What must a firm demonstrate to treat a client as an elective professional for non-MIFID?

To treat a client as an elective professional for non-MIFID purposes, a firm must demonstrate that the client has the necessary experience, knowledge, and expertise in the relevant financial markets. This is typically accomplished by passing a qualitative test that assesses the client's understanding of the risks involved in the types of products being offered. Additionally, the firm must ensure that proper disclosure is made to the client regarding the implications of being classified as an elective professional.

This approach prioritizes the protection of the client, ensuring they are adequately informed and capable of making investment decisions in complex financial environments. The passing of the qualitative test and provision of appropriate disclosures together help confirm the client's suitability for this classification, which is essential for regulatory compliance and responsible client management. This demonstrates that the client is not just financially capable but also knowledgeable enough to understand the implications of their investment decisions.

Understanding these requirements is crucial for firms in managing client relationships and meeting regulatory obligations while providing appropriate services based on clients' capabilities.