PROSPERGATE CAPITAL LTD, is a company registered under the laws of the Republic of Cyprus, with registration number C369583. It is a regulated Cyprus Investment Firm (‘CIF’) by the Cyprus Securities and Exchange Commission (‘CySEC’) under license number 361/18. The Company is also acting as the External Manager of PROSPERGATE FUND AILFNP V.C.I.C LTD under the Small Alternative Investment Fund Managers Law of 2020 (L. 81(I)/2020). 

The registered office of the Company is situated at 2 Filiou Zannetou street, 3021 Limassol Cyprus. 

For the purposes of, inter alia, this Client Categorization Policy, the Company is operating under: 

• Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on Markets in financial instruments (“Market in Financial Instruments Directive” or “MiFID II”) which was implemented in Cyprus by the Investment Services and Activities and Regulated Markets Law of 2017 (Law  87(Ι)/2017). 
• The Alternative Investment Funds Law of 2018 L.124(I) of 2018 (“the AIF Law”) and the Small Alternative Investment Fund Managers Law of 2020 (L.81(I) of 2020) (“the SMALL AIFM Law”).

Pursuant to the legal requirements under MiFID II and Law 87(I)/2017, relating to Client Categorization, the Company has created and maintains an effective and transparent procedure for categorizing its clients which is made known to the Clients at the time of their onboarding. 

This Policy 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, nor does it form part of any contract between the CIF and any Client. 

PROSPERGATE CAPITAL LIMITED aims to correctly categorize its prospective clients so that the latter receive the appropriate level of protection. 

Following the implementation of MiFID II in Cyprus, pursuant to the Investment Services and Activities and Regulated Markets Law, the Company is required to categorize its Clients into one of the following three categories:

1. Retail Client
2. Professional Client by default or 

Professional Client on request (through change of client categorization)

3. Eligible Counterparty.

Therefore, when the Company is considering an application for opening an account, it will classify a prospective Client under any of the above categories based on the information provided by the said Client and notify the relevant client accordingly regarding his/her categorization.

A. Retail Clients

“Retail Client” is a Client who is NOT a professional Client or an eligible counterparty (as defined below). Retain clients are afforded with the highest level of protection by the Law. 

B. Professional Clients

A “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. In order to be considered a professional Client, a Client must comply with one of the following criteria:

a. 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 the above Directive, entities authorised or regulated by a Member State without reference to the above Directive, and entities authorised or regulated by a non-Member State:

I. Credit Institutions;

II. Investment Firms;

III. Other Authorised or regulated financial institutions;

IV. Insurance Companies;

V. Collective Investment Schemes and management companies of such schemes;

VI. Pension funds and management companies of such funds;

VII. Commodities and commodity derivatives dealers;

VIII. Locals;

IX. Other Institutional Investors (like Portfolio Investment Companies).

b. Large undertakings meeting two of the following size requirements on a company basis:

i. balance sheet total: EUR 20.000.000

ii. net turnover: EUR 40.000.00

iii. own funds: EUR 2.000.000

c. 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.

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

Clients who may be treated as professionals on request, following approval by the Company (please see further below under ‘Request for Different Classification’). The entities mentioned above from (2.2.a.) through (2.2.b.) are considered to be ‘professionals’ in relation to all investment services and activities and financial instruments. The Clients mentioned in (2.2.c.) through (2.2d.) may be treated as professionals generally or in respect of a particular investment service or transaction, or type of transaction or product.

Professional Clients are responsible for keeping the Company informed about any change, which could affect their categorisation. Should the Company become aware that the Client no longer fulfils the initial conditions which made him eligible for a professional treatment, the Company will take appropriate action.

C. Eligible Counterparties

An “Eligible Counterparty” is any of the following entities to which 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 Firm / Greek Investment Firm, other investment firms from other MiFID Member States, credit institutions, insurance companies, UCITS and their management companies, Portfolio Investment Companies, pension funds and their management companies and other financial institutions authorised by a Member State or regulated under Community legislation or the national law of a Member State, undertakings exempted from the application of the Investment Services and Activities and Regulated Markets Law 87(I) of 2017 in accordance with paragraphs (k) and (l) of subsection (2) of section 3, national governments and their corresponding offices, including public bodies that deal with public debt, central banks and supranational organizations.

Some of the protections a Retail Client is entitled to, as opposed to other client categories, are set out below: 

– A Retail Client will be given more information regarding the Investment Company, the services provided, the nature of the 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. 

– Where the Company provides the services of Reception & Transmission of orders and/or Execution of Client orders, 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 the Company 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. The Company is 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 transaction or product, 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. 

– As per the provisions of the MiFID, when executing Client orders, the Company must take all sufficient steps in order to achieve the best possible result for the retail client ( “best execution policy”) taking into account price, costs, speed, likelihood of execution and settlement, size, nature or any other consideration relevant to order execution. Where there may be material difficulties in the proper execution of Retail and Professional Clients on Request’s orders, the Company is under an obligation to warn the customers accordingly when such difficulty becomes known to the Company. 

– The Company is obliged to enter into a written agreement with the Retail and the Professional Client on Request, setting out the essential rights and obligations of both parties.

 – Retail clients are entitled to and are offered ‘negative balance protection’, as defined in the User Agreement. 

– Retail Clients may be entitled to compensation under the Investor Compensation Fund  (“ICF”) for Clients of Investment Firms, while Professional Clients are not entitled to compensation under the ICF. 

– Where the Company holds a retail Client account with positions in leveraged financial instruments or contingent liability transactions, the firm must report to the Client if the initial value of each instrument depreciates by 10% and thereafter at multiplies of 10%. 

– Professional Clients are also entitled to confirmation for the execution of their orders, however there is no specific timeframe involved as to when the Professional Client will receive this information.

A. Retail Clients

A “Retail Client” has the right to request to be reclassified as  a “Professional Client by Request”, however such recategorization will be afford a lower level of protection to the client. The Company is not obliged to deal with him/her under a different classification.

Tests and Criteria: The Company is allowed to treat any of the retail Clients as professionals provided that the relevant criteria and procedures mentioned below are met. Any waiver of the protection afforded by the standard conduct of business regime will be effected only 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 his own investment decisions and fully understands the risks involved.

The fitness test applied to managers and directors of entities licensed in the financial sector under MiFID II could be regarded as an example of the assessment of expertise and knowledge. In the case of small entities, the person subject to the above assessment should be the person authorised to carry out transactions on behalf of the entity.

In the course of the above assessment, as a minimum, two (2) of the following criteria should be satisfied:

1. the Client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;
2. the size of the Client’s Financial Instruments portfolio, defined as including cash deposits and Financial Instruments exceeds EUR 500.000;
3. the Client works or has worked in the financial sector for at least one (1) year in a professional position, which requires knowledge of the transactions or services envisaged.

PROCEDURE 

Retail Clients may waive the benefit of the detailed rules of conduct applicable to them only where the following procedure is followed:

1. 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;
2. the Company will give them a clear written warning of the protections and investor compensation rights they may lose;
3. they must state in writing, in a separate document from the User Agreement (business Terms and Policies), that they are aware of the consequences of losing such protections and accept them;
4. before deciding to accept any request for waiver, the Company is required to take all reasonable steps to ensure that the Client requesting to be treated as a ‘Professional Client’ meets the relevant tests and criteria above.

B. Professional Clients

A “Professional Client” has the right to request a different classification as a ‘Retail Client’ in order to obtain a higher level of protection.

It is the responsibility of the Client, initially 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 Client’, enters into a written agreement with the Company 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.

C. Eligible Counterparties

An “Eligible Counterparty” has the right to request a different classification either as a ‘Professional Client’ or as a ‘Retail Client’ in order to obtain a higher level of protection. According to the Investment Services and Activities and Regulated Markets Law, the Company is not obliged to deal with the Client on this basis.

This policy may be updated and changed from time to time in order to comply with any  new legal requirements and/or amendments. Should such changes commence, the updated Client Categorization Policy will be published on our website.

If you would like to contact us with any queries or comments, please send an email to [email protected]

Prospergate Capital Ltd is a Cyprus Investment Firm (CIF) that is authorized by the Cyprus Securities and Exchange Commission (CySEC) (License number 361/18), with the license to perform portfolio management services. The company externally manages, on a discretionary basis, client funds that are located in global financial institutions pursuant to a pre-defined investment strategy. Since the risk of investing in certain financial instruments is generally high and the market value of such financial instruments may be exposed to varying factors, such as a turbulent economic and political environment, fluctuations in foreign exchange rates and shifts in market sentiment, the investor takes full responsibility for the risk involved with such investments and understands and acknowledges that investment yield and or capital preservation is not guaranteed. The investor should ensure that they are fully aware of the potential risks connected with Portfolio Management services and with their chosen investment strategy. The investor should be aware of the fact that some investment strategies may involve a higher degree of risk compared to other strategies and investments within this framework which may result in the loss of all or part of the initial investment. The investor should also understand and acknowledge that past performance does not guarantee future returns. Past performance should not be taken as an indication or guarantee of future performance.