MIFID II – IB Inducements

Background
New EU rules on inducements enter into force 3 January 2018. However, Denmark has decided to implement the requirements half a year prior to the time where rules will be applicable in the rest of EU, meaning that the Danish requirement will enter into force on 1 July 2017.

Requirements
Similar to the European rules, the Danish requirements contain a ban for third-party companies on receiving and keeping any fees, commissions or other payments in relation to offering discretionary portfolio management and independent advice to the customers.

The ban does not apply to payments in kind of minor value, which may increase the quality of the service provided to the customer, and which cannot prevent the investment company in question from complying with its duty to act in the customer's best interest.

According to the Danish Regulation the companies that are not allowed to receive and keep any fees etc. in connection with provision of discretionary portfolio management to the customers and independent advice are:

  • Banks
  • Investment firms
  • Investment management companies with authorisations as investment firms

Therefore, Saxo Bank A/S cannot pay inducement to IB's providing discretionary portfolio management to the customers or independent advice, as of 1 July 2018.

In other cases than the above mentioned, companies are allowed to pay or receive a fee or commission in connection with the provision of an non-independent investment services or an ancillary service, if the payment is designed to enhance the quality of the relevant service to the client and does not impair with the company's duty to act honest, fairly and professionally in accordance with the best interest of its clients.

The IB solution
Saxo Bank A/S will implement a selection of solutions which will enable  our IBs to work within certain boundaries or move to a non-inducement fee model. As an IB of Saxo, you will be contacted by your Account Manager within the next weeks with more detailed information about your specific situation.

 

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