Professional Clients


ANNEX No. 8 to R.N.S.C. Regulation No. 32/2006

Art. 1 Categories of clients regarded as professional clients:

(1) The professional client refers to the client who has experience, knowledge and ability required to take investment decision and assess the risks involved. In order to be regarded as professional client, the client shall be included in the categories referred to in paragraph (2) and shall meet the criteria mentioned at the same paragraph.

(2) The following categories of clients shall be regarded as professional clients for all investment services and financial instruments defined in accordance with Law no. 297/2004:

a) Entities which must be authorised and regulated to operate on financial markets. The following list includes all the authorised entities which carry out activities such as those mentioned above: entities authorised in Romania or in a Member State in accordance with a EU Directive, entities authorised or regulated in Romania or in a Member State which are not subject to a EU Directive and entities authorised and regulated by a non Member State:

1. credit institutions;

2. investment firms;

3. other financial institutions authorised or regulated;

4. insurance companies;

5. UCITS and their management firms;

6. pension funds and their management firms;

7. traders;

8. other institutional investors.

b) Firms which meet two of the following requirements:

1. aggregate balance sheet: EUR 20,000,000

2. net turnover: EUR 40,000,000

3. equity: EUR 2,000,000.

c) National and regional governments, public institutions which manage public debt, central banks, international and supranational institutions, such as the World Bank, the International Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organisations.

d) Other institutional investors whose main activity refers to investing in financial instruments, including entities which deal with securing assets or with other financial transactions.

(3) The entities referred to in paragraph (2) may request not to be treated as professional clients and may benefit of higher protection by investment firms.

(4) Where the client of an investment firm is an entity referred to in paragraph (2), the investment firm shall inform him before providing any investment service that, based on the available information, he is regarded as professional client and shall be treated as such, except for the case when the investment firm and its client decide otherwise. The investment firm shall also inform the client that he may request the alteration of contractual terms in order to be granted higher protection.

(5) It is the responsibility of the client regarded as professional client to request the granting of higher protection, when he considers that he cannot correctly assess and manage the risks involved.

(6) This higher protection shall be granted when a client regarded as professional client signs in this respect a contract with the investment firm, which provides that he shall not be treated as professional client in the application of rules of conduct. Such contract shall provide whether this is applicable for one or more services or transactions, or for one or more types of products or transactions.

Art. 2 – Clients which may be treated as professional clients on request

(1) The clients of an investment firm, other than those referred to in art. 1, including public institutions and private individual investors may also give up the protection they are entitled to in accordance with rules of conduct.

(2) The investment firm may treat any client as professional client, provided that all the criteria and procedures previously referred to are complied with. Nevertheless, these clients shall not be regarded as clients who have comparable knowledge and experience with the categories of professional clients referred to in art. 1.

(3) Any decision to give up the protection granted by rules of conduct shall be considered valid only if, following the investment firm’s assessment of the client’s experience, knowledge or ability, the client is proved to have the ability to take investment decisions on his own and understand the risks involved.

(4) The experience and training required from the investment firm’s administrators and managers by this regulation may be taken as example for assessing a client’s experience and knowledge. In the case of legal persons which do not meet the criteria referred to in art. 1, the person who shall be evaluated is the person mandated to carry out transactions on behalf of that firm.

(5) During the evaluation, at least two of the following criteria must be met:

1. the client has carried out a significant number of transactions on the market, i.e. an average of 10 per quarter, for at least four previous quarters;

2. the client’s financial portfolio, including cash deposits and financial instruments, exceeds EUR 500,000;

3. the client is working or has worked in the financial sector for at least one year on a professional position which requires knowledge on transactions or investment services.

Art. 3 The procedure by which clients may be treated as professional clients on request

(1) The clients referred to in art. 2 may give up the protection granted by rules of conduct, only if the following procedure is complied with:

a) clients shall declare in writing to the investment firm that they wish to be treated as professional clients, in general or for a certain service or transaction, or for a type of transaction or product;

b) the investment firm shall give its clients a clear written warning regarding the investor protection rights that they might lose;

c) clients must declare in writing, within a document separate from the contract, that they are informed of the consequences involved in losing the protection referred to in indent b).

(2) Before accepting any application to give up protection, the investment firm shall follow all the steps required to ensure that a client who requests to be treated as professional client meets the requirements referred to in art. 2.

(3) If the clients have already been treated as professional clients in compliance with parameters and procedures similar to the above mentioned, their relationship with the investment firm shall not be influenced by the new rules adopted in accordance with this annex.

(4) Professional clients shall inform the investment firm of any change which may influence their current classification.

(5) Where the investment firm has acknowledged the fact that its client does no longer meet the initial conditions, it shall take the measures required in this respect.