioritize the overall cost of the transaction as being the most important factor in achieving best execution for you
  5. we do not need to inform you of material difficulties relevant to the proper and prompt execution of your order(s)
  6. should we provide you with periodic statements, we are not required to provide them as frequently as for retail clients

An Eligible Counterparty

TOB for ELIGIBLE COUNTERPARTY

According to MiFID, an Eligible Counterparty is one which falls in one of the following categories:

  1. Investment Firms
  2. Credit Institutions
  3. Insurance Companies
  4. UCITS and their management companies
  5. Pension funds and their management companies
  6. Other financial institutions authorized or regulated under Community Legislation or the national law of a Member State
  7. Whose main business consists of dealing for own account in commodities and or commodity derivatives or undertakings which provide investment services and exclusive perform dealing on their own account in markets for financial futures, options or other derivatives markets, or which deal for the accounts of other member of those markets
  8. National governments and their corresponding offices including public bodies that deal with public debt
  9. Central Banks
  10. Supranational organizations
  11. Meeting pre-determined proportionate requirements, including quantitative thresholds
  12. All the above third-country undertakings ventures (a-k)

Where you are categorized as an Eligible Counterparty

  1. we are not required to provide you with best execution when executing your orders
  2. we are not required to disclose information to you regarding any fees or commissions that we pay or receive
  3. we are not required to assess the appropriateness of a product or a service that we provide to you but can assume that you have the expertise to choose the most appropriate product or service for yourself
  4. we are not required to provide you with information about ourselves, our services or the agreements through which we will be remunerated
  5. we are not required to provide you with risk disclosures regarding the products or services that you select from us

Retail Client

TOB for RETAIL CLIENTS

According to MiFID, a Retail client is one who is not a Professional or an Eligible Counterparty.

Different Treatment for each category

For each category, MiFID has different provisions related to the treatment of the Client. Below is a summary of the treatment levels applicable to each category.

Where you are categorized as a Retail Client

  1. we are required to provide you with information regarding our firm and its services, as well as the places where your orders are executed
  2. we are required to provide you with the best execution, best price and best possible result when executing your orders
  3. we are required to disclose information to you regarding any fees and commissions that we pay or receive
  4. we will assess the appropriateness of a product or a service that we provide to you considering your investment objectives, knowledge and experience in the financial market
  5. we will provide you with risk disclosures on the products and service that you select from us
  6. we will provide a statement of your account on a monthly basis
  7. we will provide you coverage at the investors compensation fund

If you require additional information about MiFID, please contact our Compliance Department at: +357 25 055 100 or akitros@gpbfs.com.cy or ekania@gpbfs.com.cy.

Risk Disclosures 2010 (PDF)

Risk Disclosures 2011 (PDF)

Risk Disclosures 2012 (PDF)

Risk Disclosures 2013 (PDF)

Risk Disclosures 2014 (PDF)

Risk Disclosures 2015 (PDF)

Risk Disclosures 2016 (PDF)

Risk Warnings

Investor Compensation Fund

GPB-Financial Services Ltd is a member of the Investor Compensation Fund (ICF) for clients of Investment Firms, which was established in May 2004. Cyprus Regulated Investment Firms are not allowed to provide investment services without participating in the Investment Compensation Fund. The existence and operation of the Fund are covered under Law 144(I) 2007 and CySEC Regulations of Investment Firm Laws, 2002-2004.

The purpose of the Fund is to compensate Retail Clients in cases where the Company is unable, or likely unable to satisfy any Client claims against it. The compensation payable may not exceed Euro 20,000.

The investment services covered are listed on the Companys license issued by the Cyprus Securities and Exchange Commission

Exclusions from Investors Compensation Fund 

The Investors Compensation Fund excludes the following type of institutions from its coverage which could be clients of the Investment Firm:
  1. The following categories of institutional and professional investors:
    1. Investment firms
    2. Legal entities associated with the Company and, in general, belonging to the same group of companies
    3. Banks
    4. Cooperative credit institutions
    5. Insurance companies
    6. Collective investment organizations in transferable securities and their management companies
    7. Social insurance institutions and funds
    8. Investors characterized by the Company as Professionals
  2. States and supranational organizations
  3. Central, federal, confederate, regional and local administrative authorities
  4. Enterprises associated with the Company
  5. Managerial and administrative staff of the Company
  6. Shareholders of the Company whose participation directly or indirectly in the capital of the member of the Fund amounts to at least 5% of its share capital, or its partners who are personally liable for the obligations of the Company, as well as persons responsible for carrying out financial audits of the Company as provided by the Law, such as qualified auditors
  7. Investors having an enterprise connected with the Company, and in general of the group of companies to which the Company belongs, positions or duties corresponding to the ones listed in paragraphs 5 and 6 above
  8. Second-degree relatives and spouses of the persons listed in paragraphs 5, 6 and 7, as well as third parties acting on account of these persons
  9. Investor-clients of the Company responsible for facts pertaining to the Company that has caused its financial difficulties or has contributed to the worsening of its financial situation; or, which have profited from these facts
  10. Investors in the form of a company which, due to its size, is not allowed to draw a summary balance sheet in accordance with the Companies Law or a corresponding law of a Member State.

Client Complaints Policy

Disclaimer

Should you require additional information about the functions of the Investor Compensation Fund, please contact our Compliance Department at +357 25 055 000 or akitros@gpbfs.com.cy or ekania@gpbfs.com.

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