Implementing the Directive of the European Parliament and of the Council on markets in financial instruments (MiFID), legislation regulating new and additional requirements for provision of investment services came into effect in the Member States of the European Union and the European Economic Community as of 1 November 2007.
Citadele bank provides professional investment services and implements all measures to ensure the protection of the interests of investing customers and procedures to prevent potential conflicts of interest, which may adversely affect the legitimate expectations of the investing customers.
What is MiFID and how is this Directive important to you?
One of the main aims of this Directive is unification of protection conditions for investors throughout the European Union. The applicable level of protection depends on how much you trust your own and Bank specialists’ knowledge. For example, if your knowledge on and experience in investment is limited and you request that Bank specialists advise you or make investment decisions on your behalf, you will be given the highest level of protection.
MiFID defines three basic principles to be followed by the Bank in providing investment services to you:
- to act honestly, fairly and professionally in representing your interests;
- to provide correct, complete and not misleading information on the matters relevant to you;
- to provide the services taking into account the specific circumstances associated with you, i.e. to ensure that the investments comply with your needs as an investor.
What kind of client are you?
Prior to starting to provide investment services to you, we must categorize you as a professional or non-professional investor. What are the differences between these categories? In accordance with the national legislation implementing MiFID:
- the clients with less knowledge of or experience in investment (non-professional investors) are given the highest level of protection;
- the clients with more knowledge of or experience in the field of investment in financial instruments (professional investors) are given a lower level of protection;
- institutional investors (banks, governments, pension funds) – eligible counterparty.
Since large companies concluding high-value transactions in financial instruments on a continuous basis are most often categorized as professional investors, investing natural persons are in practice generally recognized as non-professional investors.
If you want to be categorized as a professional investor, you have to be sure that you will be able to make independent investment decisions, assess all relevant risk factors and you do not need a higher level of protection of investors.
The Bank can only categorize you as a professional investor, if you meet at least two of the following conditions, which have to be declared by filling out the investor’s information form:
- you frequently perform transactions;
- you have acquired a large portfolio of financial instruments;
- you have work experience in the field of investment services.
Important: Not all protective measures stipulated by MiFID are applicable to professional investors. For example, you will receive less information about implementation of your investment decisions, you will be provided with minimum risk assessment associated with specific investment decisions, etc.
Please note that you may request to be assigned to a higher category of protection of investors’ interests at any time by respectively changing the investor's category: eligible counterparty ? professional investor; professional investor ? non-professional investor. Lowering the professional category means an increased level of protection for the investor as well as closer cooperation with Bank specialists over the course of consulting.
What information is provided to you?
The Bank provides investment services only to the customers who have signed/renewed (after 01/01/2008) written contracts for investment services (hereinafter referred to as the “Contract”).
Since periodic provision of Bank information allows you to better control the status of your funds held in the Bank and/or the portfolio of financial instruments, the Bank periodically provides detailed information about:
- the execution of your orders;
- monetary funds and financial instruments held by you and accounted by the Bank;
- investment costs and related Bank fees.
Other periodic reports sent by the Bank to professional and non-professional investors are specified in the Contract.
What are your obligations set forth by MiFID?
Please note that upon entry into effect of MiFID and in order to properly ensure the protection of investment interests of investing customers, the Bank must obtain basic information about your experience in investing in financial instruments, investment objectives, and your financial capabilities. This information is gathered using the investor's information form.
If the above information about your investment knowledge, experience and capabilities is not received, Bank specialists will not be able to provide you with top-quality investment services or ensure the protection of your investment interests as provided for in MiFID.
In the regulated market of financial instruments of the Republic of Lithuania, MiFID requirements are implemented by the following national legislation:
- Law on Markets in Financial Instruments of the Republic of Lithuania (Official Gazette, 2007, No. 17-627);
- Law on Securities of the Republic of Lithuania (Official Gazette, 2007, No. 17-626);
- Resolutions of the Securities Commission of the Republic of Lithuania detailing the rules and procedures governing the activity of brokers.