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UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the Financial Services Authority

The tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the recommendations contained here should seek independent advice from a Financial Services Authority authorised Stockbroker or Financial Adviser. So, while we would not wish to reduce our liability under the FSA regulatory regime, we cannot otherwise be held liable if individuals suffer losses through following tips contained on this site. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in equities can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy price and the sell price for smaller company shares can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. UK-Analyst.com defines a smaller company share as any stock traded on AIM or PLUS or which has a market capitalisation of less than £300 million. Membership of this website is free of charge. All material on UK-Analyst.com is protected by copyright. UK-Analyst.com reserves the right to initiate legal proceedings against anyone engaged in the unauthorised reproduction of the material. By joining this website customers understand that they may be contacted from time to time with offers from the t1ps.com Ltd group of websites.UK-Analyst.com can be contacted at 3rd Floor, 5-11 Worship Street, London EC2A 2BH. Email admin@t1ps.com - tel 020 7562 3370.

We are obliged to publish this communication which concerns the Markets in Financial Instruments Directive (“MiFID”) and how our relationship with you as a customer of this website will be impacted.

Introduction of MiFID

MiFID is European Union legislation which must be implemented in all member states and is driving the single largest change to the regulation of the European investment industry in the last 20 years. Its objectives are the development of a pan-European market in investment services through the establishment of a single set of European regulation rules. Amongst its impacts are changes in the way trades can be executed, the level of protection afforded to investors and it particularly focuses on pre and post trade transparency in the Equity market. It comes into force on 1st November 2007.

How does MiFID impact your relationship with this website?

This communication comprises the following further documents (below) which address how your relationship as a customer of this website is impacted. You should be aware that we do not provide execution services and that advice provided is not personalised in any way and therefore that we do not owe you any suitability protections.

These documents (below) should be read carefully, but do not require further specific action from you:
1. A Question and Answer document which sets out some of the questions that may arise in relation to MiFID and our answers to them.
2. Your Client Categorisation under MiFID
3. Our Conflicts of Interest Policy

Who do I contact with questions?

We have included a Question and Answer document which may address questions that you have arising from this material.
If you have additional questions please contact our compliance team on 02075623389. It will help us expedite your queries if you are able to quote your reference number as shown at the top of this letter.

Yours faithfully,

Tom Winnifrith
CEO
T1ps.com Limited



Following implementation of the Markets in Financial Instruments Directive in the UK, we are required by the FSA rules to classify our customers again into one of three regulatory categories. The regulatory classification given to a client determines the UK regulatory requirements that will apply to us when providing services to that customer from 1 November 2007.

Your Categorisation
Pursuant to the FSA rules and based on information that we hold about you, we have classified you as a Retail Client and you will be treated as such in respect of all business we conduct with or for you.

Your Right to Recategorisation

You have the right to request classification as a Professional client. This will decrease the level of regulatory protection that you will be afforded. A summary of the main differences between the treatment of professional clients and retail clients is set out in the Annex to this letter.

Before deciding to accept a request for re-categorisation as an elective professional client, we must take all reasonable steps to ensure that the client requesting to be treated as an elective professional client satisfies the qualitative test and, where applicable, the quantitative test. These tests are set out in the Annex to this letter.

It you have any reason to contact us in relation to these materials, please do not hesitate to contact us on either monisha@t1ps.com or 020 7562 3389.



Were we to treat you as a professional client rather than a retail client, a number of FSA rules will cease to apply to us and we will be entitled to take advantage of several relaxations. In particular:

Disclosures: You will not be given any of the additional disclosures required to be provided to retail clients (for example on costs, commissions, fees and charges, foreign exchange conversion rates, and information on managing investments).
Financial Promotions: We may take your status into consideration in determining what information should be included in a financial promotion to you in order to satisfy our requirement to make the communication fair, clear and not misleading.
Appropriateness: Where we assess whether a product or service is appropriate for you, we can assume that you have the necessary level of experience and knowledge to understand the risks involved in relation to any investment, service, product or transaction.
Suitability: We do not provide personal recommendations. However, if we were ever required to assess the suitability of a personal recommendation to you or (if we are providing relevant investment management services) of a decision to trade for your portfolio, we can assume that you have the necessary experience and knowledge to understand the risks involved, and can sometimes assume that you are able financially to bear any investment risks consistent with your investment objectives.
Best execution: The way in which we would have to comply with the FSA’s best execution requirements may differ between professional and retail clients were we to provide this service.
Prompt execution: We are not obliged to inform you of material difficulties relevant to the proper carving out of your order(s) promptly. However, it is our general policy that you would be informed if it is reasonable that we should do so.
Periodic statements: We are obliged to provide retail clients with more detailed information periodically. A retail client has a right to a periodic statement every 3 months (rather than every 6 months for a professional client).
Client money: If we were holding money on behalf of a retail client:
a. we must notify it of whether interest is payable (which is not required for professional clients); and
b. we cannot transfer the money to a third party without notifying a retail client and we must explain who is responsible for that third party’s actions or omissions, and the consequences where that third party becomes insolvent.
Investor compensation scheme: As a Professional Client you would not be an “Eligible complainant” and lose the right of access to the Financial Ombudsman Service. Any complaint you make will be dealt with under our internal complaints procedures.
Holding of designated investments You would not be given any of the additional disclosures required to be provided to retail clients. If we recommend a custodian to you we are not required to undertake a risk assessment with regard to that recommendation.

Packaged Products: We are not required to send you the detailed information available to Retail Clients in relation to regulated collective investment scheme units, investment trust savings schemes, stakeholder pension schemes, and life products. [COB 7.2; COB 7.3; COB 15]

Confirmation of Transactions: We are not required to provide a confirmation of transactions within the Retail Client time limits set out in COB 17.2 but are obliged to provide relevant documentation “promptly”.





A client classifies for treatment (whether authorised by an EEA State or a third country and whether or not authorised by reference to a directive) as a Per Se Professional Client if they are:


a) a credit institution;
b) an investment firm;
c) any other authorised or regulated financial institution;
d) an insurance company;
e) a collective investment scheme or the management company of such a scheme;
f) a pension fund or the management company of a pension fund;
g) a commodity or commodity derivatives dealer;
h) a local;
i) any other institutional investor;
j) a large institution engaging in MiFID business that meets two of the following three criteria on a company basis:
 a balance sheet total of €12,500,000;
 a net turnover of €25,000,000;
 an average number of employees during the year of 250;

k) a national or regional government, a public body that manages public debt, a central bank, an international or supranational institution (such as the World Bank, or the IMF) or another similar international organisation; or
l) another institutional investor whose main activity is to invest in financial instruments or designated investments.

A client may be categorised as an Elective Professional Client if:

(1) T1PS.com Limited undertakes an adequate assessment of the expertise, experience and knowledge of the client that this assessment gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making his own investment decisions and understanding the risks involved (the 'qualitative test'); and

(2) in relation to MiFID or equivalent third country business in the course of that assessment, at least two of the following criteria are satisfied:

a. the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

b. the size of the client's financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds €500,000;

c. the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged;



What is MiFID and what will it change?

The Markets in Financial Instruments Directive (MFID) is European Union legislation which must be implemented
in all member states and is driving the single largest change to the regulation of the European investment industry in the last 20 years. Its main objective is to enhance the development of a pan-European market in investment services through the establishment of a single set of European regulatory rules. Amongst it impacts are changes in the way trades can be executed, the level of protection afforded to investors and pre and post trade transparency in equity markets. It comes into force on 1st November 2007.

This Q&A attempts to outline the impact of MiFID, paying particular attention to some of the questions that you may have as a client of T1PS. If you have additional questions please contact our compliance team at either monisha@t1ps.com or on 02075623389.

1. What are the reasons behind the new regulations?

European law makers wanted to transform the regulation of financial services as existing regulations were obstructing the development of a harmonised pan-European market. It was impossible to change the regulations obstructing the development of a harmonised pan-European market without re-writing fundamental parts of the current regulatory regime. The following help illustrate why:
a. Concentration rules and pre/post trade transparency in the Equity markets
Today, some countries have rules requiring firms to execute all share transactions on the domestic exchange or to report post trade information to the domestic exchange (these types of rules are known as “concentration rules”).MiFID prohibits such rules as they hamper access to markets in those countries and give a quasi-monopoly to the local exchange. However abolishing these rules requires an alternative regulatory framework for pre and post trade transparency. So MiFID has abolished ‘concentration rules” and established an alternative regime for pre and past trade transparency.

b. Differing standards of regulation across Europe
Firms that want to do business across Europe are often hampered by different regulations existing in each Member State. So MiFID has introduced a consistent set of high level regulatory principles, fleshed out by more detailed regulations, which apply across Europe. Member States can only add more regulation in exceptional circumstances. So large parts of the FSA’s current rule book have had to be replaced by the high level principles and more detailed regulation in MiFID.

2. Where do local regulators fit into the picture?
Most of MiFID has to be implemented by Member States in order for it to have legal effect. In each jurisdiction, the main method of implementation is through rules made by the appropriate regulator (e.g. In the UK this will be the Financial Services Authority [FSA]).

3. When does MiFID come into force?
In the UK all the rules and laws necessary to implement the MiFID provisions have been made and will commence operation on 1 November 2007. In some Member States implementation is behind schedule.
4. How will MiFID impact on the relationship between T1PS and its clients?

New Client Classification
Under MiFID clients must be classified as one of ‘retail client”, ‘professional client” or “eligible counterparty. Amongst other things, your new Client Classification will dictate the Ievel of investor protection that you enjoy as a client of T1PS under MIFID. Your new client classification is included in this communication pack.


5. What other areas does MiFID cover and what does it change?
As one of the aims of MiFID is to create consistency in financial services regulation across Europe, it necessarily covers a wide area and a lot of detailed topics. However some of the other main areas that are covered and the changes they may bring about include the following.
Authorisation/licence requirements
MiFID prohibits a firm from undertaking specified activities without being authorised by its local regulator.
Some of these activities are being regulated across Europe for the first time, for example, operating a Multilateral trading facility (MTF) and undertaking commodities business. Although the FSA already regulates some of these activities, firms in the UK will, as they are now covered by MiFID, be able to “passport” those services into other European countries (see below).

Conflicts of Interest & Inducements
MiFID imposes new requirements for managing conflicts of interest and inducements. It has increased the category of payments that it asserts may be ‘inducements” and gives rise to a conflict of interest because they are received or paid out by a firm. As such T1PS may increase the disclosures to clients of the payments we receive and pay out in relation to the business we undertake for them. MiFID also requires every firm to:
 maintain a record of all identified activities which entail a material risk of damage to a client’s interest; and
 have a conflicts of interest policy.
Financial promotions
MiFID imposes detailed requirements on financial promotions directed at retail clients. Promotions directed at other clients are simply subject to the high level requirement that they are fair clear and not misleading. The FSA is mirroring this approach in its new rules so lots of the old detailed requirements on real time and non real time direct offers, have now been deleted.

Client categorisation and KYC obligations
Client categorisation is discussed above in question 4. Many of the requirements in MiFID do not apply to the top category, that of eligible counterparties. Many requirements only apply on a limited basis to the middle category of professional clients. We will, however, be required to satisfy the “know your client” obligation in respect of our professional clients and ensure we provide suitable/appropriate investment advice to those clients based on the information our Know Your Client (KYC) reveals.
Passportinq through Europe
One key benefit of MiFID is that it allows authorised firms to ‘passport’ into any Member State in the European Union and undertake financial services/activities in those Member States without having to obtain further authorisation.
CONFLICTS OF INTEREST POLICY
PURPOSE
The purpose of this policy is to provide guidance in identifying and handling potential conflicts of interest that may entail a material risk of damage to the interests of our clients.
GENERAL RULE
We will undertake our business to ensure, as far as possible, that we manage our clients’ interests in a conflict-free environment. The best interests of our clients come first at all times.
IDENTIFICATION OF POTENTIAL CONFLICTS OF INTEREST
Conflicts of interest may arise between us and our clients or between two or more clients. We have identified the following areas as those where a material risk of damage to a client’s interest is most likely to occur. Following this is a summary of the procedures in place to ensure that such conflicts do not arise.
BETWEEN THE FIRM AND ITS CORPORATE CLIENTS

PA Dealing: a potential conflict of interest might arise if an employee of the Firm were to trade in a security ahead of investing in/selling that same security on behalf of a client.

Inducements: were substantial gifts or entertainment to be received, they employees might be influenced to place orders with one fund rather than another

Senior Management: Certain relevant persons within the group may cross the established Chinese walls across the boundaries of the financial services regulated businesses.

Investment Research: research provided may be paid for by external companies. This research may be used by a group company in its investment decision making
BETWEEN ONE CLIENT AND ANOTHER

Corporate finance advice: a potential conflict might occur were we to advise a client re his private/public company, while investing our clients in that company or giving them research or investment advice.
ARRANGEMENTS TO MANAGE THE POTENTIAL CONFLICTS OF INTEREST
The following procedures are in place to ensure that the potential conflicts of interest listed above do not occur.
PROPRIETARY TRADING AND INVESTMENT RESEARCH
The Firm does not undertake any proprietary trading; it only provides advisory services investment research to its clients. Group companies also provided discretionary and advisory investment management services to its clients.
PERSONAL ACCOUNT DEALING
No employee of the Firm may carry out any personal account dealing which could create a conflict of interest with any client. Any proposed personal account dealing by employees or by persons directly connected to the employee are subject to pre-approval by the Compliance Officer and no dealing which could create a conflict of interest between the employees of the Firm and our customers will be permitted.
INDUCEMENTS
No employees are permitted to accept gifts or entertainment without specific permission from the Compliance Officer. Specific permission is only granted if the gifts and entertainment are small and unlikely to affect the interests of our clients.
NON-MONETARY BENEFITS
The firm does not accept any non-monetary benefits.
CORPORATE FINANCE ADVICE
When the corporate finance team is providing advice to clients, a watchlist and blacklist of companies associated with those clients is maintained by the compliance officer; the investment team cannot investment in any companies on the blacklist, and must seek permission from the compliance officer for companies on the watchlist. The firm operates an informational barrier between the corporate finance team and the investment advisors such that employees do not discuss business with one another and are physically segregated.
DISCLOSURE OF CONFLICTS
The primary duty of the Firm is to manage any potential conflicts of interest through the policies above. If, however, such arrangements are not sufficient to ensure with reasonable confidence that the risk of damage to a client’s interests will be prevented, then the Firm will disclose the conflict to the client in writing before undertaking any business on its behalf that may be affected by that conflict. Additionally we will seek the client’s express permission to undertake the business before proceeding.
RECORDS
The Firm maintains an up-to-date record of any circumstances in which a conflict of interest may arise or has arisen as a result of the activities carried on by the Firm.