More transparency for your investments. Supervision Act

Transcription

1 The Wertpapier- Austrian aufsichtsgesetz Securities Supervision Act More transparency for your investments. This English text describing the Austrian Securities Supervision Act 2007 is a translation of the original German text and is provided for your convenience only. In the event of discrepancies the German original text shall prevail over the English translation.

2 The Austrian Securities Supervision Act I The Austrian Securities Supervision Act 2007

3 Trust through more transparency. 1 November 2007 marked the date on which the Austrian Securities Supervision Act of 2007 (Wertpapieraufsichtsgesetz 2007/WAG 2007) came into force and a new regulatory regime governing transactions in financial instruments became applicable. The Securities Super vision Act of 2007 transposes the EU s Directive on markets in financial instruments (Markets in Financial Instruments Directive, MiFID) into Austrian law. The objectives to be met by MiFID are to introduce uniform rules to ensure the protection of investors throughout the EU and to complete the process of creating uniform competitive conditions for all types of trading systems. MiFID is a further step towards a single European market and regulatory regime for investment services. The scope of application of MiFID basically encompasses financial services companies (banks, investment consultants, etc.) within the EU that perform investment services and activities or ancillary services (e.g. custodianship), as well as all trading systems. This English text describing the Austrian Securities Supervision Act 2007 is a translation of the original German text and is provided for your convenience only. In the event of discrepancies the German original text shall prevail over the English translation. Significance for investors. The objectives of implementing the MiFID provisions in the Austrian Securities Supervision Act 2007 (WAG 2007) include improving the level of protection for investors, enhancing transparency on financial markets and ensuring the integrity of the overall market and the parties involved. WAG 2007 builds on a broad basis created by earlier legislation. Since 1997 the protection of private and professional investors has been regulated by the conduct of business rules. As of 1 November 2007, WAG 2007 expanded this regulatory framework by introducing a more comprehensive transparency and disclosure regime. Close cooperation between investor and bank. WAG 2007 ensures that financial services companies provide investors with adequate advice with regard to treasury and securities transactions so that investors are able to assess the implications and consequences of intended transactions. This requires a broadly-based exchange of information between investor and adviser. A relationship manager is in a position to offer sound advice only if he or she is able to make an informed assessment of key aspects such as the investor s risk appetite, financial situation, investment goal and experience in financial markets on the basis of information obtained from the customer. If an investor refuses to furnish the information required by law, the law does not permit the provision of investment advice and a personal recommendation of investment products or the conclusion of an investment management agreement with this investor. The extended conduct-of- business rules. The core elements of WAG 2007 can be summarised as follows: Each investor must be assigned to one of the three categories. An investor profile must be jointly prepared and continuously updated. The suitability and appropriateness of a financial instrument for the customer must be assessed. The legislation requires the bank to provide customers with more information and extends the bank s reporting duties vis-à-vis the customer. Conflicts of customer interests with those of the bank providing the service must be identified and prevented. The principles governing order execution must be documented in writing. Documentation and record preservation requirements are expanded. This brochure provides you with information on the core elements set forth in WAG These data must be collected in order to draw up a comprehensive investor profile, which is mandatory for banks under WAG Providing this information is in the sole interest of the investor. Banks are, of course, subject to the bank secrecy rules in respect of information obtained in this process, and for this reason such information enjoys special protection. The Austrian Securities Supervision Act 2007 I 3

4 The Austrian Securities Supervision Act 2007 Investor categories. The Austrian Securities Supervision Act of 2007 (WAG 2007) requires banks to assign customers to one of three categories: Retail customers. Professional customers. Eligible counterparties. The Bank Austria relationship manager, on the basis of the information provided, assigns the investor to one of these categories. The investor enjoys the level of protection defined by WAG 2007 for the respective category. Retail customers investor category. This category comprises all customers categorised as neither eligible counterparties nor professional customers. It is irrelevant in this context whether these persons are natural or legal persons and whether the assets to be invested are private or business assets. Hence, a company may also be classified as a retail customer. Retail customers enjoy the full protection of the conduct of business regime set forth in WAG This includes: The right to comprehensive information regarding planned transactions in financial instruments and the company executing them, in this case Bank Austria. Transparency with regard to the costs of services offered. Advising the customer and assessing the suitability and appropriateness of a financial instrument for the customer. Information regarding the opportunities and risks of financial instruments. Best possible execution of customer orders (Execution Policy). Disclosure of conflicts of customer interests with bank interests. goals and risk appetite must be drawn up for professional customers, too, if the customer wishes to enter into a written asset management agreement or if a specific financial instrument is recommended within the context of providing investment advice. Eligible counterparties investor category. This category may include, among others, the following undertakings with activities in the financial services sector: Credit institutions (incl. central banks). Investment firms. Insurance companies (excluding social insurance institutions). Mutual fund companies. Pension funds and their management companies. Securities and commodity futures exchanges. Eligible counterparties are subject to the investor protection provisions set forth in WAG 2007 only to a limited extend. No investment advice is provided and there are limited disclosure requirements with regard to these counterparties. Modification of the level of protection upon customer request. Upon assignment to a specific investor category by the bank, customers who meet the pertinent legal requirements (verification is effected by the bank) may apply in writing to be assigned to a different category. They can thus obtain a higher or lower level of protection. Mixing investor categories and classifying a customer as a professional customer pursuant to Section 59 of WAG 2007 at the customer s request is not possible at Bank Austria. Professional customers investor category. Professional customers are customers who possess the experience, knowledge and expertise to make their own investment decisions and properly assess the risks involved. Customers considered to be professionals include: Large undertakings meeting at least two of the following requirements: Balance sheet total of at least EUR 20 million. Net turnover of at least EUR 40 million. Own funds of at least EUR 2 million. National and regional governments, public bodies that manage public debt. Institutional investors whose main activity is to invest in financial instruments. Professional customers are deemed to possess the necessary knowledge and experience. The bank is therefore not required to determine, by means of an enquiry, whether the customer understands the risks involved in the intended transaction. However, an abbreviated investor profile regarding the customer s investment 4 I The Austrian Securities Supervision Act 2007

5 The investor profile the cornerstone of every investment. The MiFID regulatory regime implemented by WAG 2007 stipulates that bank employees are to provide the best possible investment advice in respect of financial instruments. Guaranteeing this high standard requires effective communication: The bank has to make sure that the customer is in a position to assess the full consequences of the intended transactions. It is to this end that a comprehensive investor profile is drawn up together with the customer. In the event that the customer is not willing to furnish the legally required information, the bank is permitted to provide only a limited range of activities. Comprehensive investor protection cannot be guaranteed without an extensive exchange of information between the bank and the customer. The investor profile must be drawn up prior to entering into an agreement with a customer. The investor profile must be reviewed and updated every time a new investment transaction is concluded. At the consultation during which the investor profile is drawn up together with the customer, the customer signs his or her profile and receives a copy. Comprehensive investor profile for retail customers. Only an exhaustive investor profile creates the basis required by the relationship manager to offer best possible advice to the customer and recommend financial instruments that comply with the respective customer s investment objectives, knowledge and experience, financial situation and risk appetite. The information provided by the relationship manager on a financial instrument contributes to giving the customer a fair and balanced picture of the opportunities and risks of the intended trans action. A very important aspect is determining a customer s risk appetite. Moreover, establishing the customer s financial situation is crucial to assess the suitability of a financial instrument according to WAG The enclosed Bank Austria brochure Investment-Related Information. Disclosure of Risk contains the required information and offers useful guidance. It is also available for download in the Internet at Abbreviated investor profile for professional customers. WAG 2007 stipulates that an abbreviated investor profile is to be drawn up for professional customers as well. The customer s experience and knowledge with respect to financial instruments need not be established in this case, as the required expert knowledge can be taken for granted. The Austrian Securities Supervision Act 2007 I 5

6 The Austrian Securities Supervision Act 2007 Exhaustive information for investors. An intensive exchange of information between the investor and the bank is the basis for any responsible business relationship. WAG 2007 stipulates that banks, prior to providing financial services, must inform customers in detail about the bank and the services it offers. Investors are to be given a clear picture of the framework conditions under which they are carrying out their treasury and securities transactions. The scope of disclosure obligations varies depending on the investor category. The more experience a customer possesses with regard to individual financial instruments, the more expert knowledge may be taken for granted under WAG The detailed information on Bank Austria for investors required in accordance with WAG 2007 is given below. Information about Bank Austria. The Company Profile provides you, as investor, with information regarding the services and activities of Bank Austria. It also details the type, frequency and timing of reports on services rendered and provides information on deposit guarantee and investor compensation. For further details please consult the chapter Company Profile of Bank Austria. The bank is required to establish its execution policy in line with legal requirements. Bank Austria s execution policy was drawn up taking into account the following aspects: The price of the financial instrument. The costs related to the execution of the order. The speed of execution. The probability of executing and processing the order. The size and type of the order. All other aspects relevant to achieving the best possible results in the execution of the order. For retail customers, achievement of the best possible result is assessed on the basis of total costs, that is, the price of the financial instrument plus the costs involved in order execution. Bank Austria s execution policy is designed to optimise all these factors to the best possible benefit of the customer. However, as regards the establishment of the best possible venue for executing orders, this venue cannot in each individual case be guaranteed to obtain the objectively best possible result on a consistent basis. For further details regarding the execution policy of Bank Austria please refer to the enclosed brochure entitled This is how we execute orders for you. The Execution Policy of UniCredit Bank Austria AG. Information regarding the execution policy in the best possible interest of the customer. The execution policy of Bank Austria lays down the principles for the execution of customer orders for the acquisition and disposal of financial instruments in the customer s best interest. This set of rules governing order execution was compiled to ensure that best possible results are obtained for the customer in executing orders. The criteria according to which transactions are concluded must be transparent and comprehensible for the customer. 6 I The Austrian Securities Supervision Act 2007

7 Information regarding charges for securities services offered. Pursuant to WAG 2007, the bank is obligated to inform customers in advance of the costs involved in the execution of treasury and securities trans actions. These costs include all expenses arising for a customer in direct relation to the execution of an order as well as any fees and charges paid to third parties involved in executing the order. The list of fees and charges for securities services of Bank Austria and information on the costs involved in the execution of treasury transactions are available from your account manager at Bank Austria. Guidelines for managing conflicts of interest. A large universal bank like Bank Austria provides customers with a wide variety of different treasury and securities services. At the same time, Bank Austria operates in numerous other fields of business where the bank finances and advises customers or invests for its own account. The large number of transactions effected in the broad financial services segment makes it impossible to guarantee that a conflict of bank and customer interests can be excluded. With this in mind, the bank, based on WAG 2007, developed Guidelines for managing conflicts of interest and for disclosure of benefits, which help to identify potential conflicts of interest and provide guidelines on how to manage these situations. Customer interests, as a matter of principle, always come before the interests of the bank and its employees. For Bank Austria, the objective is to prevent conflicts of interest as far as possible. If a conflict of interest arises, the bank s top priority is to resolve the problem in the customer s interest. If, according to a reasonable assessment, the organisational and administrative arrangements made by the bank are not sufficient to avoid the risk of damage to customers interests, the bank will disclose to the customer the nature and source of the conflict of interests before undertaking business on the customer s behalf. This disclosure must be made in a general manner while maintaining banking secrecy vis-à-vis other customers. For further details on dealing with conflicts of interest at Bank Austria please refer to the enclosed Summary of guidelines for managing conflicts of interest and for disclosure of benefits. The Austrian Securities Supervision Act 2007 I 7

8 Published by UniCredit Bank Austria AG, Schottengasse 6 8, A-1010 Vienna, Austria Editor: Bank Austria Graphics: Stiedl, Vienna Photographs: Medioimages/Photodisc Printed by: xxxxxxxxx Printer s errors and typographical errors excepted. Editorial close: January 2011 Internet: XXM/01.11/ST/XX The Austrian Securities Supervision Act 2007