Suitability, MiFID and Cross-Border Banking represent a large number of rules and regulations that have to be taken into account when selling financial products and services. Our software delivers results from rule-based analysis and takes decisions.
Banks have to meet customer expectations and must comply with regulatory requirements, such as MiFID II and AIFMD, to balance customer needs with products or investments and to protect their clients. The decisions involved can be handled by ACTICO software. Based on rules, it decides what combinations are possible for compliance with product, client and investment suitability.
In the EU, the Markets in Financial Instruments Directive (MiFID) is authoritative for suitability, while in other countries, regulations by regulatory agencies or standards of financial organizations apply, such as FINRA in the US, the Hong Kong SFC, the SEC of Thailand, or the MAS in Singapore.
Specifications ensure that products and services are tailored to each situation and the needs of that customer. This includes the identification of the persons’ risk profile and personal preferences. The risk profile the customers risk capacity into consideration in addition to their age, assets, liabilities, investment knowledge, goals and risk tolerance.
Suitability checks influence the entire decision-making process from consultation to monitoring. ACTICO Software enable you to check products before they are offered or sold (Proposal Suitability Check), while the transaction is executed (Execution Suitability Check) and subsequently based on all active portfolio holdings as well as ongoing transactions (Suitability Monitoring).
Product Suitability includes analyzing the opportunities and risks of products and services. ACTICO software generates indicators for which type of investor group the products are appropriate for. On the other hand, Client Suitability focuses on the analysis of matches between assets and customer risk profiles, and between information on the risk and their disclosure.
One of the obligations arising from MiFID II is conducting a review of appropriateness, based on the client's documented knowledge and experience. This is required in order to understand certain product categories and their risks. In a cross-border transaction, local regulations must be applied first to be identified based on the scenario’s complex assessment rules.