Pursuant to the Securities Market Act, all clients who trade in securities, buy or sell fund units or execute other transactions on the securities market will be allocated into different groups to enable the securities institutions to adapt the level of protection based on the different types of clients.
The client protection varies for the different client groups depending on, among other things, the client’s experience and expertise with respect to investments on the securities market. Pursuant to the Act, securities institutions are required to divide their clients into three different categories: retail clients, professional clients or eligible counterparties. See below for more information regarding the client categories. The highest level of protection is afforded to those clients that belong to the retail client category, and the lowest level of protection is afforded to those who belong to the eligible counterparty category.
- RETAIL CLIENT
As a client in this category, you will receive the highest level of consumer protection pursuant to the Securities Market Act. This means that the Bank will provide information about, among other things, the following:
- The Bank and the services the Bank offers
- Relevant financial instruments and the associated risks
- Expenses and other fees for trading in these financial instruments
This also means that the Bank, in conjunction with the provision of portfolio management or investment advice, will make an assessment of whether a service or product is suitable for you before the Bank provides the service or recommends the product. The Bank conducts this so-called suitability test based on your objective with the investment, your financial position and your experience with and knowledge of the relevant service or transaction.
In relation to types of services other than portfolio management and investment advice, the Bank will assess whether the service or product is appropriate for you based on your knowledge and experience. Where the service relates to the execution of orders on your initiative with respect to uncomplicated financial instruments, e.g. listed shares, no such so-called appropriateness test is conducted.
As a client in this category you may, under certain circumstances, change category and be placed instead in the professional client category. Since the latter category has a lower level of protection, this means that you will waive some of the protection which applies to the retail client category. In order to change category, you must request this in writing. After providing you with further information regarding what the change entails, the Bank will then make a determination with reference to your request. Please contact the Bank if you require further information about changing client category.
- PROFESSIONAL CLIENT
As a client in this category, you are generally expected to have the level of knowledge necessary to enable you to personally determine what information you need in order to make an investment decision. This means that you must personally request the information that you think you need. In conjunction with the provision of investment advice by the Bank, no assessment of your experience and your knowledge, or of your financial position, is usually made. In conjunction with portfolio management, no assessment of your experience and your knowledge is made. In conjunction with the provision of other types of services and products, the Bank will not make any assessment of whether the service or product is appropriate for you based on your experience and your knowledge.
As a client in this category, upon written request and with the Bank’s consent, you may change category and be placed instead in the retail client category. You may thereby receive a higher level of protection. A professional client may also, upon written request and with the Bank’s consent, change to the eligible counterparty category and thereby lower the level of protection. Please contact the Bank if you require further information about changing client category.
- ELIGIBLE COUNTERPARTY
As a client in this category, you have the lowest level of protection pursuant to the Act. However, in conjunction with the provision of portfolio management and investment advice, the Bank will make an assessment as to whether the service or product is suitable for you based on your aim with the investment.
As a client in this category, upon written request and with the Bank’s consent, you may change to the professional client or retail client category and thereby receive a higher level of protection. Please contact the Bank if you require further information about changing client category.