NKB Investments Limited

MiFID IMPLEMENTATION: CLIENT CATEGORISATION

CLIENT CATEGORISATION

NKB Investments Limited is regulated by the Cyprus Securities and Exchange Commission ("CySEC") in respect of investment business in Cyprus. In accordance with the rules of CySEC ("the Rules"), we are required to classify our clients and counterparties into one of three regulatory categories:

Retail Clients;
Professional Clients;
Eligible Counterparties.

The greatest level of regulatory protection is afforded to Retail Clients, and the lowest level to Eligible Counterparties.

A Retail client is a client who is neither a Professional Client nor an Eligible Counterparty.

Professional Clients include:

entities which are required to be authorised or regulated to operate in the financial markets, including credit institutions, investment firms, insurance companies, collective investment schemes and pension funds and their management companies, commodities and commodity derivative dealers, and other institutional investors;
large undertakings meeting two of the following size requirements on a company basis:
- balance sheet total of €20 million;
- net turnover of €40 million;
- own funds of €2 million;
national and regional governments, public bodies that manage public debt, central banks and international and supranational institutions; or
other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions.

Firms which are treated automatically as Eligible Counterparties include:

Investment firms;
Credit institutions;
insurance companies;
UCITS and their management companies;
pension funds and their management companies;
other authorised and regulated financial institutions;
certain undertakings exempted from the application of MiFID;
national governments and public bodies that deal with public debt; and
central banks and supranational institutions.

Under MiFID, Professional Clients and Retail Clients can move between categories. In particular, Retail Clients can request to be treated as Professional Clients.

Under MiFID, Investment Firms must take reasonable care to ensure that a Retail Client requesting treatment as a Professional Client is able to meet similar qualitative criteria and, a separate quantitative test. At least two of the following quantitative criteria must be met:

the client has carried out transactions, in significant size, on the relevant market at an average frequency of ten per quarter over the previous four quarters;
the size of the client's financial instrument portfolio, defined as including cash deposit and financial instrument, exceeds 500,000 Euros;
the client works or has worked in the financial sector for at least one year in a professional position which requires knowledge of the transactions or services envisaged.

Clients have the right to request a different classification in order to benefit from a higher degree of regulatory protection should they require it. However our business policy is to decline such requests.

If you are an existing client of NKB, then the classification given by us to you will, unless otherwise agreed between us, determine the regulatory protection you are entitled to as well as the regulatory requirements that apply to us when we provide services to you from 1st November, 2007 onwards. We consider the relationship to be between NKB Investments Limited and yourselves, and not any underlying customers of yours.

If we have classified you as an Eligible Counterparty or Professional Client, please go to our Download page to familiarise yourself with our MiFID documents which will have already been sent to you as part of the account opening process.