CONDITIONS AND CRITERIA FOR CLASSIFICATION OF CLIENTS AS PROFESSIONAL OR NON-PROFESSIONAL

in compliance with the Markets in Financial Instruments Act and Ordinance №38 on the Requirements to the Activities of Investment Intermediaries

Non-professional clients

 In compliance with the Markets in Financial Instruments Act and Ordinance №38 on the Requirements to the Activities of Investment Intermediaries, all clients who do not meet the criteria for professional clients will be categorized as non-professional clients by Deltastock AD

Under the Markets in Financial Instruments Act and Ordinance №38 a client categorized as a non-professional, is given the opportunity to change his/her classification status to professional. This is possible, if the client meets at least two of the following criteria:

a) During the past year the individual has conducted at least 10 deals per quarter, of a substantial size on the respective market;

b) The individual’s investment portfolio size, which includes financial instruments and cash deposits, is over the BGN equivalent of 500 000 Euro;

c) The individual has worked in the financial sector no less than one year at a position, which requires knowledge concerning the respective deals and services.

Professional clients

All clients (investors), who, in compliance with the Markets in Financial Instruments Act and Ordinance №38, have the experience, knowledge and skills necessary to make individual investment decisions and to evaluate all of the risks associated with the respective investment, will be categorized as professional clients by Deltastock AD

Regarding the regulatory requirements, Deltastock AD may categorize as professional clients:

a) Credit institutions;

b) Investment intermediaries;

c) Other institutions, subject to licensing or otherwise regulated;

d) Insurance companies;

e) Collective investment enterprises;

f) Pension funds;

g) Entities that by profession trade with derivative financial instruments on commodities;

h) Legal entities that offer investment services or execute investment activities that are expressed only in trading for their own account on the markets for financial futures or options or other derivative financial instruments on the money market with the only objective hedging of positions on the markets of derivative financial instruments, or when they trade on someone else’s account (also participant in the market) on these markets, or determine the price for them and when they are guaranteed by a clearing member of the very same market, when the responsibilities for execution of the contracts closed by such entities are assumed by a clearing member of that market;

i) Other institutional investors;

j) Large companies that comply with at least two of the listed below criteria:

- Total Assets/Liabilities- at least € 20.000.000 in BGN equivalency;

- Net turnover- at least € 40.000.000 in BGN equivalency;

- Own assets- at least € 2.000.000 in BGN equivalency.

k) National and regional state agencies and state agencies that participate in the management of the national debt, central banks, international institutions such as the World Bank, International Monetary Fund, Central European Bank, European Investment Banks and other similar international organizations..

l) Other institutional investors whose major activity is the investment in financial instruments, including entities that perform the services of securitization of assets or other financial transactions.

Eligible counterparties

Clients in compliance with the Markets in Financial Instruments act and Ordinance №38 categorized by Deltastock AD as eligible counterparties are:

a) Investment intermediaries

b) Credit institutions

c) Insurance companies

d) Collective investment schemes

e) Pension funds

f) Pension- insurance associations

g) Governments

h) State agencies that participate in the management of the national debt

i) Central Banks and international institutions

            Deltastock AD defines its clients as professional, non-professional or eligible counterparties, according to the above mentioned criteria. In accordance with the regulations of the active legislation, Deltastock AD can, on its own initiative or by request of the client:

1. Define as a professional or non-professional client, someone who in other cases would be an eligible counterparty.

2. Define as a non-professional client, someone who considers himself a professional.

            The different categories, guarantee a different level of client protection. Regardless of which of the above mentioned criteria the client is categorized in, he/she has the right to ask for a higher or lower level of protection.

            To make a better assessment of the client, Deltastock AD will request information about his/her knowledge, experience and skills in trading with financial instruments, the investment objectives, financial situation and risk tolerance. The information will be used to determine the most appropriate service regarded by Deltastock AD or preferred by the client. In statutory cases, Deltastock AD is obliged to deny the offering of investment services should a client refuse to provide the required information.