Experienced client - what will the tests look like? Marek Wołos is answering [IDM]

An experienced customer is a new category that was introduced by the Polish Financial Supervision Authority at the beginning of August this year. on the Forex and CFD market. Despite ESMA's unfavorable opinion, the PFSA decided that it would be worth giving a gate to traders with appropriate knowledge and experience on the way to obtaining higher leverage in brokers operating on the domestic market. To change the customer category from retail to experienced, it is enough to meet 2 with 3 conditions (we describe them in a separate article here).

The point regarding the need to undergo training of 50 hours and pass the knowledge verification test raises the most doubts - the KNF has not specified many aspects that may be associated with it. 2nd of October The Chamber of Brokerage Houses has announced the introduction of a uniform standard of knowledge verificationwhich is to apply in Poland.

What does this mean exactly? What should these standards look like? He answered Marek Wołos, expert of the Chamber of Brokerage Houses for OTC markets.

Is it already known exactly what the knowledge verification standards of an experienced customer will look like? Can you get to know them somewhere?

The standard of uniform verification of customer knowledge about the CFD market was created following the decision of the Polish Financial Supervision Authority in August this year, where the KNF complied with the demands of the Chamber and, taking into account the specificity of the Polish market, introduced as part of national intervention the status of an experienced customer that will allow investing in the market CFD with the use of 1: 100 leverage, while maintaining the protection appropriate for a retail client. The Chamber, recognizing the need to promote good business standards on the market, as well as to protect customers, by the decision of the Management Board, appointed 6 a personal verification committee composed of representatives Members of the Chamber of Brokerage Houses offering access to the CFD market and IDM representative - an expert on OTC markets. The Verification Commission has developed an examination base that is used for the purposes of examination tests.

The exam database is used to conduct exam tests and is stored and managed by IDM. The database consists of a minimum of 180 questions, included in five thematic blocks and is made available free of charge to members of the Chamber of Brokerage Houses for the purposes of customer verification. As part of the standard, the brokerage house offers 50 training hours for the client, divided into five thematic blocks and conducting an examination test that completes the training according to the rules described in the standard. Such a process, completed with a positive result of the text, is an element of customer verification when changing his status to an experienced customer. The client who passed the exam test receives a certificate issued according to the IDM pattern. The certificate allows to qualify to the group of clients experienced by the investment company - a member of the Chamber of Brokerage Houses.

A press release from the Chamber of Brokerage Houses regarding the introduction of verification standards says that IDM members are included in its scope. Will institutions that are not members of IDM also have an obligation to adapt to them wanting to offer Polish clients a change of status to an experienced client?

Taking into account the challenges related to new solutions implemented by national intervention, IDM believes that all entities operating on the CFD market in Poland should apply such a uniform standard when verifying an experienced client. For the benefit of domestic clients, the Chamber proposes to implement such a unified standard on the CFD market for all companies operating in Poland. The Chamber also forwarded the document to the Polish Financial Supervision Authority.

Will passing the verification test at a given broker entitle the client to automatically obtain the same status with other brokers (of course, assuming that the second condition of KNF guidelines is met)? In other words, will the broker be able or even have to respect the test passed in another institution?

Brokerage houses associated in IDM undertake to comply with the standard and mutual acceptance of the IDM certificate. IDM may also make the examination base available to other investment companies that decide to cooperate and undertake to apply the Chamber standard.

Will the status of an experienced client be granted permanently, without time limits, regardless of the client's investment activity after receiving it?

In his decision, the supervisor included the condition that the CFD provider verifies the conditions for granting the status of experienced customer at least once a year. If an experienced customer no longer meets the conditions set out in  After the decision, the CFD provider takes steps to change the status of the client, without affecting the value of the initial margin for positions arising from CFD transactions concluded prior to the loss of that status.

What will the verification process of the real course of 50 hours look like? The scope of knowledge was divided into five blocks. Will the submitted materials be somehow verified in terms of quality or will there be any freedom?

Examination courses are conducted individually by brokerage houses based on the standard examination base, which consists of five thematic blocks and contains 180 test questions that clarify issues and determine the target level of customer knowledge. The IDM verification committee updates the knowledge base at least once a year. The course ends with a test that verifies customer knowledge. The participant of the test may be a person who has completed 50 training at an investment company that is a member of IDM, or with whom the Chamber has concluded a contract for access to the examination base.

What does the test look like and what does it consist of? What level of good answers does the test pass?

The examination test lasts 60 minutes and covers the topics discussed during the 50-hour training in the investment company. The test includes a set of 40 questions selected randomly from the indicated knowledge base. Each test question has three answers. Only one answer is correct. For each correct answer, the test participant receives 1 point. The test participant receives 0 points for an incorrect answer. At the end of the test, the participant receives information about its result - positive or negative. A positive test result is obtained by the participant who received at least 26 points - he will give the correct answers to 65 percent. test questions. A participant with a negative test result will not be qualified to the group of experienced clients, but may retake the exam after 24 hours from the end of the previous test, with only three attempts to pass the test within a calendar month.

Will they have to be certified in any way in connection with the use of external training companies that would offer educational courses?

The IDM standard indicates that it is the Members of the Chamber of Brokerage Houses who undertake to conduct relevant trainings for a client applying for the status of an experienced client according to the scope of knowledge specified by the Chamber, divided into five thematic blocks. Training provided by external training companies is not certified by IDM.   

Thank you for the conversation and dispelling many doubts.