PRIN 1 Annex 1 Non-designated investment business - clients that a firm may treat as an eligible counterparty for the purposes of PRIN

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11.1

A firm may categorise the following types of client as an eligible counterparty for the purposes of PRIN:

(1)

a properly constituted government (including a quasi-governmental body or a government agency) of any country or territory;

(2)

a central bank or other national monetary authority of any country or territory;

(3)

a supranational whose members are either countries or central banks or national monetary authorities;

(4)

a State investment body, or a body charged with, or intervening in, the management of the public debt;

(5)

another firm, or an overseas financial services institution;

(6)

any associate of a firm (except an OPS firm), or of an overseas financial services institution, if the firm or institution consents;

(7)

a client when he is classified as an eligible counterparty in accordance with 1.2; or

(8)

a recognised investment exchange, regulated market or clearing house.

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1.2

A firm may classify a client (other than another firm, regulated collective investment scheme, or an overseas financial services institution) as an eligible counterparty for the purposes of PRIN under 1.1(7) if:

(1)

the client at the time he is classified is one of the following:

(a)

a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time);

(b)

a body corporate that meets (or any of whose holding companies or subsidiaries meets) two of the following tests:

(i)

a balance sheet total of 12.5 million euros (or its equivalent in any other currency at the relevant time);

(ii)

a net turnover of 25 million euros (or its equivalent in any other currency at the relevant time);

(iii)

an average number of employees during the year of 250;

(c)

a local authority or public authority;

(d)

a partnership or unincorporated association which has net assets of at least £10 million (or its equivalent in any other currency at the relevant time) (and calculated, in the case of a limited partnership, without deducting loans owing to any of the partners);

(e)

a trustee of a trust (other than an occupational pension scheme, SSAS, personal pension scheme or stakeholder pension scheme) with assets of at least £10 million (or its equivalent in any other currency), calculated by aggregating the value of the cash and designated investments forming part of the trust's assets, but before deducting its liabilities;

(f)

a trustee of an occupational pension scheme or SSAS, or a trustee or operator of a personal pension scheme or stakeholder pension scheme where the scheme has (or has had at any time during the previous two years):

(i)

at least 50 members; and

(ii)

assets under management of not less than £10 million (or its equivalent in any other currency at the relevant time); and

(2)

the firm has, before commencing business with the client on an eligible counterparty basis:

(a)

advised the client in writing that he is being categorised as an eligible counterparty for the purposes of PRIN;

(b)

given a written warning to the client that he will lose protections under the regulatory system;

(c)

for a client falling under (1)(a) or (b):

(i)

taken reasonable steps to ensure that the written notices required by (a) and (b) have been delivered to a person authorised to take such a decision for the client; and

(ii)

not been notified by the client that the client objects to being classified as an eligible counterparty;

(d)

for a client falling under (1)(c), (d), (e) or (f):

(i)

taken reasonable steps to ensure that the written notices required by (a) and (b) have been delivered to a person authorised to take such a decision for the client; and

(ii)

obtained the client's written consent or is otherwise able to demonstrate that consent has been given.