Information about Citfin – Finanční trhy, a.s.

Regulation (EU) No. 648/2012 of the European Parliament and of the Council on OTC Derivatives, Central Counterparties and Trade Repositories and other associated regulations of the European Commission (hereinafter referred to as “EMIR”) establishes new obligations for participants in derivative transactions. EMIR sets obligations for providers of derivatives and for clients using these derivatives.

Since Citfin – Finanční trhy, a.s. (hereinafter referred to as “Citfin”) provides foreign exchange derivatives within its portfolio (forwards and swaps), the provision of these foreign exchange derivatives must fulfil the obligations set by EMIR.

EMIR Obligations

1. Categorisation of Clients in Accordance with EMIR. To fulfil obligations arising from EMIR, the client must know whether they are a financial counterparty or a non-financial counterparty (above-threshold, below-threshold). Citfin automatically classifies its clients in the non-financial counterparty category. If you find that you do not fall within the non-financial counterparty category within EMIR’s classification, or you expect that to happen in the near future, immediately inform Citfin. Financial counterparties are investment firms authorised in accordance with Directive 2004/39/EC, credit institutions authorised in accordance with Directive 2006/48/EC, insurance undertakings authorised in accordance with Directive 73/239/EEC, assurance undertakings authorised in accordance with Directive 2002/83/EC, reinsurance undertakings authorised in accordance with Directive 2005/68/EC, UCITSs and, where relevant, their management company, authorised in accordance with Directive 2009/65/EC, institutions for occupational retirement provisions within the meaning of Directive 2003/41/EC and alternative investment funds managed by AIFMs authorised or registered in accordance with Directive 2011/61/EU. A non-financial counterparty is an undertaking, other than a financial counterparty (non-financial counterparties are licence holders of a payment institution, unless they hold another licence as described above), established in the European Union. In accordance with EMIR, a non-financial counterparty is obligated to check that their outstanding positions do not exceed the clearing threshold, i.e. threshold associated with a clearing obligation via a central counterparty:
   • Limits for obligatory clearings are set by art. 11 of Commission Regulation no. 149/2013 as follows:
     • EUR 1 billion gross notional value for OTC credit derivative contracts,
     • EUR 1 billion gross notional value for OTC equity derivative contracts,
     • EUR 3 billion gross notional value for OTC interest derivative contracts,
     • EUR 3 billion gross notional value for OTC foreign exchange derivative contracts,
     • EUR 3 billion gross notional value for OTC commodity derivative contracts and other OTC derivative contracts not listed above.
   • In case a non-financial counterparty exceeds the threshold, it is obligated to inform ESMA, ČNB and Citfin of this fact.
   • Limits are monitored as an average position in OTC derivative contracts for over a period of 30 days.
2. Reconciliation of Outstanding Futures. One of the requirements of EMIR is a reconciliation of outstanding derivative transactions. At prescribed intervals, Citfin will supply its clients via the Bankservis application or via e-mail about outstanding foreign exchange derivative transactions and their values in accordance with the requirements of EMIR.Reconciliation intervals are dependent on the type of counterparty and the number of outstanding contracts:
   • Financial and above-threshold non-financial counterparties
     • daily – more than 500 outstanding contracts
     • weekly – 51 to 499 outstanding contracts
     • quarterly – 50 or fewer outstanding futures contracts
   • Below-threshold non-financial counterparties
     • quarterly – more than 100 outstanding futures contracts
     • annually – 100 or fewer outstanding futures contracts

   Starting in the first quarter of 2014, a reconciliation process for outstanding futures contracts will begin at the prescribed frequency based on the number of outstanding contracts

3. Reporting Obligation. All derivatives must be reported to trade repositories. It is necessary to arrange which of the counterparties will report to the trade repository. Citfin can report for the client, the client can do the reporting themselves or the obligation can be delegated to a third party. We propose to our clients that they allow Citfin to provide reporting for them. If the client wishes to report futures contracts themselves, they must inform Citfin of this fact in writing. If Citfin does not receive this information from the client, Citfin will do reporting for the customer. The basic requirement for fulfilling the reporting obligation for legal persons is that the counterparties must mutually impart their temporary or permanent legal entity identifier (“LEI”). LEI is the identifier of the counterparty and the reporting obligation cannot be fulfilled without it. The reporting obligation is effective from the 12th February 2014. If the client, that uses foreign exchange derivatives, does not provide Citfin their LEI, the reporting obligation arising from EMIR will not be fulfilled.
   
4. Receiving LEI. The issuing and (annual) renewal of LEI is subject to a fee. The fees differ by provider. In the Czech Republic, the LEI provider is Centrální depozitář cenných papírů, a.s., and the fee for issuing and for annual renewal totals CZK 1,875 and CZK 940 respectively. The form for requesting an LEI by Centrální depozitář cenných papírů can be found here. The list of all current LEI providers is available here. Please send your LEI to obchod@citfin.cz.

EMIR Information Sources

http://www.cnb.cz/en/supervision_financial_market/legislation/index.html
https://www.esma.europa.eu/search/site/emir

In providing investment services and particularly in trading investment instruments, Citfin – Finanční trhy, a.s. (hereinafter “Citfin”) applies the rules laid down in accordance with the requirements set out in Directive 2014/65/EU of the European Parliament and Council of 15 May 2014 on markets in financial instruments (“MiFID II”), and/or Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing MiFID II with regard to organizational requirements and operating conditions for investment firms and laying down the terms for the purposes of that Directive (the “Implementing Regulation”) and No. 256/2004 Coll. on doing business on the capital market, as later amended (hereinafter “ZPKT”). The primary objective of these rules is to protect customers, in particular in terms of the scope of the information to be transmitted, the evaluation of information on customer’s expertise and experience and the rules for the transmission and execution of customer’s instructions on investment instruments.

Main changes affecting these areas:

• Assessing the target market – test of product suitability for the customer – Citfin carries out a suitability test of the products offered to its customers. To meet these requirements, an update of investment surveys was prepared and implemented. Its aim is to increase awareness of the possible risks of investment services, especially among non-professional customers, and so ensure a higher level of protection.

• Implementation of instructions under the best conditions and in the best interest of the customer – Citfin has rules in place that aim at ensuring that every individual instruction of the customer is executed under the best conditions and that it is ensured that such instructions are executed consistently under the best possible terms and conditions, in a honest, fair and professional manner and in the best interests of the customer.

• Management of conflicts of interests – Citfin has rules and mechanisms in place to prevent conflicts of interest. To avoid conflicts of interest, Citfin has established an corresponding organizational structure with control mechanisms, ensuring the separation of incompatible roles and guaranteeing the avoidance of conflicts of interest.
• Information on costs and related fees – All costs and related fees charged for the investment services or ancillary services to the customer that should be communicated are based on Annex II to EU Regulation 2017/565. Citfin will provide this information at customer’s request before arranging any specific transaction (specific amount of costs and fees) and then provide it broken down into individual items in the Exchange Trade Confirmation.

The information on the different areas is contained in these documents:

1. Basic Company Information
2. Investment Services and Instruments
3. Categorisation of Clients
4. Warning about the Risks Associated with the Use of Investment Instruments
5. Conflict of Interests Policy
6. Rules for Executing Orders
7. Guarantee Fund of Securities Traders
8. Rules of Handling Client’s Assets

The application for inclusion in the “Professional Client” category can be found HERE.

The times in the tables indicate the time limit (Cut-Off Time) by which the client must deliver the payment order to Citfin – Finanční trhy, a.s. so that the payment is made on the same day. The payment execution is also subject to the sufficient coverage of funds on the client’s payment account with Citfin.

Payment orders with the NORMAL speed for the payment transaction

If the client indicates the NORMAL speed for the payment transaction in the payment order and meets the requirements for the payment execution (the payment order is delivered by the Cut-Off Time, and the funds on the client’s payment account with Citfin are sufficiently covered), the funds will be transferred to the recipient’s bank:

• Within T+1 in the case of a domestic payment
• Within T+2 or T+3 in the case of a foreign payment

Payment orders with the URGENT speed for the payment transaction

If the client indicates the URGENT speed for the payment transaction in the payment order and meets the requirements for the payment execution (the payment order is delivered by the Cut-Off Time, and the funds on the client’s payment account with Citfin are sufficiently covered), the funds will be transferred to the recipient’s bank:

• Within T+0 in the case of a domestic payment
• Within T+0 or T+1 in the case of a foreign payment

If the client indicates the URGENT speed for the payment transaction in the payment order, he/she will be charged a fee according to the price list of Citfin – Finanční trhy, a.s., which is available on this website.

URGENT SPEED OF PAYMENTS

Cut-Off Time for the receipt of the payment order and coverage of the payment transaction

Currency		Time
	CZK in ČR	12.30
	CZK foreign	11.30
	EUR in EHP*	15.00
	EUR outside EHP*	13.30
	USD	13.30
	GBP	08.30
	CHF	08.30
	NOK	08.30
	SEK	n/a
	JPY	n/a
	PLN	08.30
	CAD	n/a
	HUF	08.30
	DKK	n/a
	AUD	n/a
	RUB	n/a
	RON	n/a
	CNY	n/a

*EEA means the European Economic Area consisting of all EU Member States and Norway, Iceland, Switzerland and Liechtenstein.