Investment Firms

In the Slovak Republic the conditions for the establishment, activity and termination of  activity of an investment firm is governed by the Act No 566/2001 Coll. on Securities and Investment Services (The Securities Act) as subsequently amended (hereinafter referred to as the "The Securities Act").  

An investment firm is a joint-stock company which has its registered office in the territory of the Slovak Republic and whose scope of business comprises the provision of one or more investment services to clients, or the performance of one or more investment activities on the basis of an investment services licence issued by the National Bank of Slovakia.

Licence to provide investment services

A licence to provide investment services shall be issued by the National Bank of Slovakia. An application for a licence to provide investment services shall be submitted to the National Bank of Slovakia by the founders of the investment firm, unless the Securities Act provides otherwise. If a bank is applying for a licence to take up and carry on the business of an investment firm, the application shall be submitted by the Board of Directors of the bank.

A licence to provide investment services is granted for an indefinite period and may not be transferred to another legal person or natural person, and does not pass on to a legal successor. An investment services licence is valid in all Member States and allows an investment firm to provide the licensed activities in the territory of another Member State either through the establishment of a branch or the freedom to provide services.

The business name of an investment firm other than a bank must contain the words "investment firm" or the abbreviation "o.c.p." No other entities may use this designation in their business name.


The persons used for financial intermediation and for the promotion

An investment firm may use independent financial agents and bound financial agents for financial intermediationwithin the capital market sector only provided that the independent financial agent and the bound financial agent are registered in the Register of Financial Agents, Financial Advisers, Financial Intermediaries from another Member State within the Insurance or Reinsurance Sector and Bound Investment Agents.

An investment firm may use bound investment agents for the promotion of the investment services and secondary services provided by the said persons, for receiving and delegation of instructions from clients or prospective clients, placement of financial instruments and provision of investment counselling in relation to such financial instruments and investment services and secondary services offered by the said persons only provided that the bound investment agent is registered in the Register of Financial Agents, Financial Advisers, Financial Intermediaries from another Member State within the Insurance or Reinsurance Sector and Bound Investment Agents or in a similar register kept in another Member State.

An investment firm is obliged to ensure a bound investment agent to furnish the information in what position it is and which person it represents at the contact with a client or prior to the discussion with the client or a prospective client.


Safeguarding of client financial instruments and funds

Client assets placed with an investment firm is not included in the assets of the investment firm. An investment firm may not use the funds or financial instruments that a client has placed with it for its own benefit or the benefit of any third party, unless the client has given his consent thereto.


Operating conditions for investment firm in relation to clients

An investment firm, when providing investment services, ancillary services or investment activities, is obliged to act in the interests of clients in accordance with the principles of an honest business relationship and professional care. The investment firm is obliged to operate in such a way so as not to impair the security of the financial system and it may not perform any activities directed towards the manipulation of market.

An investment firm shall notify clients of their categorization as a

  • retail client,
  • professional client or
  • eligible counterparty (Article 73u of  The Securities Act).

When providing investment advice or portfolio management, an investment firm is obliged to  obtain the necessary information regarding the client's or potential client's knowledge and experience in the investment field relevant to the specific type of financial instrument or investment service or ancillary service, his financial situation and his investment objectives, so as to enable the securities dealer to recommend to the client or potential client the investment services and financial instruments that are suitable for him in light of the information about his knowledge and experience.

When providing investment services other than providing investment advice or portfolio management, an investment firmis obliged to ask the client or potential client to provide information regarding his knowledge and experience in the investment field relevant to the specific type of financial instrument, investment service or ancillary service offered or demanded so as to enable the investment firm to assess whether the client understands the risks involved in relation to that financial instrument, investment service or ancillary service offered or demanded and whether it is adequate for the client.