What is a Wholesale Client?

When a prospective client would like to enter into a financial product (e.g. FX contracts, derivatives), if the answer to one or more of the questions within the test below is yes, it is very likely that the prospect is a wholesale client.

 

What does wholesale investor mean in terms of Client Money Rules in Australia and how will this impact you? What can you do if you do not wish to be classified as a wholesale investor?

  • Legislative changes have been made in relation to the Australian Client Money Rules and what AxiCorp can do with that money. Only in limited circumstances can AxiCorp withdraw Client Money and these are clearly set out in both the client agreements and the PDS.
  • Some clients can opt-out of the Australian Client Money rules depending upon the strict rules we are required to apply when classifying clients and how they are treated. You can read about this under the clause entitled “Exempt Wholesale Clients”.
  • Being classified as a wholesale client and having agreed to the client agreement and PDS will mean that you have opt-out of the Australian Client Money Rules to the extent permissible by the Applicable Laws and will not be afforded the same protection as a retail client under the new client money rules . However If you do not wish to be classified as a wholesale customer, can write to service@axitrader.com and we will classify you as retail customer according to your instructions.
  • These new rules also set out new obligations that we need to comply with when we keep records of Client Money, how often we are required to reconcile those records, and when we are required to provide reports to the regulator.

You can read about all the above changes in the client agreements (see the clauses relating to “Client Money”) and in the PDS (see the section relating to “Holding Your Money”). These new rules come into effect from 4th April 2018.

When the prospect opens an account under an entity (non-individual)’s name

 

Test

Evidence

What evidence do we need to collect?

1

Does the business (non-manufacturing business) employ more than 20 people? Or if that business is a manufacturing business, does it employ more than 100 people?  

A written statement from a Director or an authorised person 

Contact Client Services team for a template to provide this statement

2

If the business is a company or a trust, has its control person provided you with evidence (in the column of ‘evidence’) stating he/she has net assets of A$2.5m or gross income of at least

$250,000 for each of the last 2 financial years?

An original or a certified copy of a certificate given within the preceding 2 years by a

qualified accountant

Contact client on- boarding team for a template of the certificate

3

Is the business a financial services licensee or a wholly-owned subsidiary of a financial services licensee? 

Proof of ASIC Company Search or AFS Licensee

Register

Client on-boarding team to conduct search

4

Is the business a body or a wholly-owned subsidiary of a body carrying on a business of investment in certain areas?

A written statement from a Director or an authorised person; or a copy of corporate

constitution

Contact Client Onboarding team to conduct search

5

Is the business a body regulated by APRA (e.g. a bank, an insurer) other than a trustee of a certain type of fund or a wholly-owned subsidiary of the above body? 

Proof of APRA Entity Search, e.g. ADI list or register of insurer

Contact Client Services team for details and Client on-boarding team

to conduct search

6

Is the business a listed entity or a related body corporate or a wholly-owned subsidiary of a listed

entity?

Proof of Exchange Search, e.g. listing

details

Client on-boarding team to obtain the

evidence

7

Does the business have or control gross assets of at least A$10m? Including assets under a trust that the business manages. Is the business a

wholly-owned subsidiary of the above business?

Copy of lasts audited financials; or evidence of control,

e.g. Trust Deed

Provide financials to Client Onboarding team

8

Is the business a related body corporate of a wholesale client?

Various

Contact Client Services team for details and Client Onboarding team

When the prospect opens an account under an individual’s name

 

Test

Evidence

Compliance Note

9

Has the individual provided you with evidence (in the column of ‘evidence’) stating he/she has net assets of A$2.5m or gross income of at least

$250,000 for each of the last 2 financial years? Net assets include the net assets of a company or trust controlled by the individual

A copy of a certificate given within the preceding 2 years by a qualified accountant

Contact client on- boarding team for a template of the certificate

10

Does the business have or control gross assets of

at least A$10m? Including assets under a trust that the individual manages.

Completed and signed written statement

Contact Client Onboarding team for required statement

 

Financial Value Test

Under Corporations Act Reg 7.1.22, when calculating whether the $500,000 test is met in respect of a derivative, the value of the derivative is calculated by the notional value of the derivative. This means, that, for example, a client who enters into a derivative with a notional value of $500,000 will be regarded as a wholesale client, even if the position has a leverage of 100 times such that the client is only required to deposit $5,000 as initial margin.
Under Corporations Act Reg 7.1.17B a number of different derivatives (short or long) can be aggregated together to meet the $500,000 threshold if they are entered into "at or about the same time".