Regolamentazione e licenza

The law which provides for the provision of investment services, the exercise of investment activities, the operation of regulated markets and other related matters following the implementation of the Markets in Financial Instruments Directive (MiFID) governing all EU member states, requires the categorization of clients.

RetailFX has proceeded with the new categorization of clients as retail clients, professional clients or eligible counterparties in accordance with the Law. All Clients are categorized as Retail Clients when opening a trading account and have the highest level of protection (such as eligibility to the Investor Compensation Fund, Best Execution, and Safeguarding Clients Assets etc). Clients are allowed to request to be reclassified in writing or RetailFX may categorize them otherwise, according to the specifications, conditions, and procedures of MiFID.

"Retail Client" is a client who is not a professional client or an eligible counterparty.

"Eligible Counterparty" is a professional client or legal entity who provides investment services that involve the reception and transmission or the execution of orders. Clients under this category have the lowest level of protection.

"Professional Client" is a client who possesses the experience, knowledge and expertise to make their own investment decisions and properly assess the risks that they incur. In order to be considered a professional client, the client must comply with the following criteria:

Α. Categories of clients who may be considered to be professionals:

The following shall be regarded as professionals in relation to all investment services and activities and financial instruments:

1. Entities which are required to be authorized or regulated to operate in the financial markets. The list below should be understood as including all authorized entities carrying out the characteristic activities of the entities mentioned: entities authorized by a member state under a European Community Directive; entities authorized or regulated by a member state without reference to such Directive; and entities authorized or regulated by a non Member State

(a) Credit institutions;

(b) Registered Investment Firms;

(c) Other authorized or regulated financial institutions;

(d) Insurance undertakings;

(e) Collective investment schemes and management companies of such schemes;

(f) Pension funds and management companies of such funds;

(g) Commodity and commodity derivatives dealers;

(h) Other institutional investors.

(i) Locals

2. Large undertakings meeting two of the following size requirements, on a proportional basis:

(a) balance sheet total at least: 20.000.000 euro

(b) net turnover at least: 40.000.000 euro

(c) own funds at least 2.000.000 euro

3. National and regional governments, public bodies that manage public debt, central banks, international and supranational institutions such as the World Bank, the Internal Monetary Fund, the European Central Bank, the European Investment Bank and other similar international organizations.

4. Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitization of assets or other financing transactions.

They must however be allowed to request non professional treatment and RetailFX may agree to provide a higher level 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 risks involved. This higher level of protection will be provided when a client who is considered to be a professional enters into a written agreement with RetailFX to the effect that it shall not be treated as a professional for the purposes of the applicable conduct of business regime.

Β. Clients who may be treated as professionals on request:

Clients other than those mentioned above, including public sector bodies and private individual investors, may also be allowed to waive some of the protections afforded by the conduct of business rules of RetailFX.

RetailFX is therefore allowed to treat any of the above clients as professionals provided the relevant criteria and procedures are fulfilled.

Such as that the client is capable of making his own investment decisions and understanding the risks involved (fitness test).The company reserves the right to decline any of the above requests for different categorization

Requests for more information and re-categorization shall be submitted to http://www.etoro.com/application/help/contact.aspx.

INTRODUCTION

1.1          RetailFX Ltd (“the Company”) is an Investment Firm regulated by the Cyprus Securities and Exchange Commission (“CySEC”) with license number 109/10.

1.2          This Policy is issued pursuant to, and reflects Compliance with, the European Directive 2004/39/EC Of 21 April 2004 on Markets in Financial Instruments (MiFID)  and with the implementation in Cyprus legislation  on  Investment  Services  and  Activities  and Regulated Markets Law of 2007 – Law 144(I)/2007 (the “Rules”) that apply to the Company. It is not intended to  create  third  party  rights  or  duties  that  would  not already exist if the policy had not been made available and it does not form part of any contract between the Company  (or  any  of  its  affiliates)  and  any  client  or prospective client.

1.3          What follows is an overview on how trades and orders are executed, the factors that can affect an execution’s timing  and  the  way  in  which  market  volatility  plays  a part  in  handling  orders  when  buying  or  selling  a financial product.

1.4         Upon acceptance of a client order and when there is no specific  client  instruction  regarding  the  execution method,  the  Company  will  endeavor  to  execute  that order in accordance with the Best Execution policy.

1.5         Nevertheless,  whenever  there  is  a  specific  instruction from  a  client,  the  Company  shall  execute  the  order following  the  specific  instruction.  In  fact,  any  specific  instructions  from  a  client  may  prevent  the  Company from  taking  the  steps  that  it  has  designed  and implemented in the execution policy to obtain the best possible  result  for  the  execution  of  those  orders  in respect of the elements covered by those instructions.

1.6         This  Policy  is  available  to  clients  upon  request  and  is also  made  available  on  our  Website. The Company reserves the right to amend or supplement this Policy at any time.

2.         FINANCIAL PRODUCTS TO WHICH THIS POLICY APPLIES

2.1         The financial products to which this Policy applies are all of the products offered by the company.

2.2         The  trading  conditions  of  the  above  products  are available  on  the  Company’s  official  web  site  at  www.etoro.com 

3.         COMPANY’S APPROACH TO BEST EXECUTION

3.1         The  Company  identifies  and  seeks  to  obtain  the  most favorable  terms  reasonably  available  when  executing an order on behalf of a client.

3.2         To  do  this,  the  Company  relies  on  three  basic components:

•          state‐of‐the‐art  technology  for  routing,  monitoring  and executing orders;

•          careful  consideration  of  the  elements  of  order execution;

•          regular  and  rigorous  examination  of  the  overall execution quality.

3.3         When  executing  a  buy  or  sell  order,  the  Company  always considers:

•         the classification of the client as retail or professional;

1.   the nature of the client order;

•          the characteristics of the financial instruments that  are subject to that order;

•          the characteristics  of  the  execution  venues  to which that order can be directed.

4.          THE ROLE OF TECHNOLOGY IN EXECUTING CLIENTS’ ORDERS

The Company uses automated systems to route and execute client orders.  When clients’ orders are received by the Company, it is automatically executed  

For OTC financial instruments, the Company may trade against its own proprietary desk or will route the orders to other market maker firms.  Many of these firms also provide automated executions of orders.

5.         THE ELEMENTS OF OUR BEST EXECUTION POLICY

5.1   Routing  determinations  are    based  on  five main criteria  and  are  regularly  reviewed  by  the  Company. Hence to determine the best way to execute an order for a client the Company takes into consideration:

(1)  Speed and Likelihood of the Execution. Due to the levels of volatility affecting both price and volume, the Company seeks to provide client orders with the fastest execution reasonably possible.

(2)  Price Improvement and Overall Consideration of Costs.  Orders are     routed  to  market  makers  and/or  market  centers where  opportunities  for  price  improvement  exist.

(3)          Size Improvement. In routing orders, the Company seeks  markets  that  provide  the  greatest  liquidity and  thus  potential  for  execution  of  large  orders.

(4)          Overall Execution Quality. When determining how and  where  to  route  or  execute  an  order,  the      Company’s  traders  draw  on  extensive  day‐to‐day experience  with  various  markets  and  market    makers,  focusing  on  prompt,  sequential  and reliable execution.

(5)          Clients’ specific instructions.  The  Company  will always execute client orders in accordance with the instructions  given  by  that  client  or  on  its  behalf. Consequently,  if  a  client  requires  an  order  to  be executed  in  a  particular  manner  and  not  in accordance  with  the  Company’s  best  execution      principles  set  forth  herein,  the  client  must  clearly state  his/her  desired  method  of  execution  hen      he/she places the order. To the extent that a client instruction is not comprehensive, the Company will determine any non‐specified components of  the execution in accordance with these best execution      principles.

5.2         The  Company  invites  the  clients  to  bear  in  mind  that the duty of best execution not only relates to price but also  involves  the  consideration  of  various  factors including  cost,  speed  and  likelihood  of  execution  and settlement.  Even  if  a  trade  appears  not  to  have  been executed  at  the  best  possible  price,  it  does  not necessarily  constitute  a  violation  of  the  duty  of  best execution.

6.          REGULAR  REVIEW  OF  EXECUTION  QUALITY  AND  OF EXECUTION VENUES

6.1          The Company regularly evaluates the overall quality of its  order  executions.  The  Company  studies  the  quality of executions for listed and OTC retail market orders.

6.2          The Company’s Management periodically evaluates the execution quality and makes recommendations regarding order routing practices.

7.         EXECUTION VENUES CURRENTLY CHOSEN

7.1 Execution Venues are the entities with which the orders are placed or to which the Company transmits orders for execution. For the purposes for the financial instruments provided by the Company, the Company act as a principal or an agent on the Clients behalf; therefore the Company is not always the sole Execution Venue of the Client orders. The Company might transmit the Client order in the external market (other liquidity providers) if the order is for the financial instrument provided by the Company.

        The Company acknowledges that the transaction entered in Financial Instruments with the Company are not undertaken on a recognized exchange, rather they are undertaken through the Company’s Trading Platform, and accordingly, they may expose the Client to greater risks that regulated exchange transactions. Therefore the Company may not execute an order, or it may change the opening (closing) price of an order in case of any technical failure of the trading platform or quote fees. The Client is obliged to close an open position of any given Financial Instruments during the opening hours of the Company’s Trading platform. The Client also has to close any position with the same counterparty with whom it was originally entered into, thus the Company.

        The Company places significant reliance to the above execution venue(s) based on the above mentioned factors and their relevant importance. It is the Company’s policy to maintain such internal procedures and principles in order to act for the best interest of its client and provide them the best possible result ( or “best execution”) when dealing with them.

8.         PRICE VOLATILITY 

8.1         Volatility is one factor that can affect order execution. When  clients  place  a  high  volume  of  orders  with brokers, order imbalances and backlogs can occur. This implies  that  more  time  is  needed  to  execute  the pending orders. Such delays are usually caused by the occurrence of different factors: (i) the number and size of  orders  to  be  processed,  (ii)  the  speed  at  which current  quotations  (or  last‐sale  information)  are provided  to  the  Company  and  other  brokerage  firms; and  (iii)  the  system  capacity  constraints  applicable  to the  given  exchange,  as  well  as  to  the  Company  and other firms.

8.3         In  order  to  minimize  such  a  risk,  the  Company  has  in place  procedures  and  arrangements  which  to  the furthest  extent  possible  provide  for  the  prompt,  fair and expeditious execution of client orders.

9.         EFFECTS ON ORDER EXECUTION

9.1         Clients  should  be  aware  of  the  following  risks associated  with  volatile  markets,  especially  at  or  near the open or close of the standard trading session:

•          Execution at a substantially different price from the    quoted bid or offer or the last reported sale price at the  time  of  order  entry,  as  well  as  partial executions  or  execution  of  large  orders  in  several transactions at different prices.

•          Opening  prices  that  may  differ  substantially  from the previous day’s close.

•          Locked  (the  bid  equals  the  offer)  and  crossed  (the bid is higher than the offer) markets, which prevent the execution of client trades.

10.         ALTERNATIVE TYPES OF ORDERS

10.1          Given  the  risks  that  arise  when  trading  in  volatile markets,  you  may  want  to  consider  using different types  of  orders  to  limit  risk  and  manage  investment strategies.

(1)          Market  order.  With  a  market  order  the  client instructs  a  broker  to  execute  a  trade  of  a  certain size  as  promptly  as  possible  at  the  prevailing market  price.  Financial  institutions  are  required  to execute  market  orders  without  regard  to  price changes.  Therefore,  if  the  market  price  moves significantly during the time it takes to fill a client’s order, the order will most likely be exposed to the risks outlined above, including execution at a price substantially  different  from  the  price  when  the order was entered.

(2)          Limit  order.  With  a  limit  order,  the  client  sets  the maximum  purchase  price,  or  minimum  sale  price, at  which  the  trade  is  to  be  executed.  As  a  limit order  may  be  entered  away  from  the  current market price, it may not be executed immediately. A  client  that  leaves  a  limit  order  must  be  aware that he/she is giving up the certainty of immediate execution  in  exchange  for  the  expectation  of getting  an  improved  price  in  the  future.  Limit orders  may  be  routed  to  an  exchange  without      human intervention.

(3)          Stop  order.  Different  from  a  limit  order,  a  stop order allows selling below the current market price or  buying  above  the  current  market  price  if  the stop  price  is  reached  or  breached.  A  stop  order  is therefore  a  “sleeping”  order  until  the  stop  price  is reached  or  breached.  When  the  stop  price  is reached or breached, the stop order is converted to a  market  order.  See  section  10.1(1)  for  market orders.

(4)          Trailing Stop Order. The trailing stop order is a stop order  as  described  in  10.1(3)  but  the  trailing  stop price  moves  according  to  parameters  set  by  the client. This way the trailing stop can be used to sell if  price  drop  more  than  a  specified  distance  from the  highest  price  traded,  or  to  buy  if  the  price trades  above  a  set  level  form  the  lowest  traded price.

An investment firm must deal with any expression of dissatisfaction about any financial services activity provided by the Company.

RetailFX’ predefined Complaint Handling Policy sets out the process employed by RetailFX Ltd. when dealing with complaints received by clients.

Your queries should be addressed to our Customer Support Department to http://www.etoro.com/application/help/contact.aspxor on the phone 00 357-250-25060, by fax 442-030-311-342 or to the Client’s assigned Account Manager.

Your query should be in writing and should include at least your identifying information including your full name, username, the nature and description of the complaint, including the date and time the issue arose. Please note that complaints which fail to contain all the relevant information may not be handled within our regulator response time. Typically, your query will be handled by our support department or by your account manager. Any complaint shall be thoroughly examined and reviewed by our support department, applicable account manager and our compliance officer with the aim of resolving the compliant in a fair and professional manner. Clients will be informed on the timeframe of the investigation and the response will be given as soon as practical.

We encourage you to contact us if you have any questions regarding our Complaint Handling Policy.

This Policy is issued in accordance with and reflects compliance with the EU directive 2004/39/EC on Markets in Financial Instruments (MiFID) and the implementation in Cyprus legislation on Investment Services and Activities and Regulated Markets Law of 2007 – Law 144(I)/2007 that apply to RetailFX.

This Policy is only for informational purposes and is not intended to, and does not create third party rights or duties that would not already exist if the Policy had not been made available. The Policy does not form part of any contract between RetailFX (or any of its affiliates) or any Client or prospective Client.

This Policy demonstrates that RetailFX is taking all reasonable steps to identify and avoid conflicts of interest situations that may arise between RetailFX and its employees and its Clients or among its Clients during the course of the provision of investment services.It is the duty of the Compliance Officer to develop and maintain this Policy so as to prevent and resolve potential conflicts of interest.

For the purposes of identifying the types of conflict of interest which may arise in the course of providing investment and ancillary services or a combination thereof and whose existence may damage the interests of a Client, RetailFX shall need to take into account, by way of minimum criteria, the question of whether RetailFX or a relevant person, or a person directly or indirectly linked by control to RetailFX, is in any of the following situations, whether as a result of providing investment or ancillary services or investment activities or otherwise:

1. RetailFX or that person is likely to make a financial gain, or avoid a financial loss, at the expense of the Client
2. RetailFX or that person has an interest in the outcome of a service provided to the Client or of a transaction carried out on behalf of the Client, which is distinct from the Client's interest in that outcome
3. RetailFX or that person has a financial or other incentive to favour the interest of another Client or group of Clients over the interests of the Client
4. RetailFX or that person carries on the same business as the Client
5. RetailFX or that person receives or will receive from a person other than the Client an inducement in relation to a service provided to the Client, in the form of monies, goods or services, other than the standard commission or fee for that service

RetailFX shall maintain policies, controls and procedures to manage the identified conflicts of interest. RetailFX shall undertake ongoing monitoring of business activities to ensure that internal controls are appropriate, some of which are detailed below:

1. Effective procedures to prevent or control the exchange of information between relevant persons engaged in activities that may cause a conflict of interest where the exchange of that information may harm the interests of clients.
2. The separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to, clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of RetailFX.
3. The removal of any direct link between the remuneration of relevant persons engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities.
4. Measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment services or activities.
5. Measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities where such involvement may impair the proper management of conflicts of interest.

RetailFX shall also have in place Chinese Walls procedures: No communicating of information and data between the various business units of RetailFX and especially, whether RetailFX’s officers and employees have access to data in the possession of business units to which such access is not permitted, so that to prevent the flow of confidential information in a way that which adversely affect the interest of the Clients.

Where a conflict of interest arises, RetailFX will, if made aware of it, disclose it to a client or potential client prior to undertaking investment business for that client. If RetailFX does not believe that disclosure is appropriate to manage the conflict, we may choose not to proceed with the transaction or matter giving rise to the conflict.

RetailFX reserves the right to review and/or amend its Policy whenever if deems this necessary/appropriate.

RetailFX is a member of the Investor Compensation Fund for Customers of Cypriot Investment Firms (CIFs) and other Investment Firms (IFs) which are not credit institutions (the “Fund”).

The Fund was established under the Investment Firms (IF) Law 2002 as amended (the “Law”) and the Establishment and Operation of an Investor Compensation Fund for Customers of CIFs Regulations of 2004 (the “Regulations”), which were issued under the Law.

The object of the Fund is to secure any claims of Covered Clients against members of the Fund and the Fund exists to compensate Covered Clients for any claims arising from the failure by a member of the Fund to fulfill its obligations regardless of whether that obligation arises from legislation, the client agreement or from wrongdoing on the part of the member of the Fund.

A failure to fulfill its obligations consists of the following:

1. A failure to return to a Covered Client  funds owed to them or funds which belong to them but are held by a member of the Fund, directly or indirectly, in the framework of the provision by the member of the Fund to the client of a covered service and which the client has requested that the member of the Fund returns in exercise of their relevant right; OR
2. A failure to hand over to a Covered Client  financial instruments that belong to them and which the member of the Fund holds, manages or keeps on its account, including the case where the member of the Fund is responsible for the administrative management of the said financial instruments.

The payment of compensation which will be initiated where:

1. The member of the Fund is unable to meet client claims provided that this inability is resultant from its financial circumstances which show no realistic prospect of improvement in the near future; OR
2. A judicial authority has on reasonable grounds directly related to the financial circumstances of the member issued a ruling with the effect that investors’ ability to lodge claims against it are suspended.

A well founded claim by the client against the member must exist.

Covered Services: Covered Services are the services listed on RetailFX’s license (109/10) issued by CySEC (Cyprus Securities and Exchange Commission).

The fund does not cover institutional or professional investors and the total payable compensation to each covered client may not exceed EUR20,000, irrespective of the number of accounts held, currency and place of offering the investment service.

Covered Clients All RetailFX clients are covered by the Fund unless they fall within the following categories

1. The following categories of institutional and professional investors:

1. Investment Firms
2. Legal entities associated with RetailFX and, in general, belonging to the same group of companies
3. Banks
4. Cooperative credit institutions
5. Insurance companies
6. Collective investment organizations in transferable securities and their management companies
7. Social insurance institutions and funds
8. Investors characterized by RetailFX as professionals

2. States and supranational organizations.
3. Central, federal, confederate, regional and local administrative authorities
4. Enterprises associated with RetailFX Managerial and Administrative staff
5. Shareholders of RetailFX whose participation directly or indirectly in the capital of the member of the fund amounts to at least 5% of its share capital, or its partners who are personally liable for the obligations of the member of the Fund, as well as persons responsible for the carrying out of the financial audit of the member of the Fund as provided by the Law, such as qualified auditors
6. Investors having in enterprises connected with RetailFX and in general of the group of companies to which RetailFX belongs, positions or duties corresponding to the ones listed in paragraphs 4 and 5 above
7. Second-degree relatives and spouses of the persons listed in paragraphs 4, 5 and 6 as well as third parties acting for the account of these persons
8. Apart from investors convicted of a criminal offence pursuant to the Prevention and Suppression of Money Laundering Activities Law of 1996 -2000, investor-clients of RetailFX responsible for facts pertaining to RetailFX that have caused its financial difficulties or have contributed to the worsening of its financial situation or which have profited from these facts
9. Investors in the form of a company which due to its size is not allowed to draw a summary balance sheet in accordance with the Companies Law or a corresponding law of a Member State.

Prerequisites for Initiating the Compensation Payment Procedure: The Fund initiates the compensation payment procedure when at least one of the following prerequisites is fulfilled:

(a) The Cyprus Securities and Exchange Commission has determined that RetailFX is for the time being unable to meet its obligations arising from its investors-customers’ claims, in connection with the covered services it has provided, as long as such inability is directly related to  RetailFX’ financial position which has no realistic prospect of improvement in the near future; OR

(b) A Court, based on grounds directly related to the financial position of RetailFX, has made a ruling which has the effect of suspending the investors-customers‘ ability to lodge claims against  RetailFX.

Upon issuance of a decision by the Cyprus Securities and Exchange Commission or by the Court on the commencement of the compensation payment procedure, the Fund publishes in at least three national newspapers an invitation to the covered customers to make their claims against RetailFX arising from covered services, designating the procedure for the submission of the relevant applications, the deadline for their submission and their content.

Calculating the Amount of Payable Compensation:

The amount of compensation payable to each Covered Customer is calculated in accordance with the legal and contractual terms governing the relation of the Covered Customer with RetailFX, subject to the rules of setoff applied for the calculation of the claims between the Covered Customer and RetailFX. The calculation of the payable compensation derives from the sum of total established claims of the Covered Customer against RetailFX, arising from all Covered Services provided by RetailFX and regardless of the number of accounts of which the customer is a beneficiary, the currency and place of provision of these services.

The Fund is obliged to pay to each Covered Customer – claimant the compensation within three months from sending to the Cyprus Securities and Exchange Commission the minutes with the compensation beneficiaries.

For any further information regarding the Fund, please refer to the offices of the Administrative Committee of the Fund, at the following address: Administrative Committee of the Investor Compensation Fund for Customers of CIFs and other IFs: 32 Stasikratous Street, 4th floor

P.O. Box 24996, 1306 Nicosia E-mail address: investmentfirms@cysec.gov.cy Fax no.: 22 375762

Cyprus enacted the appropriate legislation and has taken effective regulatory and other measures by putting in place suitable mechanisms for the prevention and suppression of money laundering and terrorist financing activities. Moreover, Cyprus is committed to apply all the requirements of international treaties and standards in this area and, specifically, those deriving from the European Union Directives.

Under the current Law, which came into force on 1 January 2008, the Cyprus legislation has been harmonized with the Third European Union Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (Directive 2005/60/ΕC).

As a licensed Investment Firm, RetailFX shall follow the regulations therefore must ensure that appropriate measures are taken to combat money laundering.

With accordance to the CySEC’s regulations, every Investment Firm must have own funds, which are at all times more than or equal to the sum of its capital requirement, when there is a minimum requirement set forth by law, under which no Investment Firm can operate. An Investment Firm must have in place sound, effective and complete strategies and processes to asses and maintain on an ongoing basis the amounts, types and distribution of internal capital that they consider adequate to cover the nature and level of the risks to which they might be exposed. These strategies and processes are subject to regular internal review and to the CySEC’s review, to ensure that they remain comprehensive and proportionate to the nature, scale and complexity of the activities of the Firm.

For the purposes of safeguarding clients’ rights in relation to financial instruments and funds belonging to them, an Investment Firm must keep such records and accounts as are necessary to enable it at any time and without delay to distinguish assets held for one client from assets held for any other client, and from its own assets. Such separation of accounts is being supervised both internally and externally, by the CySEC.

2010