Knowledge Base

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Questions

Which clients receive the highest level of protection under the MiFID II Directive?

Professional clients
Retail clients
Eligible counterparties
Investment firms

What is the primary obligation of the manufacturer in terms of product governance under MiFID II?

Define a positive and negative target market for each instrument
Verify the compatibility of instruments with the needs of its client base
Fully reverse inducements to the client for independent advice
Take all sufficient measures to obtain the best possible result in terms of price

What is the primary criterion for determining whether a client is an eligible counterparty under MiFID II?

Having a portfolio exceeding €500,000
Being a credit institution or investment firm
Meeting two of the three criteria: total balance sheet exceeding €20 million, net revenue exceeding €40 million, or equity exceeding €2 million
Having at least one year of professional experience in the financial sector

What criteria must a retail client meet to request professional treatment (opt-up)?

A portfolio exceeding €200,000 and at least two years of professional experience
Ten significant transactions per quarter over the last four quarters and a portfolio exceeding €500,000
At least three years of professional experience in the financial sector
A total balance sheet exceeding €20 million

The suitability statement must be provided to a professional client before the transaction is executed.

True
False

Suitability assessment

Click to see answer

Inducements may be retained by the investment firm for independent advice without being passed on to the client.

True
False

Categorize items by dragging them to the appropriate zones

Items to categorize:

Capacity to bear losses
Knowledge and experience with regard to the instrument
Risk tolerance
Investment objectives
Categories:

Suitability assessment

Appropriateness assessment