Requirement (MIFID)
Article 35 Assessment of suitability
Requirements MIFID - DIRECTIVE 2006/73/EC
Description
Description
1. Member States shall ensure that investment firms obtain
from clients or potential clients such information as is necessary
for the firm to understand the essential facts about the client and
to have a reasonable basis for believing, giving due consideration
to the nature and extent of the service provided, that the specific
transaction to be recommended, or entered into in the course of
providing a portfolio management service, satisfies the following
criteria:
(a) it meets the investment objectives of the client in question;
(b) it is such that the client is able financially to bear any related
investment risks consistent with his investment objectives;
(c) it is such that the client has the necessary experience and
knowledge in order to understand the risks involved in the
transaction or in the management of his portfolio.
2. Where an investment firm provides an investment service to
a professional client it shall be entitled to assume that, in relation
to the products, transactions and services for which it is so
classified, the client has the necessary level of experience and
knowledge for the purposes of paragraph 1(c).
Where that investment service consists in the provision of
investment advice to a professional client covered by Section 1 of
Annex II to Directive 2004/39/EC, the investment firm shall be
entitled to assume for the purposes of paragraph 1(b) that the
client is able financially to bear any related investment risks
consistent with the investment objectives of that client.
3. The information regarding the financial situation of the
client or potential client shall include, where relevant, information
on the source and extent of his regular income, his assets,
including liquid assets, investments and real property, and his
regular financial commitments.
4. The information regarding the investment objectives of the
client or potential client shall include, where relevant, information
on the length of time for which the client wishes to hold the
investment, his preferences regarding risk taking, his risk profile,
and the purposes of the investment.
5. Where, when providing the investment service of investment
advice or portfolio management, an investment firm does
not obtain the information required under Article 19(4) of
Directive 2004/39/EC, the firm shall not recommend investment
services or financial instruments to the client or potential client.
Comment
Applies to Article 19(4) of Directive 2004/39/EC