FAQS: IBIE Account Transfer
Overview:
This is an important document regarding the proposed transfer of your account from IBUK and IBLLC to IBIE that requires your attention. Please read the entirety of this document ahead of taking any action referred to in the Covering Letter sent to you via email.
Background:
Please take time to read these FAQs, which summarise some of the key changes to the regulatory framework which will be brought about by the Proposed Transfer (as described below) and provide answers to some of the more general questions that you may have. The FAQs should be read in conjunction with the Covering Letter. If you require any further information, please get in touch with us using the contact details provided in the Covering Letter.
Discussion:
The FAQs are split into three parts.
- Part A sets out key information in relation to the Proposed Transfer (as described below).
- Part B covers key legal and regulatory topics that arise as a result of the Proposed Transfer (as described below).
- Part C aims to answer any other questions that you may have and provides some further and more practical information in relation to what will and will not be changing following the Proposed Transfer (as described below).
PART A – THE PROPOSED TRANSFER
1. What is the situation currently?
As you will be aware, at present, your relationship with Interactive Brokers is led by our entity based in the United Kingdom, specifically Interactive Brokers (U.K.) Limited (“IBUK”) and the services provided to you are provided by IBUK and, depending on the products you do business in, our US affiliate Interactive Brokers LLC (“IBLLC”).
2. What is Interactive Brokers requesting?
We are inviting all clients domiciled in the European Economic Area (“EEA”) to transfer their accounts to one of our brokers based in Europe.
We propose to transfer the relationship that you currently have with IBUK and IBLLC to Interactive Brokers Ireland Limited (“IBIE”), an Interactive Brokers investment firm located in Ireland. It is our intention that all of your accounts, investments and services currently provided to you by IBUK and IBLLC will instead be singularly provided by IBIE (for convenience we will refer to this as the “Proposed Transfer”).
3. Who is IBIE? What sort of a firm is it?
IBIE is an investment firm regulated by the Central Bank of Ireland and authorised pursuant to the second Markets in Financial Instruments Directive (Directive 2014/65/EU). IBIE is an affiliate of IBUK and IBLLC.
4. What are IBIE’s legal details?
Interactive Brokers Ireland Limited is registered as a private company limited by shares (registration number 657406) and is listed in the Register of Companies maintained by the Irish Companies Registration Office. Its registered address is 10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland. IBIE can be contracted by telephone at 00800-42-276537 or electronically through the IBIE website at www.interactivebrokers.ie.
5. Who regulates IBIE and what are their contact details?
As set out above the Central Bank of Ireland is the competent regulator for IBIE (in the same way that the Financial Conduct Authority is the competent regulator for IBUK). IBIE is included in the Central Bank of Ireland’s register of authorised firms under number 423427. The Central Bank of Ireland’s contact details are set out below:
Location
The Central Bank of Ireland
New Wapping Street
North Wall Quay
Dublin 1
D01 F7X3
Contact Numbers
Phone: +353 (0)1 224 6000
Fax: +353 (0)1 224 5550
Postal Address
Central Bank of Ireland
P.O. Box 559
Dublin 1
Public Helpline
E-mail: enquiries@centralbank.ie
Lo-Call: 1890 777 777
Phone: +353 (0)1 224 5800
6. Where does IBIE fit with respect to the broader Interactive Brokers group?
IBIE is a wholly-owned subsidiary that sits within the broader Interactive Brokers Group.
7. What does the Proposed Transfer mean for me? Will there be any material impacts?
We do not anticipate any material impacts for you as a result of the Proposed Transfer. Nonetheless, it is very important that you read these FAQs carefully and in full and make sure that you understand what the changes are for you.
8. What do I have to do if I want to continue doing business with Interactive Brokers?
If you would like to continue to do business with Interactive Brokers, we require your cooperation and action.
Specifically, we need you to consent and agree to the Customer Agreement and other Documents available under the Important Information section of the Proposed Transfer process and to the regulatory matters outlined in the Covering Letter, the Important Information and Consent sections of the Proposed Transfer process. You can do this by following the instructions in the Covering Letter.
To be clear, you do not have to consent to the Proposed Transfer if you feel that you may be adversely affected by it. You have the option of transferring your positions to another broker or closing your positions and transferring any cash balance to another account.
If you do not take action by December 7, 2022, your account will be restricted from opening new transactions or transferring in new assets. You always have the ability to transfer your account to another broker. If you wish to decline, please follow the instructions in the Covering Letter.
In either case, we ask that you read the entirety of this FAQs and the Covering Letter before deciding to consent to or decline the Proposed Transfer.
9. What happens next?
If you consent to the transfer, please complete all actions detailed in the Covering Letter and we will prepare your account to be transferred to IBIE. Once your account is transferred, IBIE will write to you with further information about your new relationship with them.
PART B – LEGAL AND REGULATORY CHANGES THAT YOU SHOULD BE AWARE OF
1. What terms and conditions will govern my relationship with IBIE following the Proposed Transfer? Are these different to the ones that currently apply?
Trades that you conduct after the Proposed Transfer will be governed by the new Customer Agreement between you and IBIE. A copy of the IBIE Customer Agreement is available in the Important Information section of the Proposed Transfer process.
2. What conduct of business rules (including best execution) will apply to my relationship with IBIE? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?
There are some changes to be aware of, which we explain below.
If you do business with IBUK on a “carried” basis (in other words, you trade index options, futures and futures options and IBUK carries your account and custodies your assets) then the Financial Conduct Authority’s conduct of business rules currently apply to you. These rules are based heavily on the recast Markets in Financial Instruments Directive, the Markets in Financial Regulation and various delegated directives and regulations (collectively, “MiFID”). In relation to best execution, where it applies, IBUK must take all sufficient steps to achieve the best possible result for you when we execute your order.
If you currently do business with IBUK on an “introduced” basis (in other words, you trade products outside of those mentioned in the previous paragraph and you have a relationship with both IBUK and its US affiliate, IBLLC) a mix of conduct of business rules will currently apply to you. For instance, with respect to the introduction of your business to IBLLC, the Financial Conduct Authority’s conduct of business rules will apply (see above in relation to these). Once introduced to IBLLC, the relevant U.S. Securities and Exchange Commission and U.S. Commodity Futures Trading Commission rules and regulations (among others) will apply to IBLLC’s role (including its obligations in relation to best execution and custody).
Please note that it is of course possible that your business is split across these two scenarios (in other words some of your business is conducted on a “carried” basis while some of it is conducted on an “introduced” basis).
Going forward, the distinction between “carried” and “introduced” business will no longer apply and in each case set out above, Irish conduct of business rules will exclusively apply to your relationship with IBIE. Similar to the UK Financial Conduct Authority’s rules, the Irish conduct of business rules are based on MiFID and IBIE’s obligations in relation to best execution will largely mirror those that currently apply to IBUK.
In our view, while the rules that apply to our relationship will change, we do not consider such changes to be material or to result in a lesser degree of protection being afforded to you.
3. How will my investments that I custody with IBIE be held from a legal/regulatory perspective? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?
The rules that currently apply depends on the sort of business that you presently have with IBUK (please see the response to Question B2 above). Where you conduct “carried” business with IBUK, the Financial Conduct Authority’s client asset (or “CASS”) rules will apply. These rules are based heavily on MiFID. Where you conduct “introduced” business with IBUK and IBLLC, the US custody rules will apply to your custody assets.
Going forward, as set out above, the distinction between “carried” and “introduced” business will no longer apply and in each case set out above, Irish custody rules will exclusively apply to your relationship with IBIE. Like the UK Financial Conduct Authority’s rules, the Irish conduct of business rules are based on MiFID. Please consult the Client Assets Key Information Document provided in the Important Information section in relation to the Irish custody regime.
4. How am I protected against loss? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK?
Currently, your eligible assets are protected from loss either under the US Securities Investor Protection Corporation at an amount of up to USD 500,000 (subject to a cash sublimit of USD 250,000) or the UK Financial Services Compensation Scheme at an amount up to GBP 50,000 (which regime applies depends on the relevant segment of your IBUK account, as explained in the response to Question B2 above). After the Proposed Transfer, the Irish Investor Compensation Scheme, which is administered by The Investor Compensation Company DAC, may protect your assets from loss should IBIE default and be unable to meet its obligations to you.
Ireland’s compensation scheme is similar to the compensation scheme you have access to in the UK, albeit with a lower limit. The purpose of the Irish Investor Compensation Scheme is to pay compensation to you (subject to certain limits) if you have invested money or investment instruments in either of the following cases:
- A firm goes out of business and cannot return your investments or money; and
- A Central Bank of Ireland determination or a court ruling has been made under the Investor Compensation Act 1998.
The Investor Compensation Company DAC (ICCL) administers the scheme. IBIE will be a member of the scheme.
The scheme covers investment products including:
- Public and private company shares
- Units in collective investment schemes
- Life insurance policies (including unit-linked funds)
- Non-life insurance policies
- Tracker bonds
- Futures and options
Usually, you can only make a claim after a firm goes out of business and its assets have been liquidated and distributed to those who are owed money. Please check the details of the schemes for any limits that apply – not all losses will be covered as there are maximum levels of compensation. The ICCL will pay you compensation for 90% of the amount you have lost, up to a maximum of €20,000.
5. How do I make a complaint to IBIE? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK? What if my complaint relates to something that happened while I was a customer of IBUK?
The new Customer Agreement sets out how to lodge a complaint with IBIE. The complaints handling procedures are materially similar to those that apply to your existing relationship with IBUK. If the substance of your complaint relates to something that happened prior to the Proposed Transfer, then you should address your complaint to IBUK. Its current contact information will stay the same and can be found at interactivebrokers.co.uk should you need to contact IBUK.
6. After the Proposed Transfer, will I still have access to the Financial Ombudsman Service?
In case of complaint, investors should follow the complaints procedure as referred to in the Customer Agreement. Once your account is transferred to IBIE, the UK Financial Ombudsman Service will cease to have jurisdiction over any complaints that you may have in respect of IBUK. However, please be aware that Ireland has a dispute resolution scheme in the form of the Financial Services and Pensions Ombudsman (“FSPO”). The FSPO is a free and independent statutory dispute resolution scheme for financial services. You may be eligible to make a complaint to the FSPO if you are an “eligible complainant”. Details of who are “eligible complainants” can be found on www.fspo.ie. The FSPO can be contacted at:
Postal Address
Financial Services and Pensions Ombudsman
Lincoln House,
Lincoln Place
Dublin 2
D02 VH29
Telephone
+353 (0)1 567 7000
Email
Info@fspo.ie
7. How will my personal data be processed and protected? Are there any material differences that will apply to my relationship with IBIE compared to those that apply to my existing relationship with IBUK in this context?
Your data will be processed and protected in accordance with the Interactive Brokers Group Privacy Policy which can be found at: https://www.interactivebrokers.com/en/index.php?f=305. There will be no material change.
PART C – OTHER PRACTICAL QUESTIONS AND NEXT STEPS
1. Who should I contact before the Proposed Transfer takes place and after the Proposed Transfer if I have any questions in the ordinary course?
Generally speaking, you should contact IBUK with any questions that you may have prior to the Proposed Transfer, and you should contact IBIE with any questions that you may have following the Proposed Transfer taking place. Regardless of who you contact at Interactive Brokers, we will ensure your query is promptly dealt with and we will help you to connect with the right person or department.
2. Will the range of products offered be the same?
Our current expectation is that the same range of products will be offered by IBIE as are offered by IBUK.
There might be a restriction on Foreign Exchange transactions that would create a negative balance or would increase a preexisting negative balance in either component currency. However, the same currency pairs can be traded as Forex CFD. Contracts For Difference are complex instruments, and we invite you to carefully review the CFD risk warnings before trading these instruments following the transfer of your account.
Please note that IBIE offers financing for securities and commodities trades but cannot support withdrawals of borrowed funds. You will be free to withdraw any free cash not needed to support your open positions. If you would like to withdraw additional funds, you can sell positions and withdraw the proceeds.
In limited instances where clients hold restricted products, clients may transfer and maintain or close such positions but won’t be allowed to increase the position.
3. I currently trade OTC derivatives with IBUK – what will happen to my open positions?
Your open positions will be transferred to IBIE and you will face IBIE rather than IBUK. You will no longer have any legal relationship with IBUK in relation to those positions. We will separately provide you with an updated Key Investor Information Document (please follow the link to the PRIIPs KID landing page in the Covering Letter).
4. What happens to any security I have granted to IBUK/IBLLC as part of a margin loan?
If you have granted security or collateral to IBUK/IBLLC this will transfer to IBIE upon the Proposed Transfer taking place.
We do not anticipate you needing to take any steps to reflect the change in beneficiary, although we may need to take some administrative steps of our own to update security registers with the change in details. This should, however, not affect our priority or otherwise affect the date from which the security is valid.
5. Will I have access to the same trading platform or be subject to any software changes following the transfer of my account?
The transfer of your account will have no impact upon the software you use to trade or administer your account. The technology will remain the same as it is today.
6. Will all account balances be transferred at the same time?
All balances, with the exception of accruals (e.g., interest, dividends) will be transferred at the same time. Once accruals have been posted to cash, they will automatically be swept to the transferred account.
7. What will happen to my current account following the transfer of my account?
Once all accruals have been swept, your current account will be closed and inaccessible for trading purposes. You will still be able to access this closed account via the Client Portal for purposes of viewing and printing archived activity and tax statements.
8. Will IBKR’s commissions and fees change when my account is transferred?
No. IBKR commissions and fees do not vary by the broker your account is maintained with.
9. Will my trading permissions change when my account is transferred?
No. Your trading permissions will not change when your account is transferred.
10. Will open orders (e.g., Good-til-Canceled) be carried over when my account is transferred?
Open orders will not be carried over to the new account, and we recommend that clients review their orders immediately following the transfer of their account to ensure that the open orders are consistent with their trading intentions.
11. Will I be subject to the U.S. Pattern Day Trading Rule if my account is transferred?
Accounts maintained with IBUK are subject to the U.S. Pattern Day Trading (PDT) rule as the accounts are introduced to and carried by IBLLC, a U.S. broker. The PDT rules restricts accounts with equity below USD 25,000 to no more than 3 Day Trades within any 5-business day period.
As accounts transferred to IBIE will not be introduced to IBLLC, they will not be subject to the PDT rule.
12. Will I receive a single, combined annual activity statement at year end?
No. You will receive an annual statement of your existing account which will cover the period starting 1 January 2022 through the date your account was transferred and a second annual statement for your new account which will cover the period starting from the transfer date through the end of the year.
13. Will the current cost basis of positions be carried over when my account is transferred?
Yes, the transfer of your account will have no impact upon the cost basis of your positions.
14. Will the transferred account retain the same configuration as the current account?
The configuration of the account following transfer will match that of the current account to the extent permissible by regulation. This includes attributes such as margin capability, market data, additional users, and alerts.
15. Will my login credentials change?
No. Your username, password, and any 2-factor authentication process in place for your existing account will remain active following transfer. You will, however, be assigned a new account ID for your transferred account.
常見問題解答：英國脫歐相關賬戶遷移
簡介
盈透證券集團（以下簡稱“IB”）及其英國子公司盈透證券（英國）有限公司（以下簡稱“IBUK”）一直在為英國脫歐過渡期結束（目前定於2020年12月31日）做籌劃，致力於為我們的歐洲客戶準備替代方案。我們的重點是把相關變化和影響降到最小，確保為客戶提供的經紀服務能夠無縫銜接過渡。此事件涉及的客戶將會收到通知，通知中會說明相關的變化和時間線。下方為從IBUK到我們其它歐洲經紀公司的賬戶遷移相關常見問題及解答。
常見問題解答
問：2021年1月1日英國脫歐開始後IBKR將採取什麼措施確保經紀服務持續運行？
答：早在2018年，IBKR便設立了盈透證券盧森堡有限公司（以下簡稱“IBLUX”），並於2019年11月獲得監管授權。此外，我們目前還在著手創建兩家位於歐盟的經紀公司：盈透證券愛爾蘭有限公司（以下簡稱“IBIE”）和盈透證券中歐有限公司（以下簡稱“IBCE”）。
我們計劃在2020年12月31日之前將所有受英國脫歐影響的客戶遷移到這三家位於歐盟的經紀公司（以下簡稱“歐盟經紀公司”）。遷移到IBIE和IBCE還需要獲得相關國家主管機關的監管授權。
問：我們的賬戶要遷移到哪家IBKR經紀公司？
答：哪些賬戶要遷移到IBLUX、IBIE和IBCE這三家經紀公司中的哪一家尚未最終確定。我們預計大多數西歐客戶會遷移到IBIE，中歐和東歐客戶則遷移到IBCE，還有部分客戶會遷移到IBLUX。這其中客戶的賬戶類型和頭寸也會納入考慮。
在最終發送遷移請求前，我們會向所有客戶發送通知，詳細說明其將被遷入的經紀公司。
問：此次遷移計劃涉及哪些客戶？
答：涉及的客戶包括居住在歐盟的個人客戶和在歐盟國家成立的實體客戶。這些賬戶大部分都開立在盈透證券（英國）有限公司。
問：通過什麼方式徵求客戶同意？
答：我們準備好遷移賬戶後，您會收到一封郵件讓您登錄客戶端。登錄後，您會看到相關披露文件和客戶協議，您可以以電子方式在線表示同意。未對最開始的郵件作出回應的客戶將會收到一系列後續提醒郵件。
問：如果我不做任何操作會怎麼樣？
答：如果未能作出回應表示同意，您的賬戶最終會受到交易和轉帳限制，就如同您不同意遷移一樣。另外請注意，您的賬戶將繼續適用當前協議的條款和條件（包括費用和保證金政策），直至完成遷移到指定歐盟經紀公司、遷移到IBKR以外的其它經紀公司或關閉。
問：如果我不同意遷移會怎麼樣？
答：如果您不同意將賬戶遷移到指定歐盟經紀公司，您的賬戶將受到限制、無法開展新的交易或轉入更多資金和/或頭寸。該等限制不會阻止您將賬戶遷出IBKR。
問：我的登錄信息會變更嗎？
答：不會。您當前賬戶的用戶名、密碼和雙因素驗證程序在遷移後仍然有效。但是，遷移的賬戶會有新的賬戶號碼。
問：遷移後我還可以訪問現在的交易平臺嗎？會有什麼軟件方面的變化嗎？
答：遷移不會對您用於交易和管理賬戶的軟件造成任何影響。所有的技術都不會發生改變。
問：所有賬戶餘額也會遷移嗎？
答：除應計項目（如利息和股息）之外的所有餘額也會一併遷移。應計項目會在實現現金後遷移。如果是利息，應計項目通常是逆向的，現金會在應計款項下一個月的第一周記入賬戶。如果是股息，應計項目是逆向的，抵消現金會在發行發支付股息的當天記入賬戶。
問：遷移後我當前的賬戶會怎麼樣？
答：所有應計項目都記入為現金並轉入遷移賬戶後，您當前的賬戶便會關閉。關閉後，賬戶將無法用於交易。但是，您仍可以通過客戶端的賬戶選擇器訪問此賬戶，查看或打印歷史報表。
問：賬戶遷移後，IBKR的傭金費用會發生變化嗎？
答：不會。IBKR的傭金和費用不會因您賬戶所在的經紀公司發生變化。
問：賬戶遷移後，我的交易許可會發生變化嗎？
答：您的交易許可將保持不變，但遷移到IBLUX的賬戶由於監管限制將無法進行杠杆外匯交易。儘管目前看來IBIE和IBCE的賬戶沒有類似限制，但如果政策調整，我們會在遷移前通知您。
問：賬戶遷移後，未完成的定單（如取消前有效定單）會被保留下來嗎？
答：未完成的定單將被轉到新賬戶，但是，我們建議客戶在遷移後立即對定單進行檢查，確保定單符合其交易目的。
問：賬戶遷移後，我還受美國典型日內交易規則限制嗎？
答：在IBUK開立的賬戶由於最終是被引入美國經紀公司IBL並由IBL提供底層清算，因此適用美國典型日內交易（PDT）規則。根據PDT規則，資產低於25,000美元的賬戶任意5個工作日內日內交易不得超過3筆。
而遷移到IBLUX、IBIE和IBCE的賬戶不再是引入IBL，因此不再適用PDT規則。
問：年末我會收到一份合併的年度報表嗎？
答：不會。您會收到一份當前賬戶的年度報表（時間範圍為2020年1月1日至遷移日）和一份遷移後新賬戶的年度報表（時間範圍為遷移日至2020年12月31日）。
問：賬戶遷移後，當前賬戶內頭寸的成本基礎是否會保留到新賬戶？
答：是的。遷移不會影響您頭寸的成本基礎。
問：遷移後的新賬戶是否會保留當前賬戶的配置？
答：在法規允許的範圍內，遷移後的賬戶配置會與當前賬戶的配置保持一致。這包括保證金、市場數據、多個使用者和警報等屬性。在有限的情況下，賬戶會被遷移到無法支持全部產品的行政轄區。持有受限產品的客戶可以進行遷移並維持或平倉該等產品的頭寸，但無法增加新的頭寸。
問：如果IBKR在2020年12月31日前未能取得遷移所必需的監管許可會怎麼樣？
答：IBLUX已經獲批，但在業務規模方面受到一定限制；因此要在2020年12月31日前完成遷移就必需要獲得IBIE或IBCE的許可。如果確定這兩家經紀公司都無法及時拿到許可，我們會聯繫客戶解釋英國脫歐過渡期結束後其賬戶的處理方案。
問：遷移後我還能繼續向英國申訴服務機構（FOS）提交投訴嗎？
答：IBUK的客戶可以將在IBUK未得到滿意解決的投訴提交給英國金融申訴服務機構處理。但遷移到IBLUX、IBIE或IBCE之後，英國金融申訴服務機構將不再適用，我們會為您提供新的替代服務相關信息。請注意，遷移不會影響我司內部的投訴處理流程。
問：遷移對數據保護有什麼影響？
答：賬戶從IBUK遷移到IBLUX、IBIE或IBCE並不會對我們根據數據保護規則對您個人信息實施保護的方式造成任何影響。IBLUX、IBIE和IBCE均會承擔數據保護責任，繼續按照我們一貫的高標準保護您的個人信息。
問：我的賬戶保障會有什麼影響？
答：在歐盟，發生經紀商違約的情況下客戶的保險保障通常會不如在英國或美國。
目前，如果滿足資格要求，IBUK的客戶在投資服務方面可享受英國金融服務補償計劃（以下簡稱“UK FSCS”）最高達50,000英鎊的保障。由於IBUK的客戶由我們的美國經紀公司IBL進行底層清算，其賬戶的證券賬戶段可以參加證券投資者保護公司（以下簡稱“SIPC”）的保險，保額最高達500,000美元（其中現金不超過250,000美元）。
而在歐盟經紀公司，IBLUX、IBIE和IBCE的合資格索賠人最多可以申請20,000歐元的賠償。有關具體方案、保險範圍和索賠資格的更多信息會同遷移請求一併發送給您。
鑒於盈透證券集團82.5億美元的總資本以及在集團所有經紀公司推行的審慎保證金政策（包括接受定單前的預先信用檢查以及對不滿足保證金要求的賬戶進行自動平倉清算），我們相信此次遷移並不會對客戶資產的總體安全穩健造成影響。
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EDD Requests for Information (RFI)
Overview:
These FAQs are meant to serve as guidelines for answering customer questions with regard to recent communications that have been sent to a large number of IBKR account holders, requesting specific information. If there are further questions not addressed in this guide, please contact the EDD department.
FOR ALL ACCOUNTS:
Is this a legitimate email?
Yes; IBKR recently sent out communications to customers requesting that customers update specific data and documentation.
Why has the customer received this notification?
IBKR is conducting a routine review of our clients for the purpose of ensuring that we maintain accurate and up to date information and conduct due diligence on clients from places or of type that present heightened AML risk. As a regulated financial institution, we are required to “know our customers”, and this is part of that effort.
Is updating this information required?
Yes; all customers who have received a notification are required to provide the requested information.
What is Source of Wealth?
Source of Wealth means any way in which the customer has derived their wealth. Examples include employment income, business income, property sale, inheritance, etc. A client’s sources of wealth should add up to 100%.
What documents are acceptable to prove Source of Wealth?
The documents we provided include a list of what you can submit to confirm your source of wealth. Each source of wealth must be accompanied by supporting documentation (e.g., a bank statement for employment income, a bill of sale for property sale, etc.).
FOR ORG ACCOUNTS:
Why is beneficial ownership information required?
Under US regulations, we are required to collect information about an organization’s beneficial ownership. It is also part of our obligation to “know our customers.”
What is a beneficial owner? How is that different from a regular owner?
A beneficial owner refers to the actual people who ultimately own the entity. This differs from regular owners, who could be a combination of other businesses, trusts, custodians, etc. Under relevant regulations, we require any entity that is an account holder to identify any natural person who owns 10% or more of the entity. We then need to verify those peoples’ identities through identification verification documents and confirm their sources of wealth.
Do I need to complete the Ultimate Beneficial Owner form if I indicated on the Certification of Beneficial Owners form that there are no 10%+ owners ?
No – you do not have to complete the Ultimate Beneficial Owner form if you have certified there are no 10%+ owners.
FOR CAFFIS, IBROKERS, COLLECTIVE INVESTMENT VEHICLES, AND HEDGE FUNDS:
What is a Wolfsberg Questionnaire?
The Wolfsberg Questionnaire is an Anti-Money Laundering (AML) Questionnaire designed by the Wolfsberg Group, which aims to provide a standardized overview of a financial institution's AML policies and practices.
*The form must be completed in its entirety and dated within the last 12 months.*
Why do I need to provide one?
The questionnaire is to help ensure that we know the organization implemented certain standards and practices associated with preventing money laundering, terrorist financing, and other financial crimes.
Note: If the business is a hedge fund, we are seeking a completed Wolfsberg Q from their fund manager/investment advisor.
Is there a link to the Wolfsberg Questionnaire form?
Yes, the blank form is available to download in Account Management – please review the document task.
You can also download the form here:
https://www.wolfsberg-principles.com/sites/default/files/wb/CBDDQ_V1.3_SC09_Final_Version _16APR2020.pdf
I am being asked to submit documentation regarding Fund Status. What documentation do I need to submit?
Please provide a proof of existence document for the fund, and proof of regulatory status for the fund manager and the fund administrator.
FOR FOREIGN BANKS:
Why do I need to provide a Foreign Bank Certification?
Under the USA Patriot Act, any foreign bank that maintains a correspondent relationship with any US-based bank or broker/dealer must provide a foreign bank certification.
*The form must be completed in its entirety and dated within the last 36 months.*
What is the purpose of a Foreign Bank Certification?
The purpose of the foreign bank certification is to help ensure that the bank is complying with all required US regulations with regards to money laundering, terrorist financing, and other financial crimes.
Shareholders Rights Directive II
On 3 September 2020, a new European Directive, the Shareholders Rights Directive II ("SRD II"), will enter into force introducing important regulatory changes for intermediaries. SRD II aims to encourage long-term shareholder engagement in European shares by introducing new requirements, including:
- Obligations for all intermediaries in the chain of custody to provide shareholders information to issuers on demand and no later than the business day immediately following the date of receipt of the request;
- Requirements for intermediaries to make available meeting announcements or any other information which an issuer is required to provide to shareholders to enable a shareholder to exercise its rights
- Requirements for intermediaries to facilitate the ability of shareholders to participate in meetings by passing on a shareholder's participation instructions (for example a vote or request to attend the meeting), without delay.
Note that the Directive applies to any intermediary, whether based in the EEA or not. Accordingly, IBKR may in the future forward any request to provide shareholders information that IBKR may receive from issuers (or other appointed entities) whose share is owned through the IBKR accounts of an intermediary or their clients.
Upon receipt of these requests, intermediaries will be required to provide shareholders information directly to the issuers no later than the business day immediately following the date of receipt of the request.
Information to Disclose
- Full name;
- Contact details (address, email address);
- Unique identifiers;
- Number of shares held;
- Category/classes of shares held (Only if explicitly requested);
- Dates from which the shares are held (Only if explicitly requested);
- Depository location;
- Vote-eligible shares.
Requests Thresholds
Member states can establish that the right of the issuer to obtain the shareholders information is only effective with regard to holding of a minimum percentage of voting rights, which where set cannot exceed 0.5%.
Requests Handling
IBKR will send these requests in a standardised electronic format. Shareholders information shall be provided directly to the issuer (or other third party entity appointed) in the format prescribed by SRD II. We recommend that intermediaries review the Commission Implementing Regulation (EU) 2018 1212, which details the regulatory formats.
IBKR has appointed a third party provider, Mediant, to facilitate the requests handling. To use their services, they can be contacted directly at SRDTabulations@mediantonline.com.
Alternatively, intermediaries should ensure that they have alternative ways to reply to these requests for information after 3 September 2020.
SFTR: Reporting to Trade Repository Obligations and Interactive Brokers Delegated Service to help meet your obligations
Background: Securities Financing Transactions Regulation (“SFTR”) is a European regulation aimed at mitigating the risk of shadow banking. SFT's have been identified as being one of the central causes of the financial crisis and during and post crisis, regulators have struggled with anticipating the risks associated with securities financing. This led to the introduction of a reporting requirement for these SFTs.
Transactions that are reportable under SFTR: Repurchase agreements (repos), stock loans, margin loans, sell/buy-back transactions and collateral management transactions.
Whom do SFTR reporting obligations apply to: Reporting obligations normally apply to all clients established in the EU with the exception of natural persons. They apply to:
- Financial counterparties ("FC"): include investment firms, credit institutions, insurance and reinsurance undertakings, UCITS and UCITS management companies, Alternative Investment Fund managed by an AIFM authorised under the Alternative Investment Fund Managers Directive ("AIFMD"), institutions for occupational retirement provision, central counterparties and central securities depositories.
- Non-Financial Counterparty ("NFC"): Undertakings established in the Union or in a third country that do not fall under the definition of financial counterparty.
- Small Non- Financial Counterparty ("NFC-"): A small non-financial counterparty is one which does not exceed the limits of at least two of three criteria: a balance sheet total of EUR 20m, net turnover of EUR 40m, and average number of 250 employees during the financial year. Under SFTR, small NFC's reporting obligations are automatically delegated to the financial counterparty with which they execute an SFT.
What must be reported?
The types of SFTs in scope of the requirements include:
Transaction level reporting:
- Securities and commodities lending / borrowing transactions
- Buy-sell backs / sell-buy backs
- Repo transactions
Position Level reporting:
- Margin lending
In-scope entities will be required to report details of an SFT which is in scope if that SFT:
- is concluded after the date on which the Regulatory Technical Standards apply to the entity
- has a remaining maturity of over 180 days on the date on which the RTS apply to the entity
- is an open / rolling transaction that has been outstanding for more than 180 days on the date on which the RTS apply to the entity
When must it be reported?
SFTR is a two-sided reporting requirement, with both collateral provider (borrower) and collateral receiver (lender) required to report their side of the SFT to an approved Trade Repository on trade date +1 (T+1).
All new SFTs, modifications of open SFT’s and terminations of existing SFTs must be reported daily. Collateral is reported on T+1 or value date +1 (S+1) dependent on the method of collateralisation used.
What do reports include?
Reporting will be done using a combination of 153 fields, depending on product and report type.
- 18 counterparty data fields - which includes information about the counterparty such as LEI and country of legal residence.
- 99 Transaction fields – which includes the loan and collateral data information on the type of SFT which has been involved in the transaction
- 20 Margin fields – which includes information on margin such as the portfolio code and currency.
- 18 Reuse fields – which includes cash reinvestment and funding source data
What must match between reports?
The SFTR reporting format includes 153 reportable fields, some of which must match between reports of the two counterparties. There will be two phases of the trade repositories’ reconciliation process, with the first phase consisting of 62 matching fields which are required for the initial SFTR implementation. A second phase, starting 2 years after the start of the reporting obligation, will contain another 34 fields which are required to match, bringing the total number of matching fields to 96.
In this context, it is particularly important that the globally unique transaction identifier - a UTI, be used and shared between the parties to the trade. The parties should agree who is to generate the UTI. If no such agreement is in place, the regulation describes a waterfall model for who would be the generating party. The generating party is obligated to share the UTI with the counterpart in an electronic format in a timely manner for both parties to be able to fulfil their T+1 reporting obligation.
INTERACTIVE BROKERS DELEGATED REPORTING SERVICE TO HELP MEET YOUR REPORTING OBLIGATIONS
FCs, NFCs and NFC-s must report details of their transactions to authorised Trade Repositories. This obligation can be discharged directly through a Trade Repository, or by delegating the operational aspects of reporting to the counterparty or a third party (who submits reports on their behalf).
As mentioned above, when executing an SFT with an FC, an NFC- does not have to submit relevant reports, as these are submitted by the FC on the NFC-‘s behalf.
However, NFC-s who do not execute SFTs with an FC are required to submit reports.
Depending on the different setups available, Interactive Brokers clients’ may not be executing an SFT with an FC, and therefore Interactive Brokers offers a delegated reporting service, to ensure its clients can report all SFTs they execute.
As mentioned above, SFTR reports submitted by the two counterparties of an SFT must contain the same UTI. To ensure this requirement is satisfied, Interactive Brokers suggests that all of its clients in scope delegate reporting to Interactive Brokers.
Interactive Brokers will take care of generating matching UTIs when submitting its own reports and those of its clients on whose behalf it submits reports.
Validating Explicit Permissions - The European Securities and Markets Authority (ESMA) have introduced a mandate whereby trade repositories need to confirm a delegated reporting agreement is in place between the two parties before accepting and sending on any reports to the regulator. Due to this, the Trade Repository that Interactive Brokers works with - Depository Trust and Clearing Corporation ("DTCC"), has introduced a process to collect this information. As a client of Interactive Brokers, if you opt for delegated reporting, this mandate will apply.
DTCC will collect this information by sending clients an email asking for confirmation from the client that they have delegated their SFTR reporting to Interactive Brokers. – This will be a one-time process for each client. Once confirmed, DTCC will accept the reports and send them onto the regulator.
Securities Financing Transactions: Currently, Interactive Brokers clients can execute two types of SFTs: margin lending and stock loans. SFTR also requires reporting information on funding sources and collateral reuse.
Trade repository Interactive Brokers use: Interactive Brokers (U.K.) Limited will use the services of Depository Trust and Clearing Corporation ("DTCC") Trade Repository.
Timetable to report to Trade repositories: The reporting start date is 13 July 2020:
July 2020: Report Phase 1 – July 13 2020 reporting go-live for banks, investment firms & Credit Institutions and CCPs & CSDs
Oct 2020: Report Phase 2 - Insurance, UCITS, AIF & Pensions
Jan 2021: Report phase 3 - Reporting go-live for Non-Financial Companies
THIS INFORMATION IS GUIDANCE FOR INTERACTIVE BROKERS CLEARED CUSTOMERS ONLY.
NOTE: THE INFORMATION ABOVE IS NOT INTENDED TO BE A COMPREHENSIVE OR EXHAUSTIVE NOR A DEFINITIVE INTERPRETATION OF THE REGULATION, BUT A SUMMARY OF ESMA'S SFTR REGULATION AND RESULTING TRADE REPOSITORY REPORTING OBLIGATIONS
IBKR Australia Short Position Reporting
Introduction
You can request IBKR Australia perform your Australian short position reporting obligations on your behalf.
What is a short position?
A short position arises where the quantity of an eligible product that you hold is less than the quantity of the eligible product that you have an obligation to deliver, such as when you engaged in short selling an ASX-listed security and borrowed securities from IBKR to cover your delivery obligation.
When do I have a reporting obligation?
Short sellers have an obligation to report certain short positions to the Australian Securities & Investments Commission (ASIC). Reporting on short positions that are below the thresholds set by ASIC is optional. A short position does not need to be reported to ASIC when:
- The value of the position is AUD 100,000 or less; and
- The position is 0.01% or less of the total quantity of securities or products on issue for that security or product.
Otherwise, the short position must be reported.
The following table provides a convenient summary of when a short position must be reported (“Reportable Short Position”):
What you need to know about short position reporting:
It is important that any clients trading or wishing to trade eligible products understand that they may have an obligation to report their Reportable Short Positions to ASIC daily.
This obligation applies to any short sellers with a Reportable Short Position under the rules whether inside or outside of Australia. By default, IBKR Australia does not report Reportable Short Positions on your behalf, so you must arrange for the reporting of your short positions (if required).
IBKR Australia, along with many third-party firms, can provide this service to you subject to applicable terms and conditions.
If you would like IBKR Australia to perform your short position reporting for eligible products held in your IBKR account, please enrol in the service via Client Portal. Currently, this service is offered at no additional cost to IBKR Australia clients.
Please note:
- If your account does not allow shorting of securities, there is no need to sign up for this service.
- IBKR Australia will only offer the option to report all short positions and not only your Reportable Short Positions.
If you enroll in the IBKR short position reporting service:
- You must not hold any other eligible products with any other bank, broker or custodian because our systems use the positions in your IBKR account to determine whether you have a reportable short position. We cannot accurately calculate your short position if you hold eligible positions elsewhere.
- You must ensure that the information you provide us is complete and accurate in all respects, as we are required to provide ASIC with certain personal information about you.
- The obligation to report your short positions is always yours and is not transferred to IBKR under any circumstance (i.e. IBKR does not become responsible for your short position reporting obligations);
- If, for any reason, we are unable to report your short positions to ASIC before the deadline or at all, we will endeavour to inform you as early as possible so that you can make alternative arrangements. However, we make no warranties that you will receive the notification prior to the reporting deadline.
How do I apply?
To apply, all you need to do is log in to your account via the Client Portal, navigate to the Settings > Account Settings menu, click on the “ASIC Short Position Reporting” icon and follow the prompts.
As part of this process, you will need a unique identifier. For Australian applicants, this can be your ACN or ARBN. For overseas clients this can be your SWIFT BIC. Alternatively, you may register with ASIC to obtain a unique identity code.
Upon electing IBKR Australia to perform this short position reporting obligation on your behalf, you must warrant that the reportable short positions held with IBKR Australia represent your entire portfolio in applicable Reportable Short Positions and acknowledge that IBKR Australia will rely on this representation and warranty in good faith on each occasion that it makes a short position report to ASIC on your behalf.
Where can I get more information?
Clients seeking more information on their short position reporting obligations should refer to the following resources:
- ASIC Regulatory Guide 196, which contains an overview of the applicable short selling rules and disclosure requirements.
- ASIC Info Sheet 98, which provides an overview of how to submit short position reports to ASIC via FIX and a list of vendors who may be able to assist you with your short position reporting obligations if you don’t elect to enrol in the IBKR short position reporting service.
PRIIP概述
背景
2018年，一項歐盟新規生效，該新規旨在對“零售”客戶進行保護，確保其在買入某種產品時能夠獲得充分的披露信息。該法規被稱為零售及保險投資產品組合法規（MiFID II指令2014/65/EU）或PRIIP，其覆蓋了所有應付給客戶的金額會受參考值或一種或多種并非由該等零售投資者直接買入之資產的業績表現影響而波動的投資。常見列子包括期權、期貨、差價合約、ETF、ETN和其它結搆性產品。
值得注意的是，經紀商不得允許零售客戶購買PRIIP覆蓋的產品，除非該產品的發行機搆已經備好了要求的披露文件讓經紀商提供給客戶。這種披露文件被稱為關鍵信息文件（“KID”），包括產品描述、成本、風險回報情況及可能的業績情境等信息。美國客戶不受PRIIP影響，因此，某些美國掛牌ETF的發行機搆通常不會創建關鍵信息文件。這就意味著，歐洲經濟區（“EEA”）的零售客戶可能無法購買此類產品。
客戶分類
IBKR默認將所有個人客戶分類為“零售”客戶，因為這樣可以給與客戶MiFID提供的最廣泛的保護。被分類為“專業”客戶的客戶無法享受“零售”客戶級別的保護，但同時也不需要受KID文件要求的限制。根據MiFID II的定義，“專業”客戶包括受監管的實體、大型客戶和要求被重新分類為“選擇性專業客戶”并且在知識、經驗和財務實力方面滿足MiFID II要求的個人。
IB提供了線上程序可供“零售”客戶申請將其分類更改為“專業”。重新分類的資格要求以及申請重新分類的步驟，請參見KB3298，如果要直接申請更改分類，可通過客戶端/賬戶管理中的相關問卷進行。
盈透證券（英國）有限公司 – MiFID分類
簡介
歐盟《金融工具市場法規（MiFID）》及其后修訂版MiFID II要求盈透證券英國有限公司【Interactive Brokers (U.K.) Limited (IBUK)】根據客戶的知識水平、經驗和專長將客戶分為“零售客戶”、“專業客戶”或“合格對手方”這几類。
根據英國金融行為監管局（“FCA”）的法規，IBUK將大多數客戶歸為零售客戶，為其提供較高層次的保護。
只有受監管的實體或由受監管的基金經理管理的基金才會被歸為專業客戶。
專業客戶與零售客戶在監管保障方面的主要區別有：
1. 組合投資的性質與風險說明：以其它服務或產品作為協議條件向零售客戶提供投資服務的公司必須：(i) 告知零售投資者組合協議的風險是否與各組成部分單獨對應的風險有所不同；并(ii) 向零售客戶提供協議不同組成部分的充分說明以及各部分相互作用改變風險的方式。上述要求不適用於專業客戶。但是，除了下方第3點的情況外，IBUK的處理方法并不會有太多不同。
2. 差價合約（”CFD“）的投資者保護措施：歐洲證券與市場管理局（”ESMA“）針對向零售客戶提供差價合約推出了干預措施。措施包括：(i) 對開倉頭寸實施新的杠杆限制，根據底層證券的波動率而定；(ii) 以單個賬戶為單位的保證金平倉規則，標准化了供應商必須平倉一個或多個未結差價合約的保證金百分比水平；(iii) 以單個賬戶為單位的負余額保護規則；
(iv) 限制交易差價合約的獎勵；以及(v) 標准化風險警示，包括披露差價合約供應商出現虧損的零售投資者賬戶的百分比。上述要求不適用於專業客戶。
3. 與客戶的溝通：公司必須確保其與所有客戶的溝通均清楚、公證、不具誤導性。但是，公司與專業客戶溝通（有關其自身、其服務與產品以及其報酬）的方式則可能會和與零售客戶溝通的方式不同。公司在信息提供的詳細程度、使用的工具以及時間選擇方面的責任都會根據客戶是零售客戶還是專業客戶而會有所不同。發送某些產品特定文件（如零售及保險投資產品組合（“PRIIP”）關鍵信息文件（“KID”）的要求不適用於專業客戶。
4. 價值減損報告：若零售客戶賬戶持有杠杆金融產品頭寸或涉及或有負債交易，則如果各產品的初始價值下降10%且之后以10%的倍數下跌，則公司必須通知零售客戶。上述要求不適用於專業客戶。
5. 合適性：在評估非咨詢（non-advised）服務的合適性時，公司須確定客戶是否具備必要的經驗和知識，能夠了解所提供或需求之產品或服務相關的風險。該等合適性評估要求應用到客戶時，公司會認為專業客戶具備必要的經驗和知識了解其被分類為專業客戶的該等特定投資服務或交易、或該等類型交易或產品相關的風險。但公司不會對零售客戶作此假設，而是必須確定零售客戶確實具備必要的經驗和知識水平。
IBUK提供非咨詢服務，在評估既定服務或產品的合適性時，不需要像對零售客戶那樣對專業客戶索取信息或遵守評估程序，如果不能確定某一既定服務或產品的合適性，IBUK也不需要向專業客戶發出警告。
6. 責任免除：在FCA法規下，公司針對零售客戶免除或限制其自身責任或義務的能力比針對專業客戶時要弱。
7. 金融服務申訴機搆：英國金融申訴服務機搆對專業客戶不可用，除非其是，例如，在其自身行業、業務、技能或專業之外行動的消費者、小型企業或個人。
8. 補償：IBUK是英國金融服務補償計划的參與成員。如果IBUK不能履行對您的義務，您有權從該計划索取賠償。這取決於業務的類型以及索賠的情況；補償僅對某些類型的索賠人和某些類型的業務可用。從補償計划獲取補償的資格將根據計划適用的規則確定。
重新分類為專業客戶
IBUK允許其零售客戶申請重新分類為專業客戶。我們會告知客戶其客戶分類，并且客戶可隨時在賬戶管理（設置>賬戶設置>MiFID客戶類別）中進行查看。客戶也可從本頁面請求更改其MiFID分類。
在下方兩種情況下，IBUK會考慮將零售客戶重新分類為專業客戶：
1. 固有專業客戶可以通知IBUK，因至少滿足以下一項條件，其認為其自身根據FCA規則應該被分類為固有專業客戶：
(i) 被授權或受監管在金融市場運作；或
(ii) 公司層面滿足下方規模要求中任意兩項的大型事業：
(a) 資產負債表總額達20,000,000歐元；
(b) 淨營業額達40,000,000歐元；
(c) 自有資金達2,000,000歐元；
(iii) 主要活動為投資金融產品的機搆投資者。這包括致力於資產證券化或其它融資交易的實體。
2. 如果基於對客戶技能、經驗和知識的評估，IBUK有理由相信，考慮所設想之交易或服務的性質，客戶能夠自行做出投資決定并了解其中風險，則IBUK會將客戶作為選擇性專業客戶。不滿足固有專業客戶要求的客戶仍然可以申請被分類為選擇性專業客戶。
要獲得重新分類，零售客戶必須提供證據證明其至少滿足以下標准中的兩項：
1. 在過去4個季度，客戶進行大額金融產品交易的平均頻率達每季度10次。
IBUK會考慮以下條件來確定大額交易：
a. 過去4個季度內，進行了至少40筆交易；
b. 過去4個季度內每個季度至少進行了1筆交易；
c. 過去4個季度內進行的最大的40筆交易總名義價值大於200,000歐元；
d. 賬戶淨資產價值大於50,000歐元。
現貨外匯和未分配OTC金屬交易不納入計算。
2. 客戶持有的金融產品（包括現金）投資組合超過500,000歐元（或等值）；
3. 客戶是個人賬戶持有人或機搆賬戶交易者，且其至少有一年在金融行業要求具備產品知識的專業崗位工作的經驗。
審核并驗證客戶提供的信息和證明資料后，如果所有相關條件均已符合，則IBUK會對客戶進行重新分類。
申請重新分類為專業客戶的零售客戶在提交相關申請前，必須閱讀并了解IBUK的警告信息。
重新分類為零售客戶專業客戶可以在上述同一賬戶管理頁面（設置>賬戶設置>MiFID客戶類別）向IBUK提出申請將其重新分類為零售客戶。
除了受監管實體或由受監管基金經理管理的基金應分類為固有專業客戶外，IBUK可接受所有此類請求。
本信息僅用於指導盈透證券全披露清算服務客戶。
注：以上信息不作為全面窮盡式指南，也不是對法規的權威性解釋，而是對IBUK對待客戶分類和重新分類政策之方法的總結。
PRIIPs Overview
BACKGROUND
In 2018, an EU regulation, intended to protect “Retail” clients by ensuring that they are provided with adequate disclosure when purchasing certain products took effect. This disclosure document is referred to as a Key Information Document, or KID, and it contains information such as product description, cost, risk-reward profile and possible performance scenarios.
This regulation is known as the Packaged Retail and Insurance-based Investment Product Regulation (MiFID II, Directive 2014/65/EU), or PRIIPs, and it covers any investment where the amount payable to the client fluctuates because of exposure to reference values or to the performance of one or more assets not directly purchased by such retail investor. Common examples of such products include options, futures, CFDs, ETFs, ETNs and other structured products.
The UK Financial Conduct Authority (FCA) has equivalent requirements for UK residents.
It’s important to note that a broker cannot allow a Retail client to purchase a product covered by PRIIPs unless the issuer of that product has prepared the required disclosure document for the broker to provide to the client. U.S. clients are not impacted by PRIIPs, so the issuers of U.S. listed ETFs do not as a rule create KIDs. This means that EEA and UK Retail clients may not purchase the product. Clients nevertheless have several options:
- Many US ETF issuers have equivalent ETFs issued by their European entities. European-issued ETFs have KIDs and are therefore freely tradable.
- Clients can trade most large US ETFs as CFDs. The CFDs are issued by IBKRs European entities and as such meet all KID requirements.
- Clients may be eligible for re-classification as a professional client, for whom KIDs are not required.
CLIENT CATEGORISATION
We categorize all individual clients as “Retail” by default as this affords clients the broadest level of protection afforded by MiFID. Client who are categorised as “Professional” do not receive the same level of protection as “Retail” but are not subject to the KIDs requirement. As defined under MiFID II rules, “Professional” clients include regulated entities, large clients and individuals who have asked to be re-categorised as “elective professional clients” and meet the MiFID II requirements based on their knowledge, experience and financial capability.
We provide an online step-by-step process that allows “Retail” to request that their categorisation be changed to “Professional". The qualifications for re-categorisation along with the steps for requesting that one’s categorisation be considered are outlined in KB3298 or, to directly apply for a change in categorisation, the questionnaire is available in the Client Portal/Account Management.
Interactive Brokers (U.K.) Limited – MiFID Categorisation
Introduction
The European Union legislative act known as the Markets in Financial Instruments Directive, or MiFID, as amended by MiFID II, requires Interactive Brokers (U.K.) Limited (IBUK) to classify each Client according to their knowledge, experience and expertise: "Retail", "Professional" or "Eligible Counterparty".
In accordance with the Financial Conduct Authority rules, IBUK categorises most clients as Retail clients, providing them with a higher degree of protection.
Only those clients that are either regulated entities or funds managed by regulated fund managers, are categorised as Per Se Professional Clients.
Professional Clients are entitled to a lower degree of protection under the UK regulatory regimes than Retail Clients. This notice contains, for information purposes only, a summary of the protections that a Retail Client might lose if they are to be treated as a Professional Client.
1. Description of the nature and risks of packaged investments: A firm that offers an investment service with another service or product or as a condition of the same agreement with a Retail Client must: (i) inform Retail Clients if the risks resulting from the agreement are likely to be different from the risks associated with the components when taken separately; and (ii) provide Retail Clients with an adequate description of the different components of the agreement and the way in which its interaction modifies the risks. The above requirements do not apply in respect of Professional Clients. However, IBUK will not make such differentiation apart from the case specified under point 3 below.
2. Retail investor protection measures on the provision of Contracts for Differences (“CFDs”): The regulatory measures include: (i) Leverage limits on the opening of a position, which vary according to the volatility of the underlying; (ii) A margin close out rule on a per account basis that standardises the percentage of margin (at 50%of the minimum required margin) at which providers are required to close out one or more open CFDs; (iii) Negative balance protection on a per account basis;(iv) A restriction on the incentives offered to trade CFDs; and (v) A standardised risk warning, including the percentage of losses on a CFD provider’s Retail investor accounts. These measures do not apply in respect of Professional Clients.
3. Communication with clients, including financial promotions: A firm must ensure that its communications with all clients are, and remain, fair, clear and not misleading. However, the simplicity and frequency in which a firm may communicate with Professional Clients (about itself, its services and products, and its remuneration) may be different to the way in which the firm communicates with Retail Clients. Regulations relating to restrictions on, and the required contents of, direct offer financial promotions do not apply to promotions to Professional Clients and such promotions need not contain sufficient information for Professional Clients to make an informed assessment of the investment to which they relate. A firm’s obligations in respect of the level of details, medium and timing of the provision of information are different depending on whether the client is a Retailor Professional Client. The requirements to deliver certain product-specific documents, such as Key Information Documents (“KIDs”) for Packaged Retail and Insurance-based Investment Products (“PRIIPs”), are not applied to Professional Clients.
4. Depreciation in value reporting to clients: A firm that holds a Retail Client account that includes positions in leveraged financial instruments or contingent liability transactions must inform the Retail Client, where the initial value of each instrument depreciates by 10 per cent and thereafter at multiples of 10 per cent. The above reporting requirements do not apply in respect of Professional Clients (i.e., these reports do not have to be produced for Professional Clients).
5. Appropriateness: For transactions where a firm does not provide the client with investment advice or discretionary management services (such as an execution-only trade), it may be required to assess whether the transaction is appropriate. When assessing appropriateness for non-advised services, a firm may be required to determine whether the client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or service offered or demanded. Where such an appropriateness assessment requirement applies in respect of a Retail Client, there is a specified test for ascertaining whether the client has the requisite investment knowledge and experience to understand the risks associated with the relevant transaction. However, in respect of a Professional Client the firm is entitled to assume that a Professional Client has the necessary level of experience, knowledge and expertise in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a Professional Client. IBUK provides non-advised services and is not required to request information or adhere to the assessment procedures for a Professional Client when assessing the appropriateness of a given service or product as with a Retail Client, and IBUK may not be required to give warnings to the Professional Client if it cannot determine appropriateness with respect to a given service or product.
6. Information about costs and associated charges: A firm must provide clients with information on costs and associated charges for its services and/or products. The information provided may not be as comprehensive for Professional Clients as it must be for Retail Clients.
7. Dealing: When undertaking transactions for Retail Clients, the total consideration, representing the price of the financial instrument and the costs relating to execution, should be the overriding factor in any execution. For Professional Clients a range of factors may be considered in order to achieve best execution –price is an important factor, but the relative importance of other different factors, such as speed, costs and fees may vary. However, IBUK will not make such differentiation.
8. Difficulty in carrying out orders: In relation to order execution, firms must inform Retail Clients about any material difficulty relevant to the proper carrying out of orders promptly on becoming aware of the difficulty. This is not required in respect of Professional Clients. The timeframe for providing confirmation that an order has been carried out is more rigorous for Retail Clients’ orders than Professional Clients’ orders.
9. Share trading obligation: In respect of shares admitted to trading on a regulated market or traded on a trading venue, the firm may, in relation to the investments of Retail Clients, only arrange for such trades to be carried out on a regulated market, a multilateral trading facility, a systematic internaliser or a third-country trading venue. This is a restriction which may not apply in respect of trading carried out for Professional Clients (i.e., this restriction can be disapplied where trades in such shares are carried out for Professional Clients in certain circumstances).
10. Exclusion of liability: Firms’ ability to exclude or restrict any duty or liability owed to clients is narrower under the FCA rules in the case of Retail Clients than in respect of Professional Clients.
11. The Financial Services Ombudsman: The services of the Financial Ombudsman Service in the UK may not be avail-able to Professional Clients, unless they are, for example, consumers, small businesses or individuals acting outside of their trade, business, craft or profession.
12. Compensation: IBUK is a member of the UK Financial Services Compensation Scheme. You may be entitled to claim compensation from that scheme if IBUK cannot meet its obligations to you. This will depend on the type of business and the circumstances of the claim; compensation is only available for certain types of claimants and claims in respect of certain types of business. Eligibility for compensation from the Financial Services Compensation Scheme is not contingent on your categorisation but on how the firm is constituted. Eligibility for compensation from the scheme is determined under the rules applicable to the scheme (more information is available at https://www.fscs.org.uk/).
13. Transfer of financial collateral arrangements: As a Professional Client, the firm may conclude title transfer financial collateral arrangements with you for the purpose of securing or covering your present or future, actual or contingent or prospective obligations, which would not be possible for Retail Clients.
14. Client money: The requirements under the client money rules in the FCA Handbook (CASS) are more prescriptive and provide more protection in respect of Retail Clients than in respect of Professional Clients.
Re-categorisation as Professional Client
IBUK allows its Retail Clients to request to be re-categorised as Professional Clients. Clients are notified of their Client Category and can check it at any time from Account Management, under Settings> Account Settings> MiFID Client Category. From this same screen, Clients can also request to change their MiFID Category.
IBUK will consider re-categorising Retail Clients to Professional Clients in two instances:
1. Per Se Professional Clients can notify IBUK that they consider that they should have been categorised as Per Se Professionals under the FCA rules, because at least one of the following conditions applies:
(i) authorised or regulated to operate in the financial markets; or
(ii) a large undertaking meeting two of the following size requirements on a company basis:
(a) balance sheet total of EUR 20,000,000;
(b) net turnover of EUR 40,000,000;
(c) own funds of EUR 2,000,000;
(iii) an institutional investor whose main activity is to invest in financial instruments. This includes entities dedicated to the securitisation of assets or other financing transactions.
2. IBUK may treat Clients as Elective Professional Clients if, based on an assessment of the Client’s expertise, experience, and knowledge, IBUK is reasonably assured that, in light of the nature of the transactions or services envisaged, the Client is capable of making its own investment decisions and understand the risks involved. Clients who do not meet the requirements to be categorised as Per Se Professional Clients can still request to be categorised as Elective Professional Clients.
To obtain such re-categorisation, Retail Clients must provide evidence that they satisfy at least two (2) of the following criteria:
1. Over the last four (4) quarters, the Client conducted trades in financial instruments in significant size at an average frequency of ten (10) per quarter.
To determine the significant size IBUK considers the following:
a. During the last four quarters, there were at least forty (40) trades; and
b. During each of the last four (4) quarters, there was at least one (1) trade; and
c. The total notional value of the top forty (40) trades of the last four (4) quarters is greater than EUR 200,000; and
d. The account has a net asset value greater than EUR 50,000.
Trades in Spot FX and Unallocated OTC Metals are not considered for the purpose of this calculation.
2. The Client holds a portfolio of financial instruments (including cash) that exceeds EUR 500,000 (or equivalent);
3. The Client is an individual account holder or a trader of an organisation account who works or has worked in the financial sector for at least one year in a professional position which requires knowledge of products it trades in.
Upon review and verification of the information and supporting evidence provided, IBUK will re-categorise clients if all relevant conditions are met to satisfaction.
Retail Clients requesting to be re-categorised as Professional Accounts must read and understand the warning provided by IBUK before the relevant request is submitted.
Re-categorisation as Retail Client
Professional Clients can request IBUK to be re-categorised as Retail Clients, from the same Account Management page described above (under Settings> Account Settings> MiFID Client Category).
With the sole exception of regulated entities or funds managed by regulated fund managers, which are categorised as Per Se Professional Clients, IBUK accepts all such requests.
THIS INFORMATION IS GUIDANCE FOR INTERACTIVE BROKERS FULLY DISCLOSED CLEARED CUSTOMERS ONLY.
NOTE: THE INFORMATION ABOVE IS NOT INTENDED TO BE A COMPREHENSIVE, EXHAUSTIVE NOR A DEFINITIVE INTERPRETATION OF THE REGULATION, BUT A SUMMARY OF IBUK’S APPROACH TO CLIENT CATEGORISATION AND RE-CATEGORISATION POLICY.
