Client Categorisation Policy
Trek Labs Europe Ltd. dba Backpack EU
1. Introduction
Backpack EU is a brand name owned and operated by Trek Labs Europe Ltd (formerly FTX EU and FTX EU Ltd, respectively) (hereinafter referred to as the “Company,” “Backpack EU,” “us,” or “we”), a company incorporated in Cyprus with registration number HE 335683 and authorised by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 273/15, with registered address at Aiolou & Panagioti Diomidous 9, Katholiki, 3020 Limassol, Cyprus.
Following the implementation of the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) and in accordance to the provisions of the Investment Services and Activities and Regulated Markets Law of 2017 (Law 87 (I)/2017) (hereinafter called the “Law”), the Company is required to categorise its Clients into one of the following three categories, each with different levels of protection and rights: (a) Retail, (b) Professional or (c) Eligible Counterparty, depending on the information provided by each Client during the account opening process.
2. General Principles
The Company, prior to engaging in business relationship with its potential clients, it shall inform clients about their categorisation, their rights to request a different categorisation and about any limitations to the level of client protection that such change of categorisation would entail. It should be noted that each category entails a different level of client protection - maximum degree of protection is given to Retail Clients while minimum protection is given to Eligible Counterparties.
It is stated that the Company has the right to review the current Policy and if changes need to be made herein, the Company shall accordingly change the categorisation of a Client if this is deemed necessary subject to applicable Regulations.
3. Categorisation Criteria
The categorisation criteria set by the Law (as amended from time to time) are the following:
3.1 Retail Clients
‘Retail Client’ is a client who is not a Professional Client or an Eligible Counterparty.
3.2 Professional Clients
‘Professional Client’ is a client who possesses the experience, knowledge and expertise to make his own investment decisions and properly assess the risks that he incurs.
Certain categories of clients are considered to be Professional Clients on the basis of the provisions of MiFID II and the Law. These are also referred to as “per se” professional clients.
Other clients may be treated as Professional Clients on request provided that the relevant criteria and procedures provided in MiFID II and the Law are satisfied. Those are referred to as “Elective” professional clients.
A. Categories of clients who are considered to be professionals - Per se Professional Clients
The following should all be regarded as professionals in all investment services and activities and financial instruments for the purposes of MiFID II and the Law:
Entities which are required to be authorised or regulated to operate in the financial markets. The list below should be understood as including all authorised entities carrying out the characteristic activities of the entities mentioned: entities authorised by a Member State under a Directive, entities authorised or regulated by a Member State without reference to a Directive and entities authorised or regulated by a non-Member State:
Credit institutions.
Investment firms.
Other authorised or regulated financial institutions.
Insurance companies.
Collective investment schemes and management companies of such schemes.
Pension funds and management companies of such funds.
Commodity and commodity derivatives dealers.
Local enterprises.
Other institutional investors.
Large undertakings meeting two of the following size requirements on a company basis:
balance sheet total of minimum EUR 20,000,000;
net turnover of at least EUR 40,000,000;
own funds of at least EUR 2,000,000.
National and regional governments, public bodies that manage public debt, Central Banks, international and supranational institutions such as the World Bank, the IMF, the ECB, the EIB and other similar international organisations.
Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions.
The entities mentioned above are considered to be professionals. However, they are allowed to request non-professional treatment and we may agree to provide a higher level of protection.
Where a Client is an undertaking referred to above, the Company must inform the Client, prior to any provision of services that, on the basis of the information available to us, the Client is deemed to be a Professional Client, and will be treated as such unless we and the Client agree otherwise.
The Company must inform the Client that he may request a variation of the terms of the agreement in order to secure a higher degree of protection.
It is the responsibility of the Client, considered to be a Professional Client, to ask for a higher level of protection when it deems it is unable to properly assess or manage the risk involved.
This higher level of protection will be provided when a Client who is considered to be a Professional Client, enters into a written agreement with us to the effect that it shall not be treated as a Professional Client for the purposes of the applicable conduct of business regime. Such agreement will specify whether this applies to one or more particular services or transactions, or to one or more types of products or transactions.
B. Clients who may be treated as professionals on request -“Elective” Professional Clients
Clients, other than those mentioned above[EG2] , including public sector bodies, local public authorities, municipalities and private individual investors, may also be allowed to waive some of the protections afforded by the conduct of business rules.
The Company is allowed to treat any of the above-mentioned Clients as Professional Clients provided that the relevant criteria and procedure mentioned below are fulfilled. These Clients will not, however, be presumed to possess market knowledge and experience comparable to that of the categories listed in paragraph I [EG3] above.
3.3 Eligible Counterparties
‘Eligible Counterparty’ is any of the following entities to which a credit institution or an investment firm provides the services of reception and transmission of orders on behalf of clients and/or execution of such orders and/or dealing on own account: Cyprus Investment Firms and remaining investment firms, credit institutions, insurance undertakings, UCITS and their management companies, pension funds and their management companies and other financial institutions authorised by a Member State or regulated under the laws of Cyprus or under the European Union law, national governments and their corresponding offices including public bodies that deal with public debt at national level, central banks and supranational organisations.
4. Request for Different Categorisation
The following requests may be submitted to the Company:
Retail Clients can request to be categorized and treated as Professional Clients in which case they will be afforded a lower level of protection.
Professional Clients can request to be categorized and treated as Retail Clients in which case they will be afforded a higher level of protection.
Eligible Counterparties can request to be categorized and treated as either Retail or Professional Clients in which case they will be afforded a higher level of protection.
It is noted that the Company will assess specified quantitative and qualitative criteria in accordance with the provisions of the Law and the change of categorization will depend on its absolute discretion. In this respect, the Company reserves the right to decline any of the above requests for different categorisation.
5. Procedure for Change of Categorisation
5.1 Retail Clients who may be treated as professional clients on request (i.e. Elective Professional Clients)
Clients who have been initially classified by the Company as Retail Clients are allowed to request to be treated as Professional Clients, if an adequate assessment of the expertise, experience and knowledge of the client undertaken by the Company gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making investing decisions and understanding the risks involved.
An example of the assessment of expertise and knowledge with regards to entities licensed under directives in the financial field could be the fitness test applied to the managers and directors of such entities. In the case of small entities, the person subject to that assessment shall be the person authorised to carry out transactions on behalf of the entity.
In the course of that assessment, as a minimum, two of the following criteria shall be satisfied:
The client has carried out transactions, in significant size, at an average frequency of 10 per quarter over the previous four quarters.
The size of the client’s financial instrument portfolio exceeds EUR 500.000.
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.
Those clients may waive the benefit of the detailed rules of business conduct only where the following procedure is followed:
they must state in writing to the Company that they wish to be treated as a professional client, either generally or in respect of a particular investment service or transaction, or type of transaction or product;
the Company must give them a clear written warning of the protections and investor compensation rights they may lose;
they must state in writing, in a separate document from the contract, that they are aware of the consequences of losing such protections.
Before deciding to accept any request for waiver, the Company must take all reasonable steps to ensure that the client requesting to be treated as a professional client meets the relevant requirements stated above. An elective professional client should not be presumed to possess market knowledge and experience comparable to a per se professional client.
Professional clients are responsible for keeping the Company informed about any change, which could affect their current categorisation.
Should the Company become aware however that the client no longer fulfils the initial conditions, which made him/her eligible for a professional treatment, the Company shall take appropriate action. Where the appropriate action involves re-categorising that client as a Retail Client, the Company shall notify that client of its new categorization.
5.2 Professional Clients who may be treated as Retail Client on request
A Professional Client is allowed to request non-professional treatment and the Company may agree to provide a higher level of protection. In this respect, the Company notifies its clients, prior to the provision of services, in a written form, of their option to be classified as retail clients and secure a higher degree of protection. The Company proceeds in this action, in order to offer a uniform level of protection to all of its clients.
The higher level of protection will be provided by the Company when the client enters into a written agreement with the Company, to the effect that it shall not be treated as a professional. Such agreement shall specify whether this applies to one or more particular services or transactions or to one or more types of product or transaction.
It is the responsibility of the client who is classified as a professional client to ask for a higher level of protection when he is not in a position to properly assess and manage the risks involved in the transactions.
It should be pointed out to all the clients that Professional Clients are not covered by the Investor Compensation Fund for clients of investment firms.
The Company shall be entitled to assume that a Professional Client [EG4] has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transactions or product, for which the client is classified as a Professional Client and also that the client is able financially to bear any related investment risks.
The Company is not required to prioritize the overall costs of a transaction as being the most important factor, when providing Professional Clients with best execution.
5.3 Eligible Counterparties who may be treated as Retail or Professional Clients on request
An Eligible Counterparty is allowed to request, either on a general form or on a trade-by-trade basis, treatment as client whose business with the Company is subject to Sections 25, 26, 28 and 29 of the Law 87(I)/2017 and the Company may agree to provide a higher level of protection. In this respect, the Company notifies its clients, prior to the provision of services, in a written form, of their option to request such treatment.
The relevant request to the Company must be made in writing and shall indicate whether the treatment as retail client or professional client refers to one or more investment services or transactions, or one or more types of transaction or product.
Where an Eligible Counterparty requests treatment as a client whose business with an investment firm is subject to Sections 25, 26, 28 and 29 of the Law 87(I)/2017, but does not expressly request treatment as a Retail Client, the Company shall treat that Eligible Counterparty as a Professional Client.
Where the Eligible Counterparty expressly requests treatment as a Retail Client, the higher level of protection will be provided by the Company when the client enters into a written agreement with the Company, to the effect that it shall not be treated as a Professional. Such agreement shall specify whether this applies to one or more particular services or transactions or to one or more types of product or transaction. It is the responsibility of the client to ask for a higher level of protection when it deems unable to properly assess or manage the risks involved.
6. Protection Rights for Retail Clients
Where the Company treats you as a Retail Client, you will be entitled to more protections under the law than if you were to be categorised as a Professional Client.
In summary, the additional protections Retail Clients are entitled to are as follows (the list may not be exhaustive):
A Retail Client will be given more information disclosures with regards to the Company, its services, its financial instruments and their performance, the nature and risks of financial instruments, its costs, commissions, fees and charges and the safeguarding of Client financial instruments and Client funds, including summary details of any relevant investor compensation or deposit guarantee scheme, as applicable.
Under the law, where the Company provides investment services other than investment advice (in the form of personal recommendations) or discretionary portfolio management, the Company shall ask a Retail Client to provide information regarding his knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded so as to enable us to assess whether the investment service or product envisaged is appropriate for the Client. In case the Company considers, on the basis of the information received that the product or service is not appropriate to a Retail Client, it shall warn the Client accordingly. Please note that the Company is not required to assess appropriateness in certain cases specified by law.
The Company shall be entitled to assume that a Professional Client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transactions or products, for which the Client is classified as a Professional Client. Consequently, and unlike the situation with a Retail Client, the Company should not generally need to obtain additional information from the Client for the purposes of the assessment of appropriateness for those products and services for which they have been classified as a Professional Client.
When executing orders, investment firms (such as the Company) and credit institutions providing investment services must take all reasonable steps to achieve what is called ‘best execution’ for their Client orders (i.e. obtain the best possible result for their Clients). Where the Company executes an order on behalf of a Retail Client, the best possible result shall be determined in terms of the total consideration, representing the price of the financial instrument and the costs related to execution, which shall include all expenses incurred by the Client which are directly related to the execution of the order, including execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.
When providing Professional Clients with best execution the Company is not required to prioritise the overall costs of the transaction as being the most important factor in achieving best execution for them. The Company must provide a retail client with a summary of its order execution policy (focused on the total cost the client incurs). This summary must provide a link to the most recent execution quality data for each execution venue listed in the Policy. The Company is not obliged to provide a summary that complies with these specific requirements to professional clients. Information on the Company’s order handling and execution policy is, however, required to be provided to professional clients as well.
The Company must inform Retail Clients of material difficulties relevant to the proper carrying out of their order(s) promptly upon becoming aware of the difficulty.
The Company is required to provide Retail Clients with more information than Professional Clients as regards the execution of their orders.
The Company is obliged to enter into a written basic agreement with the retail Client, setting out the essential rights and obligation of both parties.
Under the law we are not allowed to enter into title transfer collateral arrangements with Retail Clients whereas in the case of Professional Clients’ money and financial instruments title transfer collateral arrangements are allowed. Title transfer collateral arrangements means the change of title ownership of clients’ money and financial instruments to be used as collateral against existing or future obligations. Money and financial instruments that are subject to title transfer will not be segregated from our assets and thus you are assuming credit risk against us.
Only Retail Clients may be entitled to compensation from the Investor Compensation Fund in case of inability of the Company to repay its obligations.
Professional clients are not protected by the Company against any minus balance in their trading account, which should be covered by them, however, retail clients can never lose more than the total sum invested for trading. There can be no residual loss or obligation to provide additional funds beyond those in the retail clients’ trading account.
7. Record – Keeping
The Company must keep records of each notice provided and each agreement entered into in accordance with the present Policy.
The Company shall keep records in relation to each client in relation to (a) the categorization established for the client, including sufficient information to support that categorization; (b) evidence of despatch to the client of any notice required under this Policy and a copy of the actual notice provided; and (c) a copy of any agreement entered into with the client under this Policy.
Risk warning: Our products are traded on margin and carry a high level of risk and it is possible to lose all of your capital. Please consider our Risk Disclosure.
Legal: This website is operated by Trek Labs Europe Ltd (formerly FTX EU Ltd), registration number HE335683, with registered address at Aiolou & Panagioti Diomidous 9, Katholiki, 3020 Limassol, Cyprus. Trek Labs Europe Ltd (formerly FTX EU Ltd) is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license number 273/15.
The company operates through https://eu.backpack.exchange (formerly http://www.ftx.com/eu and https://ftxeurope.eu) and uses the trade name Backpack EU (formerly FTX EU).
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