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MiFID II - Suitability assessment

The revision of MiFID I leads to important changes in rules and regulations with regard to investor protection. The investor protection is enhanced due to stricter and new rules of conduct under MiFID II.

The investment firm must make a suitability assessment for individual portfolio management or advice regarding financial instruments. This implies that the investment firm must obtain information from the client before it provides investment advice or individual portfolio management.

Many of the rules in MiFID II are comparable to existing rules; however, there are also a number of changes.

According to MiFID II, the suitability assessment also applies to management of or advice on structured deposits. These are products of which the return depends on, for example, a market index. In addition, under MiFID II, an investment firm must provide a report to a client for each advice given in case of an investment advice. In this report, the investment firm must explain why it believes that the investment advice is suitable based on the client information that was obtained. In the event of asset management, such a report should be provided periodically. Also in , an investment firm must clearly indicate whether a suitability assessment is performed periodically with regard to the existing portfolio.

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