Client categorisation

OneTrade Limited Client Categorisation

OneTrade is a trading name of FxStat Ltd and is authorised and regulated by the Financial Conduct Authority in the United Kingdom under FCA Firm Reference Number 537787.  FxStat is a company registered in England and Wales under registered number: 07212997. Henceforth, by agreeing to the terms of FxStat Ltd you will also be acknowledging to agree with the terms and conditions of OneTrade Ltd.

FXStat Ltd (“FXSL”) will ensure that clients are appropriately categorised, prior to doing business with them, in order to ensure that regulatory protections are focused on those classes of client that need this the most.

Classification

Under the FCA Rules a client is anyone to whom FXSL provides or intends to provide any investment service or activity. FXSL is required by the FCA Rules to classify all clients and to inform them of their categorisation and to provide them with certain information before FXSL provides any investment services.

It is therefore essential that each person to whom FXSL provides investment services is properly categorised. If an employee of FXSL becomes aware of any information at any time during the relationship with the client which would indicate that a client no longer fulfils the criteria for its client categorisation, they must inform the Compliance Officer immediately.

Client Categorisation

Before conducting investment business with or for a client, FXSL must establish whether the client is a Retail Client, Professional Client or an Eligible Counterparty. FXSL is seeking permission to conduct business with Retail, Professional clients and Eligible counterparties. Details of how to classify clients are provided in the Conduct of Business Sourcebook element of the FCA’s Handbook specifically COBS 3.4 (Retail clients), COBS 3.5 (Professional clients) and COBS 3.6 (Eligible counterparties).

There will need to be some visible evidence of compliance with these rules. These records must be retained for a minimum period of five years after the date on which FXSL ceases to carry on business with or for that client.

Retail Clients

FXSL is looking to obtain permissions to deal with Retail Clients and unless a client is deemed a Professional Client or Eligible Counterparty they will be a Retail Client. A Retail Client may include the following:

  • A company, partnership or trust that does not qualify as an professional client
  • An individual who is not an authorised person
  • An individual who is an authorised person but is not acting in the course of carrying on the business for which he is authorised
  • An overseas individual who does not qualify as an overseas financial services Firm
  • A group of individuals who are not in partnership but whom FXSL proposes to treat as a single customer

Professional Clients

Certain clients automatically fall within the definition of Professional Clients (“per se” Professional Clients). These are:

  • All the categories of per se Eligible counterparties, but only if they are not undertaking Eligible Counterparty business
  • Other institutional investors (either authorised or regulated)
  • In relation to MiFID or third country business, large undertakings meeting two of the following criteria:
  1. Balance sheet total: €20m
  2. Net turnover: €40m
  3. Own funds: €2m
  • In relation to non-MiFID business, large undertakings meeting any of the following criteria:
  1. A body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) (or has had at any time during the previous two years), called up share capital or net assets of at least £5 million (or its equivalent in any other currency at the relevant time);
  2. An 1undertaking that meets (or any of whose holding companies or subsidiaries meets) two of the following tests:
    (i) A balance sheet total of EUR 12,500,000;
    (ii)A net turnover of EUR 25,000,000;
    (iii)An average number of employees during the year of 250.
  3. A partnership or unincorporated association which has (or has had at any time during the previous two years) net assets of at least £5 million (or its equivalent in any other currency at the relevant time) and calculated in the case of a limited partnership without deducting loans owing to any of the partners;
  4. A trustee of a trust (other than an occupational pension scheme, SSAS, personal pension scheme or stakeholder pension scheme) which has (or has had at any time during the previous two years) assets of at least £10 million (or its equivalent in any other currency at the relevant time) calculated by aggregating the value of the cash and designated investments forming part of the trust’s assets, but before deducting its liabilities;
  5. A trustee of an occupational pension scheme or SSAS, or a trustee or operator of a personal pension scheme or stakeholder pension scheme where the scheme has (or has had at any time during the previous two years):
    (i) At least 50 members; and
    (ii) Assets under management of at least £10 million (or its equivalent in any other currency at the relevant time);
    (iii) A local authority or public authority.
  • Regional governments, international institutions
  • Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financial transactions

Clients who do not qualify as per se Professional clients, such as small companies and individual investors, may be treated as Professional clients if they so request, provided they meet certain criteria relating to experience expertise and wealth.

Elective Professional Clients

FXSL have their own systems and processes to evaluate those clients who may be classed an as “Elective” Professional Client which involves the completion of an assessment and an approval form. The client must meet the following criteria as required by the FCA.

A client must pass a “Qualitative test” and FXSL must assess their knowledge, experience and expertise to ensure they are capable of making their own investment decisions. A client must also satisfy a “Quantitative test” (for MiFID business only) and satisfy 2 of the following where applicable:

  • Client has carried out transactions , in significant size and averaged a frequency of over 10 trades per quarter in relevant market over the period of the last 12 months
  • Value of investment portfolio and cash investments over €500,000
  • Be employed or had been employed in the relevant financial sector for over a year in a professional position which requires knowledge of the transactions or services envisaged.

The firm must provide the client with a written notification of the consequences of opting up to “Professional status” and the client must state their acceptance writing.

A Retail Client must inform the firm in writing to specifically stipulate that they wish to change categorisation from Retail Client to Professional Client. The firm will assess the clients’ request following the criteria as noted above, then write to the client with their conclusion to accept or reject their request.

If the firm accepts the clients’ request then they must write to the client (can be within the same the letter) warning them that they will lose their investor and regulatory protection (investor compensation) rights and asking the client to confirm and accept that they still want to proceed on this basis in writing. Only when this confirmation in writing has been received can the firm treat the client as a Professional Client.

Eligible Counterparties

Clients may only be classified as Eligible counterparties in relation to certain limited services. These services are:

  • Dealing on own account, execution of orders on behalf of clients or reception and transmission of orders; or
  • Any ancillary service directly related to a service or activity referred to in (a);
  • Arranging in relation to business which is not MiFID or equivalent third country firm business.

In relation to all other investment services and activities an Eligible Counterparty will be categorised a Professional Client (e.g. in respect of investment advice).

Eligible counterparties will include capital market participants such as investment firms and banks; major market users and investors such as undertakings for collective investments in transferable securities and fund managers as well as national governments and other public bodies; central banks and supranational organisations. Clients that automatically fall within the Eligible Counterparty definition will be “per se” Eligible counterparties.

The conduct of business rules in relation to best execution, order handling and certain conduct of business obligations do not apply when bringing about or entering into transactions with Eligible counterparties or in respect of any ancillary service directly related to those transactions.

Client Categorisation – Professional Status.

FXSL have their own systems and processes to evaluate those clients who may be classed as a ‘Per se’ Professional Client or “Elective” Professional Client which involves the Partners and compliance using and completing an assessment and approval form.

Risk warning: Trading leveraged or "geared" products on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you so before deciding to invest in Forex or CFDs you should consider your investment objectives, expertise and risk appetite. You may lose more than your initial deposit and could be required to deposit additional funds. You should not invest money that you cannot afford to lose and should appraise yourself of all the risks associated with Forex and CFD trading and seek advice from an independent financial advisor if you have any questions.
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Risk warning: Trading leveraged or "geared" products on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you so before deciding to invest in Forex or CFDs you should consider your investment objectives, expertise and risk appetite. You may lose more than your initial deposit and could be required to deposit additional funds. You should not invest money that you cannot afford to lose and should appraise yourself of all the risks associated with Forex and CFD trading and seek advice from an independent financial advisor if you have any questions.

OneTrade is a trading name of FxStat Ltd and is authorised and regulated by the Financial Conduct Authority in the United Kingdom under FCA Firm Reference Number 537787. FxStat is a company registered in England and Wales under registered number: 07212997.

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Please also make sure to read all the risk disclosure notice page here.