The English version of MiFID talks about “retail clients”. This has been translated in Swedish legislation as “non-professional clients”. This does not mean that you are not professional as a person and it is not an evaluation of you in any way. The purpose of this term is to clearly indicate whether or not you trade in financial instruments in a professional capacity.
Frequently asked questions about the appropriateness assessment
A retail client usually means a client who does not work with financial instruments in a professional capacity or invest in them very frequently. Retail clients have the highest level of client protection.
This is usually a client who works with securities in a professional capacity or invests in them very frequently. This may be a fund broker or another entity that works in a professional capacity with transactions in financial instruments. They are covered by client protection, but this is not as extensive as for a retail client. Among other things, the bank does not normally need to perform any appropriateness assessment when the client is a professional client.
An eligible counterparty is a client that is a bank, a financial institution or other institution equivalent to a bank. MiFID’s rules on client protection, best execution, suitability test and appropriateness assessment, information requirements and so on, do not normally need to be applied to these clients.
For transactions that have not been preceded by investment advice, the bank performs an assessment of whether the transaction is appropriate for the client, based on the client’s knowledge and experience of the financial instrument in question. An appropriateness assessment is not performed, however, in relation to non-complex financial instruments.
You the client answer some questions about the financial instruments concerned. Based on your answers, we assess whether your knowledge and experience of the instrument are such that the instrument can be deemed appropriate for you.
A client must always be subject to an assessment of appropriateness in relation to trading in a complex instrument. A professional client is presumed to have the knowledge and experience required to understand the risk and is therefore able to trade in all instruments.
No, you must contact the bank in order to dispense with the appropriateness assessment.
This term refers to financial instruments that are to be classified as non-complex under MiFID2, taking into account factors such as the instrument’s structure and risk. Listed shares, bonds and fund units are examples of financial instruments that are generally considered to be non-complex.
This term refers to financial instruments that are classified as complex under MiFID2, taking into account factors such as the instrument’s structure and risk. The bank must perform an appropriateness assessment in relation to orders in such instruments if the client is a retail client. Derivative financial instruments are an example of financial instruments that are generally considered to be complex.
When a retail client trades in a complex financial instrument for the first time, the bank must perform an appropriateness assessment.
As the bank wants to be completely certain that you have sufficient knowledge and experience with regard to the financial instrument in which you wish to trade, in this situation you will have to undergo another appropriateness assessment.
Yes, unless the order relates to a non-complex financial instrument. If you trade in a non-complex financial instrument, such as shares, on your own initiative through online banking or as a direct order through a bank branch, we do not need to perform an appropriateness assessment.
If you are a retail client and you trade in a complex financial instrument online, you will undergo an appropriateness assessment, where you answer questions about your knowledge of the instrument. A professional client is presumed to have the knowledge and experience required to understand the risk involved in the financial instruments in which she or he is a professional and therefore does not undergo any appropriateness assessment in relation to such instruments.
No, you only need to undergo an appropriateness assessment once for a particular security.