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List of minimum records that must be maintained by an investment firm according to the Act on Securities and that the Národná banka Slovenska is obliged to prepare and maintain according to the Section 75 Subsection 7 of this Act
Národná banka Slovenska according to the Section 75 Subsection 7 of the Act No. 566/2001 Coll. on Securities and Investment Services and on amendments and supplements to some laws (Act on Securities) as amended (hereinafter referred to as the „Act”) prepared and maintains the following list as at 18 March 2008:
1. Client’s Identification Data and Categorisation
A record must include:
a) a business name or name, registered office and identification number of a seller and a purchaser, if it is a legal entity (Section 75 Subsections 1 and 2 of the Act),
b) the first name and surname, permanent residence and birth reg. No. of a seller or a purchaser, if he/she is a natural entity (Section 75 Subsections 1 and 2 of the Act),
c) identification data according to the letters a) and b) about other clients,
d) information whether it is a professional or retail client (Section 8a of the Act) and assignment in respect to what investment services, ancillary services and deals it is a professional client or retail client; this information shall also include based on what provisions of the Act the client has been assigned as the professional client category and whether a written contract has been made with the client according to the Section 8a Subsection 4 of the Act,
e) list and overview of written internal rules and procedures of dividing the clients into individual categories of clients (Section 8a Subsection 7 of the Act).
2. Recording of rights and obligations agreed upon by and between the investment firm and clients
A list of documents comprising all the rights and obligations agreed upon by and between the investment firm and the client and other terms under which the investment firm provides the client with investment or ancillary services (Section 73i Subsection 1 of the Act).
3. Contract with the Client
A frame contract with the client in writing (or on another permanent media) made with the client before the first provision of an investment service other than investment advisory including basic rights and obligations of the investment firm and the client (Section 73i Subsection 2 of the Act).
4. Contracts with other persons
A list and overview of the investment firm’s contracts made with persons other then the clients.
5. Information about the client at the provision of investment advisory or portfolio management
A record about information relating to the knowledge or experience of the client or potential client in the field of investments relating to the specific type of financial instrument or investment service or ancillary service, its financial position and investment objectives so that the investment firm would be able to recommend investment services and financial instruments appropriate for the client (Section 73f of the Act).
6. Information about the client at the provision of other investment services
A record about a request addressed to the client or potential client (at the provision of investment services other than under the point 5 of this list) to provide information about its knowledge and experience in the field of investments relating to the specific offered or required type of financial instrument, investment service or ancillary service so that the investment firm would be able to assess whether the assumed investment service or product are appropriate for the client.
7. Records retaining
The investment firm is obliged to retain the records of accepted client’s orders and deals made based on such orders as well as any records about the purchase and sale of financial instruments made at his own account also without the client’s orders and other documents pertaining to the services provided for the period of at least five years, and also for Národná banka Slovenska at its request (Section 75 Subsection 3 of the Act).
8. Aggregated client’s orders with other clients´ orders and allocation to individual clients
A record about the implementation and efficient compliance with the allocation of orders ensuring fair allocation of aggregated orders and deals of every client at summary operations including more than a single client as well as the basis for the allocation to individual clients (Section 73s of the Act). The record also includes a date and time of the allocation to individual clients, determination of corresponding financial instruments, identification of every client and the amount allocated to every identified client.
9. Accepting or executing the order for executing an investment service either for the account of the client or for own account
A record about the data required by the Annex I to the Regulation (EC) No. 1287/2006 of 10 August 2006, executing the European Parliament and Council Directive 2004/39/EC, in respect to the obligations to make records for investment companies, reporting transactions, market transparency, acceptation of financial instruments for dealing and defined terms for the purposes of this Directive (hereinafter referred to as the „Regulation”).
10. Transmission of order for investment service execution to another person
If the investment firm transmits the orders for investment service performance to a third person, it shall make a following record immediately in compliance with the Article 8 Subsection 2 of the Regulation, namely
a) a record about the name or another designation of the client, whose order has been transmitted,
b) a record about the name or another designation of the client to whom the order has been transmitted,
c) a record about the conditions of the transmitted order,
d) a record about the date and precise terms of order transmitted.
11. Appropriate reports about investment services provided to the client
A record about investment services provided so that the investment firm would be able to send appropriate reports about the service provided to the client either immediately after the execution of the investment service or as a periodic statement of services provided in the form of a copy or in another form that would enable reconstruction back in compliance with the Section 73j, Section 73k and Section 73l of the Act.
12. Protection of client’s financial instruments and funds
Records and accounts maintained in such a way that the investment firm can any time and without any delay differentiate the assets held for one client from those held for any other clients and from its own assets. Sufficiently supported records proving that the client’s funds (except for a credit institution) are not used by the investment firm for its own benefit; the investment firm shall maintain its records and accounts in such a way that the accuracy and most of all correlation with financial instruments and funds held for the clients are secured (Section 71h of the Act).
13. Protection of client’s financial instruments in respect to securities funding
Detailed records about the client maintained in such a way that it is possible to differentiate the financial instruments used according to the client’s orders for funding securities as well as the quantity of financial instruments used in this way and belonging to every client granting a prior express consent so that it is possible to distribute the potential loss correctly (Section 71k Subsection 3 of the Act in conjunction with other provisions of the Section 71k of the Act).
14. Marketing communications
A record about a sample of every announcement (except for purely verbal communication) by which the investment firm is addressing retail clients or potential retail clients according to the Section 73c of the Act.
15. Investment research
A record about every item of investment research issued in writing (Section 71o of the Act).
16. Internal structure, organisation and management of the investment firm
Records about organizational structure of the company, decision-making process, internal control mechanism, qualification of employees, etc. maintained according to the Section 71 of the Act.
17. Procedures applying to the duty of compliance
Records about the way how the investment firm has implemented, applies and complies with appropriate strategies and procedures for the identification of every risk linked with the omission of liabilities stipulated by law or other special regulations, that it has accepted appropriate measures and procedures minimising such risks and enabling the Národná banka Slovenska to execute proper supervision over the investment firms (Section 71a of the Act).
18. Investment services, investment activities and ancillary services with potential conflict of interest
Records maintained and regularly updated by the investment firm about the investment service, investment activity or ancillary service performed by the investment firm or on its behalf, within which the conflict of interest entailing a material risk of damage to the interest of one or more clients has arisen or such conflict of interests may occur in the case of on a service or activity underway (Section 71n of the Act)
19. Records and reports about the compliance with obligations stipulated by law, risk management and internal audit
Records about the fulfilment of liabilities of the investment firm according to the Section 71a of the Act. These records comprise especially outcomes of monitoring and regular assessment of measures and procedures at the implementation, applying and compliance with the strategy and procedures needed for the identification of every risk linked with the omission of liabilities stipulated by law or special regulations (Section 71a Subsection 2 letter a) of the Act).
Records about the fulfilment of liabilities of the investment firm stipulated according to the Section 71b of the Act. These records include mostly the outcomes of monitoring the adequacy and effectiveness of the investment firm’s management strategies and procedures, degree of compliance with measures, processes and mechanisms accepted for the management of risks relating to the investment firm’s activities and efficiency of measures taken as a remedy of drawbacks (Section 71b Subsection 1 letter c) of the Act).
Records about the fulfilment of the investment firm’s liabilities stipulated according to the Section 71c of the Act. These records include mostly the findings of internal audit focused on examination and assessment of appropriateness and efficiency of systems, mechanisms of internal control and internal acts of management of investment firm (Section 71c Subsection 1 letter a) of the Act).
Persons responsible for the execution of positions according to the Sections 71a to 71c of the Act within the investment firm submit written reports about the activities according to the Sections 71a to 71c to the investment firm’s top management once a year minimum, unless the liability of submitting these reports more frequently is stipulated by the Articles of Association of the investment firm (Section 71d Subsection 3 of the Act).
20. Records about complaints and measures for their resolution
Records about reasonable and prompt handling of complaints received from retail clients or potential retail clients (Section 71e of the Act) and a record of each complaint and measures taken for resolution (Section 71e of the Act).
21. Records about quoted stock prices
Records about quoted stock prices maintained by a systematic internaliser; if the stock prices are quoted, they are retained by the investment firm for the period of twelve calendar months minimum; the point 5 of this record (Article 24 paragraph 1b) Regulation is not thereby affected.
22. Information about fees, commissions or in-kind settlements
Record maintained by the investment firm about fees, commissions or in-kind settlements according to the Section 73b Subsection 3 of the Act in a summary form, if at the same time the investment firm provides the client with the possibility to obtain more detailed information based on a request.
Ing. Martin Barto, CSc.
Update: February 2010