Sunday, 29 July 2012

Are there any restrictions on the type of individual client an Authorised Firm can have?

The DIFC caters mainly for wholesale markets and institutional investors. Therefore, investment firms or banks should ensure that customers meet the criteria set out under the definition of a ‘Client’ in the COB Module of the DFSA Rulebook. A broad description as to who qualifies as a client covers a Person who the Authorised Firm has determined, prior to the establishment of a relationship, is:

(a) An individual who:
(i) has at least $1 million in liquid assets and has provided the Authorised Firm with written confirmation of this fact;
(ii) Appears to the Authorised Firm , after analysis, to have sufficient financial experience and understanding to participate in financial markets; and
(iii) Has consented in writing to being treated as a Client;

(b) An individual who:
(i) Is an Employee of the Authorised Firm ; and
(ii) meets the conditions in (1)
 (a)(ii) and (iii);

(c) An Undertaking which has had, or any of whose Holding Companies or Subsidiaries has had, in the last two years, called up share capital or net assets of at least $5 million. In the case of a limited liability Partnership calculated without deducting loans owing to any of the partners;

(d) a trustee of a trust or pension fund which has had in the last two years assets of at least $5 million calculated by aggregating the value of the cash and Investments forming part of the trust's or fund's assets, but before deducting its liabilities;

(e) a properly constituted government, government agency, central Bank or other national monetary authority of any country or jurisdiction;

(f) a public authority or State Investment body;

(g) a supranational organisation whose Members are either countries, central banks or national monetary authorities;

(h) an Authorised Firm or Regulated Financial Institution ;

(i) an Authorised Market Institution, regulated Exchange or regulated clearing house;

(j) an Undertaking which is a Holding Company or Subsidiary of an undertaking in (h) or (i) with that undertaking’s consent;

(k) a Body Corporate whose Shares are listed or admitted to trading on any regulated Exchange of an IOSCO Member country; or (l) a Restricted Profit Sharing Investment Accounts1 or Special Purpose Vehicle. (2) Any Person who does not meet the criteria in (1) is a Retail Customer.

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