Question about Client categorisation by the fsa

Hi all,

this is my first thread in the forum.
I was just wondering if someone could explain briefly what is the difference between an 'per se professional client' and a 'per se eligible counterparty'.
I get the difference in the lose of security. But what about the kind of company.
I have been reviewed the fsa manual book.
And there is a list of types of institution for both but they are similar (credit institution, investment firm, pension fund,...)
How can we make the difference if for example a specific credit institution is a per se profesional client or per se eligible counterparty.

Many thanks,

M.

best thing to do is to contact the FSA directly, there is a ton of info on their site if you can navigate your way through it all. Alternatively, you can call them or submit the question by email to perimeter guidance for an official reply.

Ok, thanks

Per se professional client

MauroUk said:

Ok, thanks

Click to expand...

Its probably a good idea to do what the other poster said and check this with the FSA directly but here goes:

A per se professional client is required to be authorised or regulated to operate in the finacial markets.

A list would include:

A credit institution
An investment firm
An insurance company
An authorised CIS (collective investment scheme)
A pension fund or its management company
A commodity or commodity derivatives dealer
A local
Any other institutional investor or authorised or regulated institution

best,

MP

Per se Eligible Counterparties

An Investment Firm

A credit institution

An insurance company

A UCITS scheme

A pension fund or management company

An authorised or regulated EEA (european economic area) financial institution.

Account dealers in commodities or commodity dervivatives

A national government (or body dealing with national debt)

A central bank

A supranational organisation (World Bank, IMF etc)

An ELECTIVE Eligible Counterparty may be any per se professional client who opts out of being a per se professional client for the purpose of that transaction.

i.e Any per se professional client (except an institutional investor)

or an elective professional client who asks for elective eligible counterparty status.

NOW are we clear????

cheers and best of luck,

MP

Hi Makka Pakka,

Thanks for your time. But is exactly this extract from the FSA's manual that was confusing me.
Indeed, some clients are well distinctive from the prof or counterparty category.
But some (credit institution, investment firm,..) are appearing in both.
Then I was just wondering how can we make the difference between the categorization of a credit institution that is prof client and one that is counterparty for example.
But I will do as the previous poster suggested, I will contact the FSA.
Anyway thanks again.

M.

MauroUK: how did you get on with this question, as it is bugging me also?? Please report your findings if you wouldnt mind? If you look at the definitions of per se Professional and per se ECP they are (as you have indicated) almost identical:

ECP
(1) an investment firm;
(2) a credit institution;
(3) an insurance company;
(4) a collective investment scheme authorised under the UCITS Directive or its management company;
(5) a pension fund or its management company;
(6) another financial institution authorised or regulated under 2EU2 legislation or the national law of an EEA State;
(7) an undertaking exempted from the application of MiFID under either Article 2(1)(k) (certain own account dealers in commodities or commodity derivatives) or Article 2(1)(l) (locals) of that directive;
(8) a national government or its corresponding office, including a public body that deals with the public debt;
(9) a central bank;
(10) a supranational organisation.

Professional Client
(a) a credit institution;
(b) an investment firm;
(c) any other authorised or regulated financial institution;
(d) an insurance company;
(e) a collective investment scheme or the management company of such a scheme;
(f) a pension fund or the management company of a pension fund;
(g) a commodity or commodity derivatives dealer;
(h) a local;
(i) any other institutional investor;


What do you reckon are the subtle differences between some of these, or is it just that they were written by different people and hence its a terminolgy thing. Clearly the following are identical:
1 and b
2 and a
3 and d
4 and e are similar, excepting the UCITS part
5 and f are almost the same
6 and c are close, but 6 has more restriction on domicile
7 is about locals and own account dealers, which is close to g and h combined but there are subtle differences

The only thing I can see that is different is the header before the list of possible entity types:
Professional: an entity required to be authorised or regulated to operate in the financial markets.
ECP: Each of the following is a per se eligible counterparty (including an entity that is not from an EEA state that is equivalent to any of the following) unless and to the extent it is given a different categorisation under this chapter:

So it would appear that (in the event we are talking about an investment firm / credit institution / insurance company) then they would defo be a PROFESSIONAL if authorised or regulated or an ECP if not; but this contradicts the purpose of ECP which should be for market counterparties, so it would make more sense for ECP list to be authorised or regulated right?

If the client is not regulated or authorised, then (for these three examples) the client could actually be BOTH a Per Se Prof client and a Per Se ECP client ... so which would one would prevail??