Following an approach from the European Commission, CESR is consulting on aspects relating to client categorisation as currently set out in MiFID (which in turn is reflected in COBS 3, ‘Client categorisation’).
As you will know, COBS 3.5.2 lists those entities which a firm can classify as a per se professional client. As such, no further assessment on the client’s knowledge or understanding etc. is required, which contrasts with the ‘qualitative’ and ‘quantitative’ tests needed for elective professional clients.
The CESR paper suggests that per se professional clients may not always be as sophisticated as is presumed and do not necessarily always understand the risks involved in complex instruments.
Amongst the questions posed in the consultation is whether there is a need to assess the knowledge and experience of at least some of the entities, that currently qualify as per se professionals, before they can be considered to be professionals.
The consultation closes on 9 August.
