Decree No. 308 / 2017 Coll.
Decree on more detailed arrangements for the provision of investment services
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Effective from 03.01.2018
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308
DECLARATION
of 11 September 2017
on more detailed arrangements for the provision of investment services
Pursuant to Article 199 (2) of Act No. 256 / 2004 Coll., on Capital Market Enterprise, as amended by Act No. 204 / 2017 Coll., ("the Act '), the Czech National Bank provides for the implementation of § 12f (b) and (d), § 13 (3), § 15 (7) and § 32 (7) of the Act:
GENERAL PROVISIONS
Subject matter
This decree implements the relevant provisions of the European Union1) and provides for:
(a) requirements for the organisational arrangements of the securities dealer in relation to the protection of the customer's assets;
(b) more detailed requirements for a securities dealer when creating, offering or distributing investment instruments;
(c) the conditions under which the research provided to the securities dealer is not considered an incentive;
(d) the conditions under which the incentive is deemed to contribute to improving the quality of the service provided;
(e) the manner in which the securities dealer demonstrates an improvement in the quality of the service provided;
(f) more detailed requirements for the transfer of the received incentive in the form of remuneration or other cash advantage to the customer;
(g) more detailed requirements for informing customers of incentives;
(h) the conditions under which the advantage can be considered as a minor non-cash advantage;
(i) the manner in which the securities dealer's diary is kept and the formalities; and
(j) the formalities and manner in which the investment intermediary's records are kept.
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[K § 12f (d) of the Act]
Registration of customer's property
(1) The securities dealer in the internal registration system ensures the consistent and unambiguous identification of the investment instruments and funds of each customer in such a way that he can at any time distinguish the assets held for one customer from those held for other customers and from his own assets. The internal records shall also include records of the account in which the individual investment vehicles and funds of each customer are held with a third party.
(2) Securities dealer
(a) check the compliance of the data in its internal records with the actual state of the customer's funds and investment instruments held by a third party and remove the irregularities detected (hereinafter referred to as "recovery") at least once a month;
(b) it has an obligation to carry out recovery
1. on the basis of a document provided by a third party,
2. in a proven and documented manner, showing the course and outcome of the recovery;
(c) lay down rules for the monitoring of compliance with obligations relating to recovery and the frequency and method of recovery.
(3) Furthermore, the securities dealer shall introduce effective organisational measures that will minimise the risk of loss or impairment of the customer's assets or rights associated with such property as a result of misuse of the customer's assets, fraud, maladministration, lack of records or negligence.
(4) Where the customer's assets are located in a State whose legislation does not allow the requirements of paragraphs 1, 2 or 3, § 3 (1) (c), § 3 (2) or § 4 (4) to be met, the securities dealer shall take measures as close as possible to those of paragraphs 1, 2 or 3, § 3 (1) (c), § 3 (2) or § 4 (4). Where equivalent measures are taken, the securities dealer shall inform his customers that they shall not be subject to the provisions laid down in the law and this decree, but to equivalent measures.
(5) A securities dealer shall ensure that the right of hedge, lien or netting against investment instruments or customer funds does not apply, allowing a third party to dispose of investment instruments or client funds in order to recover debts that are not related to the client or the provision of services to the client. This shall not apply where required by the law of the third State in which the client's investment vehicles or funds are located. Where, under the law of a third State, a securities dealer is required to enter into contracts which establish the security law, lien or netting law, he shall inform the customer and indicate the risks associated with such arrangements. Where a securities dealer has negotiated a security right, a lien or a right to set off against investment instruments or customer funds, or where the securities dealer has been informed that such rights have been negotiated or otherwise arose, those rights shall be recorded in the customer's contracts and in the accounts of the securities dealer in order to make the customer's assets apparent and separable and related ownership law, in particular in the event of the bankruptcy of the securities dealer.
(6) At the request of the Czech National Bank or the Insolvency Trustee, the securities dealer shall immediately provide information on investment instruments and customer funds, including information on:
(a) accounting and internal records of investment vehicles and customer funds;
(b) accounts with third parties in which the client's investment vehicles are held pursuant to Article 3 and contracts with such persons;
(c) the accounts on which the customer's funds are deposited pursuant to § 4 and the contracts with the persons who keep them;
(d) third persons responsible for carrying out activities related to the registration and storage of the customer's assets;
(e) key persons who directly carry out or are responsible for the activities of a securities dealer in connection with the protection of customers' assets; and
(f) contracts relevant to the determination of the customer's property ownership right.
Storage of client investment instruments
(1) A securities dealer may deposit client investment vehicles in an account with a third party if:
(a) taking into account, within the framework of its obligation to act with professional care, the experience of that person, his reputation in the financial market and the legal requirements governing the handling of client investment instruments with a third party and which could adversely affect the rights of the client;
(b) the imposition of client investment instruments in a third State is subject to regulation and supervision, except where:
1. the nature of investment vehicles or investment services associated with such investment vehicles requires them to be deposited with a person in a third State where the deposit of investment vehicles is not subject to regulation and supervision; or
2. A professional customer shall request in writing a securities dealer to deposit his investment vehicles with a person in that State,
(c) ensure the separation of the client's investment instruments in third-party records from the investment instruments of the securities dealer and the persons with whom they are deposited by means of nominally identified accounts or other comparable means.
(2) The securities dealer verifies compliance with the requirements set for the deposit of client investment instruments in an account with a third party when selecting a third party, negotiating services and during their provision.
(3) The requirements laid down in paragraph 1 (b) shall apply even if a third party entrusts another person with the performance of an activity relating to the holding and custody of investment vehicles.
Depositing of customer funds
(1) A securities dealer may only deposit the customer's funds for:
(a) central banks;
(b) credit institutions authorised to operate in a Member State of the European Union;
(c) foreign banks authorised to operate in a Member State of the European Union; or
(d) an MMF subject to supervision or authorisation to operate in a Member State of the European Union; and
1. its main objective is to preserve the net value of the assets in parity (without income) or at the amount of the investment plus revenue;
2. in accordance with the objective set out in point 1, invest exclusively in high-quality money market instruments with a maturity or residual maturity not exceeding 397 days and with a weighted average maturity of 60 days or with a regularly adjusted yield consistent with that maturity and with a weighted average maturity not exceeding 60 days;
3. which the manager of an MMF considers to be of high quality on the basis of an assessment of the credit quality of money market instruments; and
4. Provides liquidity by settlement on the same or the following day.
(2) The objectives referred to in paragraph 1 (d) (1) may also be achieved by additional investment in deposits with credit institutions. Where a credit rating agency registered with the European Securities and Markets Authority that oversees it has provided a rating for an MMF instrument, the MMF's manager shall take into account, inter alia, that credit assessment when assessing paragraph 1 (d) (3).
(3) Where a securities dealer imposes customer money on a person referred to in points (b), (c) or (d) of paragraph 1, he shall proceed with prudence and professional care, taking into account the experience of that person, his reputation in the financial market and the legal requirements and market practices that govern the handling of the customer's money with that person and which could adversely affect the rights of the customer and the need for the diversification of funds. The first securities dealer shall verify compliance with the assumptions set out in the first sentence when choosing a person referred to in paragraph 1 (b), (c) or (d), when negotiating the services and during their provision.
(4) The securities dealer shall ensure that the funds of the customer and the securities dealer are deposited with the person referred to in paragraph 1 in separate accounts. The funds of a customer referred to in paragraph 1 shall not be deposits received in connection with the activities of a bank which is also a securities dealer.
(5) A securities dealer shall only deposit the customer's money into the money market fund referred to in paragraph 1 (d) if the customer agrees. In so doing, the trader shall inform the customer that the funds placed in the MMF referred to in paragraph 1 (d) shall not be held in accordance with the requirements for deposit of the customer's funds laid down in this Order.
(6) Where a person referred to in paragraph 1 (b), (c) or (d) is part of the same business group as a securities dealer, the securities dealer may impose a maximum of 20% of the value of the customer's funds on persons who are members of such a group; that maximum limit does not apply if that limit would not be proportionate to the nature, scale and complexity of the activities of the securities dealer, the security offered by those persons or the low balance of the customer's assets. The securities dealer regularly carries out an assessment of the need to apply the limit and, in the event of a change, informs the Czech National Bank of its original and revised assessment.
Use of client investment instruments
(1) A securities dealer may use the client's investment vehicles for transactions on his own account or for the account of another person or another customer, provided that the customer has previously and explicitly agreed in writing to use the investment instruments under specified conditions.
(2) A securities dealer may use client investment vehicles on a customer account held by a third party for trading on its own account or on the account of another person under the conditions set out in paragraph 1 only if:
(a) any customer whose investment instrument is held in a customer account has given its consent in accordance with paragraph 1; or
(b) the securities dealer shall have a system and control mechanisms to ensure that only the investment vehicles of the client which have given the consent in accordance with paragraph 1 can be used in this way.
(3) For the purposes of the proper allocation of losses from transactions referred to in paragraph 1 or 2, the stock trader's records shall include:
(a) any customer with the consent of whom investment vehicles have been used; and
(b) the number of investment vehicles used belonging to that customer.
(4) The securities dealer shall establish, maintain and apply procedures and measures to prevent the unauthorised use of the client's investment instruments on his own account or on behalf of another person, in particular:
(a) by concluding contracts with customers for measures to be taken by a securities dealer unless the customer has sufficient reserves in his account at the settlement date, such as the borrowing of the corresponding securities on behalf of the customer or the cancellation of the position without the order of the customer;
(b) by continuously assessing its ability to meet its obligations at the settlement date and, where this is not possible, by implementing corrective measures;
(c) close monitoring of undelivered investment vehicles at or after the settlement date and without delay by requiring them to be delivered.
(5) The securities dealer shall ensure that the borrower of the client's investment instruments provides adequate collateral. A securities dealer shall continuously monitor the adequacy of such collateral and take the necessary measures to ensure that the collateral is sufficient in relation to the amount of the client's investment instruments.
Financial collateral arrangements with ownership transfer
(1) The securities dealer shall properly and demonstrably assess the use of financial collateral arrangements with the transfer of ownership in the context of the relationship between the customer's obligations to the securities dealer and the customer's assets to which the securities dealer applies those agreements.
(2) In assessing and demonstrating the appropriateness of the application of a financial collateral arrangement with the transfer of ownership, the securities dealer shall take into account:
(a) the link between the customer's obligations to the securities dealer and the use of the financial collateral arrangement with the transfer of ownership is not very weak, including whether the likelihood of the customer's obligation to the securities dealer is small or negligible;
(b) the amount of the client's investment instruments or funds subject to an agreement on financial collateral with a transfer of ownership does not exceed the customer's obligations or is not even unlimited if the customer has an obligation to the securities dealer; and
(c) financial collateral arrangements with ownership transfer shall be subject to all investment instruments or customer funds regardless of the customer's obligations towards the dealer.
(3) When using a financial collateral arrangement with a transfer of ownership, the securities dealer shall inform the professional client and the eligible counterparty of the risks of such an agreement and its consequences for the investment vehicles and customer funds.
Management system in the field of protection of customer assets
The securities dealer shall designate at least one official with sufficient expertise and competence to check compliance with the obligations of the securities dealer in the field of protection of customer assets. Furthermore, the securities dealer shall determine whether that worker will only carry on this activity or may carry on this activity effectively in addition to the exercise of other activities of his or her own.
EQUIPMENT AND OFFICIAL INVESTMENT
[K § 12f (b) of the Act]
Securities dealer creating an investment instrument offered to customers
(1) A securities dealer making an investment instrument offered to customers shall apply the requirements set out in paragraphs 2 to 6 and paragraphs 9 and 10 in an appropriate and proportionate manner, taking into account the nature of the investment instrument, the investment service and the target market of the investment instrument.
(2) In particular, the issuer of securities forming investment vehicles shall ensure that the design of the investment instrument, including its characteristics, does not harm end-customers and does not jeopardise the stability and functioning of the financial market by enabling the issuer of securities to reduce or exclude its own risks or exposures associated with the underlying assets of the investment vehicle, if the securities dealer already holds those underlying assets for his own account.
(3) A securities dealer assesses potential conflicts of interest whenever he creates an investment instrument. In particular, it shall assess whether the investment instrument does not create a situation that could harm customers if customers take the opposite position to that originally held by the securities dealer or intend to hold it after the sale of the investment instrument.
(4) Prior to the decision on the placing on the market of an investment instrument, the securities dealer will assess whether the investment instrument poses a threat to the stability and functioning of the financial market.
(5) The securities dealer shall ensure that the personnel involved in the creation of investment vehicles have sufficient expertise to understand the characteristics of such investment vehicles and the risks associated with them.
(6) The securities dealer shall ensure that:
(a) that its management body has effective control over the system of the creation and marketing of investment instruments; and
(b) that reports on compliance with the legal obligations assigned to the management body include information on investment instruments that the securities dealer creates, including information on the sales strategy.
(1) The securities dealer shall ensure that the person carrying out the ongoing monitoring of compliance with legal obligations (hereinafter referred to as compliance) with the securities dealer regularly checks the investment instrument creation system in order to identify the risk that the securities dealer fails to comply with the obligations under Sections 8 to 10.
(2) Where a securities dealer cooperates to create an investment instrument with other persons, including persons not authorised by the supervisory authority of a Member State of the European Union for the provision of investment services, or with foreign persons having their registered office or registered office in a State which is not a Member State of the European Union, the securities dealer shall, by written agreement with those persons, amend the mutual obligations.
(3) The securities dealer shall identify the target market for each investment instrument and specify the type of customers whose needs, characteristics and objectives, including objectives relating to sustainability (3), are compatible, while identifying the type of customers whose needs, characteristics and objectives are not compatible with the investment instrument; However, such incompatibility cannot be based on sustainability factors in accordance with Article 2 (24) of Regulation (EU) 2019 / 20884 of the European Parliament and of the Council ("sustainability factor '). If more than one securities dealer cooperates to create an investment instrument, it is sufficient to identify only one target market.
(4) A securities dealer creating an investment instrument that is distributed through another securities dealer shall determine with which customer needs and characteristics the investment instrument is compatible, on the basis of his theoretical knowledge and experience with that investment instrument or similar investment instruments and on the basis of the knowledge of financial markets and needs, characteristics and objectives of end-customers.
(5) The securities dealer shall carry out an analysis of the scenarios for the investment instrument he creates, assessing the risks to end-customers of the investment instrument and the circumstances in which such results may arise, assessing the investment instrument under unfavourable conditions, in particular:
(a) deterioration of the market environment;
(b) a situation in which the maker of an investment instrument or a third party involved in the creation or functioning of an investment instrument goes bankrupt or other counterparty risks arise;
(c) the investment instrument is not commercially successful; or
(d) the demand for this investment instrument is much higher than expected, which will exert pressure on the resources of the trader or the underlying market.
(6) The securities dealer shall determine whether the investment instrument meets the identified needs, characteristics and objectives of the target market, including an assessment of whether:
(a) the risk-benefit ratio of this investment instrument is consistent with the target market;
(b) the potential sustainability factors of this investment instrument correspond to the target market; and
(c) the design of the investment instrument is based on the characteristics that are in the interests of the client and not on a business model that provides for profit based on poor business performance of the client.
(1) The securities dealer shall assess the structure of the remuneration, in particular:
(a) the costs and remuneration of the investment instrument are compatible with the needs, objectives and characteristics of the target market;
(b) the remuneration does not degrade the expected return on the investment instrument, in particular where the cost and remuneration are equal to almost all expected tax advantage associated with the investment instrument or exceed or exclude it; and
(c) the remuneration structure of the investment instrument is reasonably transparent and understandable for the target market, without including any hidden remuneration.
(2) The securities dealer shall provide information on the investment instrument to the person by which it offers or distributes the investment instrument (the investment instrument distributor). The information shall include data on the appropriate distribution networks for the investment instrument, the process of approving the investment instrument and the evaluation of the target market. The information shall be sufficient to enable the distributor of the investment instrument to understand the characteristics of the investment instrument and correctly offer or distribute it. The sustainability factors of the investment instrument shall be presented by the securities dealer in a transparent manner in order to provide information to the distributor of the investment instrument in order to take due account of all the sustainability objectives of the client (3).
(3) The securities dealer shall regularly evaluate the investment instrument that it creates, taking into account all events that could significantly affect the potential risk to the identified target market. A securities dealer shall consider whether the investment instrument continues to meet the needs, characteristics and objectives, including sustainability objectives (3), the target market and whether it is distributed to the target market, or to customers whose needs, characteristics and objectives the investment instrument is not compatible.
(4) A securities dealer shall evaluate the investment instrument before any further issue or remarketing if it is aware of an event that could significantly affect the potential risk to investors and, at regular intervals, assess whether the investment instrument operates as expected. The securities dealer shall determine the frequency of the assessment of the investment instrument by material factors, including factors related to the complexity or innovativeness of the investment strategies monitored.
(5) Furthermore, the securities dealer shall identify decisive events that could affect the potential risk or expected return of the investment instrument, in particular:
(a) exceeding the limit affecting the return profile of an investment instrument; or
(b) the solvency of certain issuers whose underlying securities or guarantees may affect the performance of the investment instrument.
(6) In the event of an event referred to in paragraph 4 or 5, the securities dealer shall take appropriate measures to:
(a) providing all relevant information on the event and its consequences for the investment instrument to the client or distributor of the investment instrument;
(b) a change in the process of approving investment vehicles;
(c) the cessation of the further issue of the investment instrument;
(d) the amendment of the investment instrument in order not to negotiate unfair contractual terms;
(e) the change in the distribution network through which investment vehicles are offered if the securities dealer becomes aware that the investment vehicle is not offered as expected;
(f) contacting the distributor of the investment instrument to discuss the modification of the distribution process;
(g) termination of a contractual relationship with an investment instrument distributor; or
h) Informing the Czech National Bank.
Securities dealer offering an investment instrument
(1) When deciding on an investment instrument itself or another securities dealer and the investment service it intends to offer or recommend to customers, the securities dealer shall comply in an appropriate and proportionate manner with the requirements laid down in paragraphs 2 to 6 and paragraphs 12 and 13, taking into account the nature of the investment instrument, the investment service and the target market. The securities dealer also complies with the requirements of European Union law in the field of financial market activities when offering or recommending an investment instrument created by a person who is not subject to European Union law in financial market activities. In this process, the securities dealer shall have an agreement to ensure that he / she receives sufficient information about the investment instrument from that maker. A securities dealer shall establish a target market for an investment instrument even if the instrument maker has not defined the target market.
(2) The securities dealer shall establish, maintain and implement an appropriate marketing system for investment instruments ensuring that the investment instrument and the investment service which he intends to offer or recommend are compatible with the needs, characteristics and objectives, including objectives relating to sustainability (3), the identified target market and the intended sales strategy are consistent with the identified target market. A securities dealer shall properly identify and assess the characteristics and needs of the customers it intends to focus on in order to ensure that customers' interests are not jeopardised as a result of commercial or financial pressures. In this process, the securities dealer shall also identify all groups of customers whose needs, characteristics and objectives are incompatible with the investment instrument or investment service concerned; However, sustainability factors do not apply to the assessment of incompatibility.
(3) The securities dealer shall ensure that he receives from the instrument maker the appropriate and reliable information necessary to understand the characteristics of the investment instrument which he intends to offer or recommend in order to ensure that the investment instrument is distributed in accordance with the needs, characteristics and objectives of the identified target market.
(4) A securities dealer may use publicly available information which is clear and reliable and provided to meet regulatory requirements such as disclosure requirements under Part Four and Part Nine of the Act to fulfil the obligation under paragraph 3. Where publicly available information cannot be used, the securities dealer shall obtain the required information from the instrument maker or its agent. In the case of an investment instrument distributed on the primary and secondary markets, the requirement to obtain information shall apply mutatis mutandis, depending on the degree of availability of publicly available information and the complexity of the investment instrument.
(5) The securities dealer shall use the information obtained from the instrument maker and the information about its customers to identify the target market and sales strategy. Where a securities dealer acts simultaneously as the maker of an investment instrument and a distributor of an investment instrument, it is sufficient to assess only one target market.
(6) When deciding on the range of investment vehicles and investment services it offers or recommends and on target markets, the securities dealer complies with the requirements under European Union law in the field of financial market activities, including the requirements for publication, assessment of suitability or adequacy, incentives and proper management of conflicts of interest. In doing so, it is particularly careful when it comes to offering or recommending new investment vehicles or when the services it provides are modified.
(1) The securities dealer shall continuously verify and regularly evaluate his investment-instrument marketing system in order to ensure that it is still adequate and appropriate for its purpose and, where necessary, to remedy it without undue delay.
(2) The securities dealer regularly evaluates the investment instrument offered or recommended by it and the investment service it provides, taking into account all events that could significantly affect the potential risk to the identified target market. A securities dealer shall always assess whether the investment instrument or investment service still meets the needs, characteristics and objectives, including objectives relating to sustainability (3), the target market identified and whether the intended sales strategy is still appropriate. Where a securities dealer finds that the target market for a specific investment instrument or investment service has been misidentified or that the investment instrument or investment service no longer complies with the identified target market, in particular where the investment instrument has become illiquid or highly volatile as a result of market changes, it shall amend the target market or update the marketing system for investment instruments.
(3) The securities dealer shall ensure that the compliance officer with the securities dealer monitors developments and regularly checks the system for the marketing of investment vehicles and its significant changes in order to identify any risk that the securities dealer fails to comply with the obligations under Sections 11 to 13.
(4) A securities dealer shall ensure that its personnel have sufficient expertise to understand the characteristics of the investment instrument offered or recommended, the risks associated with it and the services provided, as well as the identified target market.
(5) A securities dealer shall ensure that its management body has effective control over the marketing system of investment vehicles in order to determine the scope of the investment instruments offered or recommended by the securities dealer and the investment services provided by the target markets. The securities dealer shall ensure that compliance reports addressed to its management body include information on the investment instrument offered or recommended by it and the services it provides.
(6) The distributor of the investment instrument provides the maker of the investment instrument with information on the sale and, where appropriate, the results of its assessment of the investment instrument.
(1) Where different securities dealers cooperate in the distribution of an investment instrument or investment service, those securities dealers shall ensure that a securities dealer having a direct relationship to the customer is ultimately liable for the performance of its obligations in the field of the marketing of investment instruments referred to in paragraphs 11 and 12.
(2) A securities dealer that mediates the distribution of an investment instrument,
(a) ensure that the relevant information on the investment instrument is transmitted from the investment instrument maker to the distributor of the investment instrument that is directly related to the client;
(b) allow the PRIIP manufacturer to receive information on the sale of the investment vehicle if it requires it to fulfil its own investment instrument management obligations; and
(c) where appropriate, apply the obligations of the maker of the investment instrument in the management of the investment vehicles for the services it provides.
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(Paragraph 15 (7) of the Law)
Rules for receiving and providing incentives
(1) The incentive is intended to improve the quality of the service provided to the customer if all of the following conditions are met:
(a) the incentive is linked to the provision of an additional or higher-level service to the customer, at least proportional to the value of the incentive received, in particular:
1. by providing non-independent investment advice on a wide range of appropriate investment instruments, including the corresponding number of third party providers' investment instruments that do not have close links with the securities dealer and ensuring access to such investment instruments;
2. by providing non-independent investment advice in combination with either the offer to the customer that it will be assessed at least once a year whether the investment vehicles in which the client has invested continue to be suitable or with another continuous service likely to benefit the client, in particular by advising on the proposed optimal distribution of the client's assets; or
3. providing access at a competitive price to a wide range of investment vehicles that are likely to meet the needs of the customer, including the corresponding number of third-party investment vehicle providers that do not have close links with the securities dealer, together with either the provision of added-value items such as objective information sources that help the client make investment decisions or allow him to monitor, model and adjust the range of investment vehicles in which he has invested, or the provision of regular performance, cost and remuneration reports relating to the investment instruments;
(b) the incentive is not directly beneficial to the receiving securities dealer, its shareholders, associates or employees, unless it confers a material advantage on the customer;
(c) the incentive is justified by the provision of an ongoing advantage to the customer in relation to the ongoing incentive.
(2) An incentive is not considered admissible if, as a result, the provision of investment services to the customer is biased or distorted.
(3) The securities dealer shall comply with the requirements laid down in paragraphs 1 and 2 on an ongoing basis as long as he provides or receives an incentive.
(4) A securities dealer shall keep a record of the fact that the incentive received or provided by him serves to improve the quality of the investment service provided to the customer by:
(a) maintain an internal list of all incentives received from a third party in connection with the provision of investment services;
(b) records how the incentives provided or received by the securities dealer or the incentives it intends to use increase the quality of the services provided to customers; and
(c) keep records of the measures taken to ensure that the incentive is not contrary to the obligation of the securities dealer to act in a qualified, fair and fair manner and in the best interests of the customer.
(5) The securities dealer shall communicate to the customer information on incentives received from third parties or provided to third parties prior to the provision of the investment service in accordance with Article 15e (1) and (2) of the Act. A minor non-monetary benefit can be described in general by a securities dealer, other non-monetary benefits appreciated and communicated separately. If the securities dealer has not been able to identify in advance the amount of the incentive to be received or provided and instead has communicated to the customer the method of calculating that amount, it shall subsequently provide its customers with information on the exact amount of payment or benefit received or provided. Where a securities dealer receives incentives on an ongoing basis in relation to investment services that it provides to customers, it shall inform each of its clients individually of the actual amount of payments or benefits it has received in relation to it at least once a year.
(6) When complying with the requirements laid down in paragraph 5, the securities dealer shall take into account the rules governing costs and rewards laid down in Article 15d (3) of the Act and Article 50 of the directly applicable European Commission Regulation on the organisational requirements and operational conditions of investment firms (2). Where multiple securities dealers are involved in the distribution network, each securities dealer providing an investment service shall fulfil its obligations to provide information to customers.
Incentives in relation to independent investment advice or management of client's assets
(1) A securities dealer who provides the main investment service pursuant to Article 4 (2) (e) of the Act independently or the main investment service pursuant to Article 4 (2) (d) of the Act shall, in full, transfer to customers any incentives provided by a third party or a person acting on behalf of a third party in relation to the services provided to that customer, without undue delay upon receipt.
(2) The securities dealer referred to in paragraph 1 shall inform the customer of the incentives he has transferred to him, in particular by means of regular reports.
Minor non-monetary benefits
(1) The following advantages shall be considered as minor non-monetary benefits if they are justified and proportionate and have an extent such that they are not likely to affect the behaviour of the securities dealer in a way that would harm the interests of the customer concerned:
(a) information or documents relating to an investment instrument or investment service that is of a general nature or adapted to the requirements of the person concerned and reflects the situation of the client;
(b) a document from a third party that has been awarded and paid by an issuer which is a legal person or a potential issuer in order to promote the new issue of that issuer, or in the event that the issuer has entered into a contract and has paid a third party to produce such a document on an ongoing basis if their relationship is clearly described in the document and is available at the same time to all securities dealers wishing to receive it or to the public;
(c) participation in conferences, seminars or other training actions aimed at the benefits and characteristics of a specific investment instrument or investment service;
(d) the entertainment of small value offered during a business meeting or conference, seminars or other training events referred to in (c); or
(e) other minor non-monetary benefits, the list of which will be published by the Czech National Bank on its website; such an advantage must increase the quality of the service provided to the customer and, in view of the overall level of benefits provided by one person or group of persons, is such that it is unlikely to have an adverse effect on the performance of the obligation of the securities dealer to act in the best interests of the customers.
(2) The securities dealer shall inform the customer in accordance with Article 15 (5) of the part of the sentence behind the semicolon of the Act on the accepted minor non-cash benefits before providing the investment service.
Incentives in relation to research
(1) Receiving research from a third party by a securities dealer shall not be considered an incentive if research is a consideration of:
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Regulation Information
| Citation | Decree No. 308 / 2017 Coll., on a more detailed regulation of certain rules in the provision of investment services |
|---|---|
| Regulation Type | Order |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 19.09.2017 |
|---|---|
| Effective from | 03.01.2018 |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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