Information for Clients on MiFID
Investment firms, commodity dealers, and the activities they may perform are regulated under Directive 2004/39/EC on Markets in Financial Instruments (short name: MiFID), and from 3 January 2018 Directive 2014/65/EU (MiFID II), the implementing and Commission delegated regulations, as well as Act CXXXVIII of 2007 (hereinafter: Investment Firms Act). The purpose of the regulation is to develop uniform conditions and procedures in the Member States of the European Union, in the area of investment services, which help ensure maximum protection for investors and high quality services to the clients. The European Union legislative background ensures the provision of detailed information on financial instruments, makes the operation of investment firms and the execution of the transactions transparent, thereby helping clients find their way in the labyrinth of the financial world.
Client rating categories
OTP Bank allocates its clients to three statutory client rating categories: Retail Client, Professional Client or Eligible Counterparty. This MiFID rating defines for OTP Bank, on a mandatory basis, the depth of the information it must provide to you prior to concluding a deal, as well as the type of information to be requested from you. Since certain investor protection requirements (such as the completeness of information) are aligned with the special features of individual client rating categories, the clients with Retail Client rating enjoy broader protection than Professional Clients or Eligible Counterparties.
The detailed rules applicable to the client rating under MiFID are included in Section A.II.6 of the prevailing Investment Services Division Business Business Regulations (hereinafter: Business Regulations) and the the Uniform Prior Information.
- Information about the differences between the rules applicable to professional clients and retail clients, and their consequences
- Information about the differences between the rules applicable to eligible counterparties and professional clients, and their consequences
Suitability and Appropriateness Tests
Pursuant to the laws, the Bank may only – in addition to the fulfilment of other conditions – provide clients with investment advice or perform portfolio management for them, if prior to executing the order it ascertains the client's risk-bearing capacity and knowledge of financial instruments, and explores the client's income position and investment objectives.
Accordingly, in order for us to be able in the future to recommend to you the most suitable product, you need to fill in a Suitability Test, based on which OTP Bank will allocate you to one of the following five risk categories, bearing which in mind, we shall compile a product portfolio that best suits your risk profile:
- Stable
- Conservative
- Balanced
- Dynamic
- Aggressive
If your representative authorised to request a quotation (hereinafter: requesting party) proceeds on your behalf and the transaction is concluded within the framework of investment advisory services, in addition to performing the suitability test for you, it is also necessary to assess the requesting party's knowledge of and experience with the respective Global Markets service, based on the responses given to the relevant questions in the requesting party's own Suitability or Appropriateness test.
If your order is for a complex or risky investment product and the Bank renders no investment advisory services to your and the deal was initiated by you, the bank will examine your knowledge and experience related to the respective complex product in the form of an Appropriateness Test. If we find that the product selected by you is not appropriate, we will call your attention to this effect on each occasion. Based on our warning, you will have the opportunity to reconsider your order.
The detailed rules of obtaining information prior to concluding a deal are included in Section A.II.7 of the prevailing Business Regulations.
Target market analysis
With a view to ensuring to an even larger degree that the investment products sold reach the clients whose needs and objectives they satisfy, pursuant to the new statutory requirements, we perform a target market analysis. The key objective of the analysis is to determine based on the available information whether the respective product or service is in line with the clients' objectives, financial skills, experience and willingness to take risks, and to ensure that based on the risk/yield attributes the respective product is suitable for our clients.
The details related to the target market analysis are included in the document entitled Supplementary Announcement to Business Regulations on the general securities distribution information and the rules of execution of certain transactions.
Deal execution
OTP Bank's Execution Policy contains all rules that govern the execution of the clients' orders. In line with the “best execution” principle, when executing the order related to the financial instrument, the Bank will take all necessary steps to ensure the best possible outcome when executing an order for the client. The Execution Policy is included in Annex F to the prevailing Business Regulations
You will find the detailed Client Information on MiFID by clicking on
the link below:
Information for Clients on
MiFID
Information prior to concluding a deal
Prior to concluding a deal, the Bank provides clients with detailed information on the contract conditions and on the data related to the financial instrument and services being the subject matter of the contract. For further information prescribed by the law and the availability thereof see the prevailing the Uniform Prior Information and the document entitled "Supplementary announcement on general information related to securities distribution".
You may also obtain more detailed information on certain Global Markets services sold by OTP Bank's Global Markets Department at the following contact points:
- Preliminary Announcement – on certain Global Markets services rendered by Global Markets Department of OTP Bank Plc.'s
- Supplementary Announcement on the amount of the secured claim of the deal’s day, and the degree of the initial margin, the list of eligible collaterals and the acceptance rate thereof, applicable to certain Global Markets Services
- Annex 1 to the Supplementary Announcement on the List of eligible collaterals and the acceptance rates thereof
- Announcement
on the calculation of the variation margin of certain OTC derivative individual
transactions and on the conditions determining the change of the amount of the secured
claim
- Commodity swap
- Cross-Currency Interest rate swaps
- Foreign exchange option
- Foreign exchange swaps
- Dual currency structured investment
- Forward deal in precious metals (gold and silver) transactions
- Forward foreign exchange
- Inflation swap
- Interest rate swaps
- Interest rate options
- Spot securities transaction
- Stock exchange spot transaction
- Stock exchange futures
- Stock exchange options
A catalogue entitled “Investment Folder” is available in all branches engaged in securities distribution, which contains the current business regulations, announcements, lists of conditions, product information sheets, and all important analyses, prospectuses and publications related to OTP Bank's financial instrument products and investment services. The retrospective versions of the relevant documents are available on the website and in the branches of OTP Bank Plc.
If you do not wish to receive the information materials on each occasion in printed form, you may also view them on the bank's website (www.otpbank.hu/mifid and https://www.otpbank.hu/portal/hu/KNV/Befektetesek/MiFID). The detailed conditions of providing information prior to concluding a deal are included in Section A.II.5 of the prevailing Investment Services Business Regulation.