Регуляция и лицензии

eToro и брокеры

Официально зарегистрированный адрес компании eToro (Europe) Ltd.: 7 Omirou Street, Limassol, Cyprus. Компания имеет лицензию на предоставление следующих услуг: прием и передача ордеров, исполнение ордеров от имени клиентов, проведение операций ностро (на собственном счету) - по одному или более финансовому инструменту. Компания также имеет лицензию на предоставление вспомогательных услуг по хранению ценных бумаг, услуг администрации финансовых инструментов, включая услуги опеки. Предоставляемые компанией услуги включают:

Инвестиционные услуги

• Прием и передача ордеров по одному или более финансовых инструментов


• Исполнение ордеров от имени клиентов


• Проведение финансовых операций на собственном счету компании

Вспомогательные услуги

• Услуги хранения и администрации финансовых инструментов, в том числе услуги опеки и иные подобные услуги


• Предоставление кредита в отношении одного или более финансовых инструментов, в условиях, когда фирма, предоставляющая такой кредит участвует в транзакции


• Услуги по обмену валют, в случае если такие услуги необходимы для предоставления инвестиционных услуг


• Инвестиционные или иные услуги финансовой аналитики

Исчерпывающую информацию в отношении услуг и операций с финансовыми инструментами, на предоставление которых компания eToro (Europe) Ltd имеет лицензию, можно получить, щелкнув на ссылки Вспомогательные услуги и Инвестиционные услуги.

 

Клиенты из азиатско-тихоокеанского региона имеют возможность осуществлять трейдинг на платформе eToro посредством компании IC Markets Ltd, имеющей австралийскую лицензию на предоставление финансовых услуг. Деятельность компании регулируется ASIC, являющейся регулятором финансовой деятельности компаний в Австралии. Номер лицензии: AFSL 335692.

Оператором платформы eToroUSA является компания Tradonomi LLC, являющаяся представляющим брокером компании Liquidity (ILQ). Деятельность eToroUSA и ILQ регулируется Commodity Futures Trading Commission (CFTC) [Комиссией по фьючерсной торговле]. Обе компании являются членами Национальной фьючерсной ассоциации (NFA). Регистрационный номер NFA компании eToroUSA: 0382918. Регистрационный номер NFA компании ILQ: 0367140.

Постановление о порядке предоставления услуг на рынках ценных бумаг (MiFID [Markets in Financial Instruments Directive]) является общеевропейским законом, вошедшим в силу 1-го ноября 2007-го года. Постановление призвано упорядочить процесс регуляции инвестиционных услуг в Европе. Основными задачами постановления являются усиление конкурентности и защиты потребителей рынка финансовых услуг. Деятельность и спектр услуг компании eToro (Europe) Ltd. соответствуют требованиям MiFID. Документация и процедуры компании полностью соответствуют требованиям MiFID.

Юрисдикции

Компания eToro, а также ее партнеры зарегестрированы и/или подлежат регуляции в следующих юрисдикциях. Компания eToro (Europe) Ltd. имеет право предлагать следующие международные услуги в странах, являющихся членами ЕС.



Regulatory Disclosures

Pillar 3 Disclosures

Regulatory Disclosures

Client Categorization

The law which provides for the provision of investment services, the exercise of
investment activities, the operation of regulated markets and other related matters
following the implementation of the Markets in Financial Instruments Directive (MiFID)
governing all EU member states, requires the categorization of clients.

eToro (Europe) Ltd. has proceeded with the new categorization of clients as retail
clients, professional clients or eligible counter parties in accordance with the
Law. All Clients are categorized as Retail Clients when opening a trading account
and have the highest level of protection (such as eligibility to the Investor Compensation
Fund, Best Execution, and Safeguarding Clients Assets etc). Clients are allowed
to request to be reclassified in writing or eToro (Europe) Ltd. may categorize them
otherwise, according to the specifications, conditions, and procedures of MiFID.

“Retail Client” is a client who is not a professional client or an eligible counter
party.

“Eligible Counter party” is a professional client or legal entity who provides investment
services that involve the reception and transmission or the execution of orders.
Clients under this category have the lowest level of protection.

“Professional Client” is a client who possesses the experience, knowledge and expertise
to make their own investment decisions and properly assess the risks that they incur.
In order to be considered a professional client, the client must comply with the
following criteria:

Α. Categories of clients who may be considered to be professionals:

The following shall be regarded as professionals in relation to all investment services
and activities and financial instruments:

1. Entities which are required to be authorized or regulated to operate in the financial
   markets. The list below should be understood as including all authorized entities
   carrying out the characteristic activities of the entities mentioned: entities authorized
   by a member state under a European Community Directive; entities authorized or regulated
   by a member state without reference to such Directive; and entities authorized or
   regulated by a non Member State
   
   
   
   1. Credit institutions;
   
   
   2. Registered Investment Firms;
   
   
   3. Other authorized or regulated financial institutions;
   
   
   4. Insurance undertakings;
   
   
   5. Collective investment schemes and management companies of such schemes;
   
   
   6. Pension funds and management companies of such funds;
   
   
   7. Commodity and commodity derivatives dealers;
   
   
   8. Other institutional investors.
   
   
   9. Locals
   
   
   
   


2. Large undertakings meeting two of the following size requirements, on a proportional
   basis:
   
   
   
   1. balance sheet total at least: 20.000.000 euro
   
   
   2. net turnover at least: 40.000.000 euro
   
   
   3. own funds at least 2.000.000 euro
   
   
   
   


3. National and regional governments, public bodies that manage public debt, central
   banks, international and supranational institutions such as the World Bank, the
   Internal Monetary Fund, the European Central Bank, the European Investment Bank
   and other similar international organizations.


4. Other institutional investors whose main activity is to invest in financial instruments,
   including entities dedicated to the securitization of assets or other financing
   transactions.
   
   
   They must however be allowed to request non professional treatment and eToro (Europe)
   Ltd. may agree to provide a higher level of protection.
   
   
   It is the responsibility of the client, considered to be a professional client,
   to ask for a higher level of protection when it deems it is unable to properly assess
   or manage the risks involved. This higher level of protection will be provided when
   a client who is considered to be a professional enters into a written agreement
   with eToro (Europe) Ltd. to the effect that it shall not be treated as a professional
   for the purposes of the applicable conduct of business regime.

Β. Clients who may be treated as professionals on request:

Clients other than those mentioned above, including public sector bodies and private
individual investors, may also be allowed to waive some of the protections afforded
by the conduct of business rules of eToro (Europe) Ltd.

eToro (Europe) Ltd. is therefore allowed to treat any of the above clients as professionals
provided the relevant criteria and procedures are fulfilled.

Such as that the client is capable of making his own investment decisions and understanding
the risks involved (fitness test). The company reserves the right to decline any
of the above requests for different categorization

Requests for more information and re-categorization shall be submitted to

http://www.etoro.com/application/help/contact.aspx

Best Execution and Order Handling Policy

1. INTRODUCTION

1.1 eToro (Europe) Ltd. (“the Company”) is an Investment Firm regulated by the Cyprus
Securities and Exchange Commission (“CySEC”) with license number 109/10.

1.2 This Policy is issued pursuant to, and reflects Compliance with, the European
Directive 2004/39/EC Of 21 April 2004 on Markets in Financial Instruments (MiFID)
and with the implementation in Cyprus legislation on Investment Services and Activities
and Regulated Markets Law of 2007 – Law 144(I)/2007 (the “Rules”) that apply to
the Company. It is not intended to create third party rights or duties that would
not already exist if the policy had not been made available and it does not form
part of any contract between the Company (or any of its affiliates) and any client
or prospective client.

1.3 What follows is an overview on how trades and orders are executed, the factors
that can affect an execution’s timing and the way in which market volatility plays
a part in handling orders when buying or selling a financial product.

1.4 Upon acceptance of a client order and when there is no specific client instruction
regarding the execution method, the Company will endeavor to execute that order
in accordance with the Best Execution policy.

1.5 Nevertheless, whenever there is a specific instruction from a client, the Company
shall execute the order following the specific instruction. In fact, any specific
instructions from a client may prevent the Company from taking the steps that it
has designed and implemented in the execution policy to obtain the best possible
result for the execution of those orders in respect of the elements covered by those
instructions.

1.6 This Policy is available to clients upon request and is also made available
on our Website. The Company reserves the right to amend or supplement this Policy
at any time.

2. FINANCIAL PRODUCTS TO WHICH THIS POLICY APPLIES

2.1 The financial products to which this Policy applies are all of the products
offered by the company.

2.2 The trading conditions of the above products are available on the Company’s
official web site at www.etoro.com

3. COMPANY’S APPROACH TO BEST EXECUTION

3.1 The Company identifies and seeks to obtain the most favorable terms reasonably
available when executing an order on behalf of a client.

3.2 To do this, the Company relies on three basic components:

• state‐of‐the‐art technology for routing, monitoring and executing orders;


• careful consideration of the elements of order execution;


• regular and rigorous examination of the overall execution quality.

3.3 When executing a buy or sell order, the Company always considers:

• the classification of the client as retail or professional;


• the nature of the client order;


• the characteristics of the financial instruments that are subject to that order;


• the characteristics of the execution venues to which that order can be directed.

4. THE ROLE OF TECHNOLOGY IN EXECUTING CLIENTS’ ORDERS

4.1 The Company uses automated systems to route and execute client orders. When
clients’ orders are received by the Company, it is automatically executed

4.2 For OTC financial instruments, the Company may trade against its own proprietary
desk or will route the orders to other market maker firms. Many of these firms also
provide automated executions of orders.

5. THE ELEMENTS OF OUR BEST EXECUTION POLICY

5.1 Routing determinations are based on five main criteria and are regularly reviewed
by the Company. Hence to determine the best way to execute an order for a client
the Company takes into consideration:

(1) Speed and Likelihood of the Execution. Due to the levels of volatility affecting
both price and volume, the Company seeks to provide client orders with the fastest
execution reasonably possible.

(2) Price Improvement and Overall Consideration of Costs. Orders are routed to market
makers and/or market centers where opportunities for price improvement exist.

(3) Size Improvement. In routing orders, the Company seeks markets that provide
the greatest liquidity and thus potential for execution of large orders.

(4) Overall Execution Quality. When determining how and where to route or execute
an order, the Company’s traders draw on extensive day‐to‐day experience with various
markets and market makers, focusing on prompt, sequential and reliable execution.

(5) Clients’ specific instructions. The Company will always execute client orders
in accordance with the instructions given by that client or on its behalf. Consequently,
if a client requires an order to be executed in a particular manner and not in accordance
with the Company’s best execution principles set forth herein, the client must clearly
state his/her desired method of execution when he/she places the order. To the extent
that a client instruction is not comprehensive, the Company will determine any non‐specified
components of the execution in accordance with these best execution principles.

5.2 The Company invites the clients to bear in mind that the duty of best execution
not only relates to price but also involves the consideration of various factors
including cost, speed and likelihood of execution and settlement. Even if a trade
appears not to have been executed at the best possible price, it does not necessarily
constitute a violation of the duty of best execution.

6. REGULAR REVIEW OF EXECUTION QUALITY AND OF EXECUTION VENUES

6.1 The Company regularly evaluates the overall quality of its order executions.
The Company studies the quality of executions for listed and OTC retail market orders.

6.2 The Company’s Management periodically evaluates the execution quality and makes
recommendations regarding order routing practices.

7. EXECUTION VENUES CURRENTLY CHOSEN

7.1 Execution Venues are the entities with which the orders are placed or to which
the Company transmits orders for execution. For the purposes for the financial instruments
provided by the Company, the Company act as a principal or an agent on the Clients
behalf; therefore the Company is not always the sole Execution Venue of the Client
orders. The Company might transmit the Client order in the external market (other
liquidity providers) if the order is for the financial instrument provided by the
Company.

7.2 The Company acknowledges that the transaction entered in Financial Instruments
with the Company are not undertaken on a recognized exchange, rather they are undertaken
through the Company’s Trading Platform, and accordingly, they may expose the Client
to greater risks that regulated exchange transactions. Therefore the Company may
not execute an order, or it may change the opening (closing) price of an order in
case of any technical failure of the trading platform or quote fees. The Client
is obliged to close an open position of any given Financial Instruments during the
opening hours of the Company’s Trading platform. The Client also has to close any
position with the same counter party with whom it was originally entered into, thus
the Company.

7.3 The Company places significant reliance to the above execution venue(s) based
on the above mentioned factors and their relevant importance. It is the Company’s
policy to maintain such internal procedures and principles in order to act for the
best interest of its client and provide them the best possible result ( or “best
execution”) when dealing with them.

8. PRICE VOLATILITY

8.1 Volatility is one factor that can affect order execution. When clients place
a high volume of orders with brokers, order imbalances and backlogs can occur. This
implies that more time is needed to execute the pending orders. Such delays are
usually caused by the occurrence of different factors: (i) the number and size of
orders to be processed, (ii) the speed at which current quotations (or last‐sale
information) are provided to the Company and other brokerage firms; and (iii) the
system capacity constraints applicable to the given exchange, as well as to the
Company and other firms.

8.2 In order to minimize such a risk, the Company has in place procedures and arrangements
which to the furthest extent possible provide for the prompt, fair and expeditious
execution of client orders.

9. EFFECTS ON ORDER EXECUTION

9.1 Clients should be aware of the following risks associated with volatile markets,
especially at or near the open or close of the standard trading session:

• Execution at a substantially different price from the quoted bid or offer or the
  last reported sale price at the time of order entry, as well as partial executions
  or execution of large orders in several transactions at different prices.


• Opening prices that may differ substantially from the previous day’s close.


• Locked (the bid equals the offer) and crossed (the bid is higher than the offer)
  markets, which prevent the execution of client trades.

10. ALTERNATIVE TYPES OF ORDERS

10.1 Given the risks that arise when trading in volatile markets, you may want to
consider using different types of orders to limit risk and manage investment strategies.

(1) Market order. With a market order the client instructs a broker to execute a
trade of a certain size as promptly as possible at the prevailing market price.
Financial institutions are required to execute market orders without regard to price
changes. Therefore, if the market price moves significantly during the time it takes
to fill a client’s order, the order will most likely be exposed to the risks outlined
above, including execution at a price substantially different from the price when
the order was entered.

(2) Limit order. With a limit order, the client sets the maximum purchase price,
or minimum sale price, at which the trade is to be executed. As a limit order may
be entered away from the current market price, it may not be executed immediately.
A client that leaves a limit order must be aware that he/she is giving up the certainty
of immediate execution in exchange for the expectation of getting an improved price
in the future. Limit orders may be routed to an exchange without human intervention.

(3) Stop order. Different from a limit order, a stop order allows selling below
the current market price or buying above the current market price if the stop price
is reached or breached. A stop order is therefore a “sleeping” order until the stop
price is reached or breached. When the stop price is reached or breached, the stop
order is converted to a market order. See section 10.1(1) for market orders.

(4) Trailing Stop Order. The trailing stop order is a stop order as described in
10.1(3) but the trailing stop price moves according to parameters set by the client.
This way the trailing stop can be used to sell if price drop more than a specified
distance from the highest price traded, or to buy if the price trades above a set
level form the lowest traded price.

Complaint Handling Policy

An investment firm must deal with any expression of dissatisfaction about any financial
services activity provided by the Company.

eToro (Europe) Ltd. predefined Complaint Handling Policy sets out the process employed
by eToro (Europe) Ltd. when dealing with complaints received by clients.

Your queries should be addressed to our Customer Support Department to href="http://www.etoro.com/application/help/contact.aspx">http://www.etoro.com/application/help/contact.aspxor on the phone 00 357-250-25060, by fax 442-030-311-342 or to the Client’s assigned
Account Manager.

Your query should be in writing and should include at least your identifying information
including your full name, username, the nature and description of the complaint,
including the date and time the issue arose. Please note that complaints which fail
to contain all the relevant information may not be handled within our regulator
response time. Typically, your query will be handled by our support department or
by your account manager. Any complaint shall be thoroughly examined and reviewed
by our support department, applicable account manager and our compliance officer
with the aim of resolving the compliant in a fair and professional manner. Clients
will be informed on the time frame of the investigation and the response will be
given as soon as practical.

We encourage you to contact us if you have any questions regarding our Complaint
Handling Policy.

Conflicts of Interests Policy

This Policy is issued in accordance with and reflects compliance with the EU directive
2004/39/EC on Markets in Financial Instruments (MiFID) and the implementation in
Cyprus legislation on Investment Services and Activities and Regulated Markets Law
of 2007 – Law 144(I)/2007 that apply to eToro (Europe) Ltd.

This Policy is only for informational purposes and is not intended to, and does
not create third party rights or duties that would not already exist if the Policy
had not been made available. The Policy does not form part of any contract between
eToro (Europe) Ltd. (or any of its affiliates) or any Client or prospective Client.

This Policy demonstrates that eToro (Europe) Ltd. is taking all reasonable steps
to identify and avoid conflicts of interest situations that may arise between eToro
(Europe) Ltd. and its employees and its Clients or among its Clients during the
course of the provision of investment services.It is the duty of the Compliance
Officer to develop and maintain this Policy so as to prevent and resolve potential
conflicts of interest.

For the purposes of identifying the types of conflict of interest which may arise
in the course of providing investment and ancillary services or a combination thereof
and whose existence may damage the interests of a Client, eToro (Europe) Ltd. need
to take into account, by way of minimum criteria, the question of whether eToro
(Europe) Ltd. or a relevant person, or a person directly or indirectly linked by
control to eToro (Europe) Ltd., is in any of the following situations, whether as
a result of providing investment or ancillary services or investment activities
or otherwise:

a) eToro (Europe) Ltd. or that person is likely to make a financial gain, or avoid
a financial loss, at the expense of the Client

b) eToro (Europe) Ltd. or that person has an interest in the outcome of a service
provided to the Client or of a transaction carried out on behalf of the Client,
which is distinct from the Client’s interest in that outcome

c) eToro (Europe) Ltd. or that person has a financial or other incentive to favour
the interest of another Client or group of Clients over the interests of the Client

d) eToro (Europe) Ltd. or that person carries on the same business as the Client

e) eToro (Europe) Ltd. or that person receives or will receive from a person other
than the Client an inducement in relation to a service provided to the Client, in
the form of monies, goods or services, other than the standard commission or fee
for that service

eToro (Europe) Ltd. shall maintain policies, controls and procedures to manage the
identified conflicts of interest. eToro (Europe) Ltd. shall undertake ongoing monitoring
of business activities to ensure that internal controls are appropriate, some of
which are detailed below:

a) Effective procedures to prevent or control the exchange of information between
relevant persons engaged in activities that may cause a conflict of interest where
the exchange of that information may harm the interests of clients.

b) The separate supervision of relevant persons whose principal functions involve
carrying out activities on behalf of, or providing services to, clients whose interests
may conflict, or who otherwise represent different interests that may conflict,
including those of eToro (Europe) Ltd.

c) The removal of any direct link between the remuneration of relevant persons engaged
in one activity and the remuneration of, or revenues generated by, different relevant
persons principally engaged in another activity, where a conflict of interest may
arise in relation to those activities.

d) Measures to prevent or limit any person from exercising inappropriate influence
over the way in which a relevant person carries out investment services or activities.

e) Measures to prevent or control the simultaneous or sequential involvement of
a relevant person in separate investment or ancillary services or activities where
such involvement may impair the proper management of conflicts of interest.

eToro (Europe) Ltd. shall also have in place Chinese Walls procedures: No communicating
of information and data between the various business units of eToro (Europe) Ltd.
and especially, whether eToro (Europe) Ltd.’s officers and employees have access
to data in the possession of business units to which such access is not permitted,
so that to prevent the flow of confidential information in a way that which adversely
affect the interest of the Clients.

Where a conflict of interest arises, eToro (Europe) Ltd. will, if made aware of
it, disclose it to a client or potential client prior to undertaking investment
business for that client. If eToro (Europe) Ltd. does not believe that disclosure
is appropriate to manage the conflict, we may choose not to proceed with the transaction
or matter giving rise to the conflict.

eToro (Europe) Ltd. reserves the right to review and/or amend its Policy whenever
if deems this necessary/appropriate.

Investors Compensation Fund

eToro (Europe) Ltd. is a member of the Investor Compensation Fund for Customers
of Cypriot Investment Firms (CIFs) and other Investment Firms (IFs) which are not
credit institutions (the “Fund”).

The Fund was established under the Investment Firms (IF) Law 2002 as amended (the
“Law”) and the Establishment and Operation of an Investor Compensation Fund for
Customers of CIFs Regulations of 2004 (the “Regulations”), which were issued under
the Law.

The object of the Fund is to secure any claims of Covered Clients against members
of the Fund and the Fund exists to compensate Covered Clients for any claims arising
from the failure by a member of the Fund to fulfill its obligations regardless of
whether that obligation arises from legislation, the client agreement or from wrongdoing
on the part of the member of the Fund.

A failure to fulfill its obligations consists of the following:

1. A failure to return to a Covered Client funds owed to them or funds which belong
   to them but are held by a member of the Fund, directly or indirectly, in the framework
   of the provision by the member of the Fund to the client of a covered service and
   which the client has requested that the member of the Fund returns in exercise of
   their relevant right; OR


2. A failure to hand over to a Covered Client financial instruments that belong to
   them and which the member of the Fund holds, manages or keeps on its account, including
   the case where the member of the Fund is responsible for the administrative management
   of the said financial instruments.

The payment of compensation which will be initiated where:

1. The member of the Fund is unable to meet client claims provided that this inability
   is resultant from its financial circumstances which show no realistic prospect of
   improvement in the near future; OR


2. A judicial authority has on reasonable grounds directly related to the financial
   circumstances of the member issued a ruling with the effect that investors’ ability
   to lodge claims against it are suspended.

A well founded claim by the client against the member must exist.

Covered Services: Covered Services are the services listed on eToro (Europe) Ltd.’s
license (109/10) issued by CySEC (Cyprus Securities and Exchange Commission).<br
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The fund does not cover institutional or professional investors and the total payable
compensation to each covered client may not exceed EUR 20,000, irrespective of the
number of accounts held, currency and place of offering the investment service.

Covered Clients All eToro (Europe) Ltd. clients are covered by the Fund unless they
fall within the following categories

1. The following categories of institutional and professional investors:
   
   
   
   1. Investment Firms
   
   
   2. Legal entities associated with eToro (Europe) Ltd. and, in general, belonging to
      the same group of companies
   
   
   3. Banks
   
   
   4. Cooperative credit institutions
   
   
   5. Insurance companies
   
   
   6. Collective investment organizations in transferable securities and their management
      companies
   
   
   7. Social insurance institutions and funds
   
   
   8. Investors characterized by eToro (Europe) Ltd. as professionals
   
   
   
   


2. States and supranational organizations.


3. Central, federal, confederate, regional and local administrative authorities


4. Enterprises associated with eToro (Europe) Ltd. Managerial and Administrative staff.


5. Shareholders of eToro (Europe) Ltd. whose participation directly or indirectly in
   the capital of the member of the fund amounts to at least 5% of its share capital,
   or its partners who are personally liable for the obligations of the member of the
   Fund, as well as persons responsible for the carrying out of the financial audit
   of the member of the Fund as provided by the Law, such as qualified auditors.


6. Investors having in enterprises connected with eToro (Europe) Ltd. and in general
   of the group of companies to which eToro (Europe) Ltd. belongs, positions or duties
   corresponding to the ones listed in paragraphs 4 and 5 above.


7. Second-degree relatives and spouses of the persons listed in paragraphs 4, 5 and
   6 as well as third parties acting for the account of these persons.


8. Apart from investors convicted of a criminal offence pursuant to the Prevention
   and Suppression of Money Laundering Activities Law of 1996 -2000, investor-clients
   of eToro (Europe) Ltd. responsible for facts pertaining to eToro (Europe) Ltd. that
   have caused its financial difficulties or have contributed to the worsening of its
   financial situation or which have profited from these facts.


9. Investors in the form of a company which due to its size is not allowed to draw
   a summary balance sheet in accordance with the Companies Law or a corresponding
   law of a Member State.

Prerequisites for Initiating the Compensation Payment Procedure: The Fund initiates
the compensation payment procedure when at least one of the following prerequisites
is fulfilled:

(a) The Cyprus Securities and Exchange Commission has determined that eToro (Europe)
Ltd. is for the time being unable to meet its obligations arising from its investors-customers’
claims, in connection with the covered services it has provided, as long as such
inability is directly related to eToro (Europe) Ltd.’ financial position which has
no realistic prospect of improvement in the near future; OR

(b) A Court, based on grounds directly related to the financial position of eToro
(Europe) Ltd., has made a ruling which has the effect of suspending the investors-customers‘
ability to lodge claims against eToro (Europe) Ltd..

Upon issuance of a decision by the Cyprus Securities and Exchange Commission or
by the Court on the commencement of the compensation payment procedure, the Fund
publishes in at least three national newspapers an invitation to the covered customers
to make their claims against eToro (Europe) Ltd. arising from covered services,
designating the procedure for the submission of the relevant applications, the deadline
for their submission and their content.

Calculating the Amount of Payable Compensation:

The amount of compensation payable to each Covered Customer is calculated in accordance
with the legal and contractual terms governing the relation of the Covered Customer
with eToro (Europe) Ltd., subject to the rules of setoff applied for the calculation
of the claims between the Covered Customer and eToro (Europe) Ltd.

The calculation of the payable compensation derives from the sum of total established
claims of the Covered Customer against eToro (Europe) Ltd., arising from all Covered
Services provided by eToro (Europe) Ltd. and regardless of the number of accounts
of which the customer is a beneficiary, the currency and place of provision of these
services.

The Fund is obliged to pay to each Covered Customer – claimant the compensation
within three months from sending to the Cyprus Securities and Exchange Commission
the minutes with the compensation beneficiaries.

For any further information regarding the Fund, please refer to the offices of the
Administrative Committee of the Fund, at the following address: Administrative Committee
of the Investor Compensation Fund for Customers of CIFs and other IFs: 32 Stasikratous
Street, 4th floor P.O. Box 24996, 1306 Nicosia E-mail address: [email protected]
Fax no.: 22 375762

Anti Money Laundry Policy

Cyprus enacted the appropriate legislation and has taken effective regulatory and
other measures by putting in place suitable mechanisms for the prevention and suppression
of money laundering and terrorist financing activities. Moreover, Cyprus is committed
to apply all the requirements of international treaties and standards in this area
and, specifically, those deriving from the European Union Directives.

Under the current Law, which came into force on 1 January 2008, the Cyprus legislation
has been harmonized with the Third European Union Directive on the prevention of
the use of the financial system for the purpose of money laundering and terrorist
financing (Directive 2005/60/ΕC).

As a licensed Investment Firm, eToro (Europe) Ltd. shall follow the regulations
therefore must ensure that appropriate measures are taken to combat money laundering.

Capital Adequacy

With accordance to the CySEC’s regulations, every Investment Firm must have own
funds, which are at all times more than or equal to the sum of its capital requirement,
when there is a minimum requirement set forth by law, under which no Investment
Firm can operate. An Investment Firm must have in place sound, effective and complete
strategies and processes to asses and maintain on an ongoing basis the amounts,
types and distribution of internal capital that they consider adequate to cover
the nature and level of the risks to which they might be exposed. These strategies
and processes are subject to regular internal review and to the CySEC’s review,
to ensure that they remain comprehensive and proportionate to the nature, scale
and complexity of the activities of the Firm.

Safeguarding of Clients Assets

For the purposes of safeguarding clients’ rights in relation to financial instruments
and funds belonging to them, an Investment Firm must keep such records and accounts
as are necessary to enable it at any time and without delay to distinguish assets
held for one client from assets held for any other client, and from its own assets.
Such separation of accounts is being supervised both internally and externally,
by the CySEC. We operate only with reputable payment institutions and payment providers
such as Barclays’, Commerzbank and other first tier banks.

Pillar 3 Disclosures

Risk Management Disclosures – 2011

Scope of the risk management report

To present you the work and activities undertaken by the Risk Manager of the Company
during the period from the 1st of January 2011 to the 31st of December 2011, for
the evaluation and management of the various risks faced by the Company. The Report
has been prepared in accordance with the relevant provisions of Law 144(I)/2007,
as amended (hereinafter, the “Law”), Law 188(I)/2007 (consolidated with Law 58(I)/2010)
and the relevant Directives and Circulars issued by the Cyprus Securities and Exchange
Commission (hereinafter, the “CySEC”).

Executive Summary

The work of the Risk Manager during the period under review was to ensure that the
Company’s policies and procedures in place, relating to the management of the various
risks faced by the Company, were followed, as well as to assess and restructure
the said policies and procedures, when and as it was deemed necessary.

Managing risk effectively in a multifaceted organisation, operating in a continuously
changing risk environment, requires a strong risk management culture. To this end,
the Company has established an effective risk oversight structure and the necessary
internal organisational controls to ensure that the Company identifies and manages
its risks adequately, establishes the necessary policies and procedures, sets and
monitors relevant limits and complies with the relevant legislation.

1. ANALYSIS OF THE RISKS FACED BY THE COMPANY

The Company is exposed to credit risk, operational risk, foreign exchange risk,
interest rate risk, funding liquidity risk, money laundering and terrorist financing
risk, compliance risk, reputation risk, online fraud risk and information and technology
risk. The analysis of the risks included in this Section of the Report describes
each type of risk, the measures and policies taken by the Company to manage these
risks and the standing of the Company with respect to each risk, as applicable.

1.1 Credit Risk

Credit Risk arises when failures by counterparties to discharge their obligations
could reduce the amount of future cash inflows from financial assets on hand at
the balance sheet date. The Company has no significant concentration of credit risk
and implements the standardised approach for credit risk.

Cash balances are held with highly rated financial institutions and the Company
has policies in accordance with the relevant legislation, to limit the amount of
credit exposure to any financial institution, the company also developed internal
policy which reviews on weekly basis and examine the rates of the financial institutions
and limit its assets according to the risk rate of the institutions. The risk of
default of these credit institutions is quite low, based on the relevant calculations
in the Company’s capital requirements.

Further to the above the Company has policies to diversify risks and to limit the
amount of credit exposure to any particular counterparty in compliance with the
requirements of the CySEC Directive DI144-2007-06. The Company uses the Standardized
Approach to Credit Requirements for the calculation of its credit risk.

1.2 Operational Risk

Operational risk means the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events. Operational risk includes
legal risk but excludes strategic and reputational risk. The following list presents
some event types, included in operational risk, with some examples for each category:

• Internal Fraud – misappropriation of assets, intentional mismarking of positions,
  bribery.


• External Fraud – theft of information, hacking damage, third-party theft and forgery.


• Employment Practices and Workplace Safety – discrimination, workers compensation,
  employee health and safety.


• Clients, Products, & Business Practice – market manipulation, antitrust, improper
  trade, product defects, fiduciary breaches, account churning.


• Business Disruption & Systems Failures – utility disruptions, software failures,
  hardware failures.


• Execution, Delivery, & Process Management – data entry errors, accounting errors,
  failed mandatory reporting, negligent loss of Client assets.

The Company manages operational risk through a control-based environment in which
processes are documented and transactions are reconciled and monitored. This is
supported by continuous monitoring of operational risk incidents to ensure that
past failures are not repeated. For the calculation of operational risk in relation
to the capital adequacy returns, the Company uses the Basic Indicator Approach.

1.3 Foreign Exchange Risk

Foreign exchange risk is the effect that unanticipated exchange rate changes have,
on the Company. In the ordinary course of business, the Company is exposed to minimal
foreign exchange risk, which is monitored through various control mechanisms. The
foreign exchange risk in the Company is effectively managed by setting and controlling
foreign exchange risk limits, such as through the establishment of maximum value
of exposure to a particular currency pair as well as through the utilization of
sensitivity analysis. The Company is mainly exposed to the fluctuation of the Euro
versus the United States Dollar (USD), due to the fact that Major Company’s assets
are denominated in Euro whereas the reporting currency is the USD. The Risk Manager
monitors these risks with the assistance of the accounting function and based on
the fluctuation of the relevant exchange rates, the necessary hedging activities
are undertaken.

1.4 Interest Rate Risk

Interest rate risk is the risk that the value of financial instruments (including
currencies) will fluctuate due to changes in the market interest rates. The Company
is exposed to interest rate risk in relation to its bank deposits.

Interest rate risk is the risk that the value of financial instruments (including
currencies) will fluctuate due to changes in the market interest rates. The Company
is exposed to interest rate risk in relation to its bank deposits.

However, the Company’s income and operating cash flows are substantially independent
on changes in market interest rates due to the fact that the Company, other than
cash at bank which attracts interest at normal commercial rates, it has no other
significant interest bearing financial assets or liabilities.

Nonetheless, the Risk Manager monitors these risks with the assistance of the accounting
function and based on the fluctuations of the relevant rates, the necessary hedging
activities is undertaken, the review is being done on weekly basis by the accounting
function

During 2011, the interest rate risk has been minimal, due to the generally low level
of key interest rates such as those set by the United States Federal Reserve and
the European Central Bank, in addition to the fact that these levels have not fluctuated
significantly during the period under review.

1.5 Funding Liquidity Risk

Funding liquidity risk is the possibility that, over a specific horizon, the Company
will be unable to meet its demands/needs for money (i.e. cash) through mismatch
of assets and liabilities. During the period under review, the Company was not exposed
to funding liquidity risk.

Policies and procedures for the measurement and management of the Company’s net
funding position and requirements, on an ongoing and forward-looking basis, have
been established in order to mitigate the funding liquidity risk. Furthermore, the
Company has considered, alternative scenarios and the assumptions underpinning decisions
concerning the net funding position were reviewed regularly by the Risk Manager.

1.6 Money Laundering and Terrorist Financing Risk

Money laundering and terrorist financing risk mainly refers to the risk that the
Company may be used as a mean to launder money and/or finance terrorism. The Company
has established policies, procedures and controls in order to mitigate the money
laundering and terrorist financing risks.

1.7 Compliance Risk

Compliance risk is the current and prospective risk to earnings or capital arising
from violations of, or non-conformance with, laws, bylaws, regulations, prescribed
practices, internal policies, and procedures, or ethical standards. This risk exposes
the Company to financial loss, fines, civil money penalties, payment of damages,
and the voiding of contracts. Compliance risk can lead to diminished reputation,
reduced Company value, limited business opportunities, reduced expansion potential,
and an inability to enforce contracts. In general the Company has enhanced the compliance
of all departments according to regulatory requirements.

Compliance risk is limited to a significant extent due to the supervision applied
by the Compliance Officer, as well as the monitoring controls and systems applied
by the Company.

1.8 Reputation Risk

Reputation risk is the current or prospective risk to earnings and capital arising
from an adverse perception of the image of the Company by Clients, counterparties,
shareholders, investors or regulators. Reputation risk could be triggered by poor
performance, the loss of one or more of the Company’s key directors, the loss of
large Clients, poor Client service, fraud or theft, Client claims, legal action,
regulatory fines and from negative publicity relating to the Company’s operations
whether such fact is true or false.

The Company has policies and procedures in place when dealing with possible Client
complaints in order to provide the best possible assistance and service under such
circumstances. The possibility of having to deal with Client complaints is low,
compared to the high amount of the Company’s Clients, as the Company does its best
to provide high quality services to its Clients and has the appropriate procedures
in place. In addition, the Company’s Board members and Senior Management is comprised
of experienced professionals who are recognized in the industry for their integrity
and ethos, and, as such, add value to the Company.

In the few occasions which the Company had dealt with Client complaints, the Company
has successfully resolved the relevant complaints.

1.9 Online Fraud

Online fraud could occur when Clients illegally use the credit cards or other online
payment methods of others in order to fund their accounts with the Company. This
risk exposes the Company to monetary loss and to potential implications with the
credit cards’ issuers.

The Company has developed robust risk management technology to identify fraudulent
transactions. To this end, the Company employs the Risk Rule Engine Alerting and
Flagging System to prevent and identify online fraud.

Following an alert/flag by the Company’s Risk Rule Engine Alerting and Flagging
System, the Company investigates the relevant account(s) to establish whether the
transaction(s) in question are indeed fraudulent. In case the Company establishes
that fraud activity has been performed, the Company then refunds the funds to the
original mean of payment (i.e. to the real payment account holder).

In addition Credit card issuers have adopted credit card security guidelines as
part of their ongoing efforts to prevent identity theft and credit card fraud. The
Company continues to work with credit card issuers to ensure that its services,
including customer account maintenance, comply with these rules. There can be no
assurances, however, that the Compny’s services are fully protected from unauthorized
access or hacking.

When there is unauthorized access to credit card data that results in financial
loss, there is the potential that the Company could experience reputational damage
and parties could seek damages from the Company.

1.10 Information Technology Risk

Information Technology (hereinafter, “IT”) risk could occur as a result of inadequate
information technology and processing, or arise from an inadequate IT strategy and
policy or inadequate use of the Company’s IT. Specifically, the company recruited
an IT Manager, policies have been implemented regarding improved backup procedures,
software maintenance, hardware maintenance, improved security policies, use of the
internet, anti-virus procedures and monitoring systems. Materialization of this
risk has been minimized to the lowest possible level.

2. CAPITAL MANAGEMENT

This is the risk that the Company will not comply with capital adequacy requirements
or may not be able to continue as a going concern. The primary objective of the
Company with respect to capital management is to ensure that the Company complies
with the imposed capital requirements of Section 67 of the Law with respect to its
own funds and that the Company maintains strong capital ratios in order to support
its business, to maximize shareholders’ value and to optimise its debt and equity
balance. The Company must have own funds which are at all times more than or equal
to the sum of its capital requirements. In addition, the Company must not fall below
the level of its initial capital in any case.

Furthermore, CySEC requires every Cyprus Investment Firm to maintain a minimum ratio
of capital to risk weighted assets of 8%. The capital adequacy ratio expresses the
capital base of the Company as a proportion of the total risk weighted assets. CySEC
may impose additional capital requirements for risks which are not covered by Pillar
I of Basel II. The Company is further required by the Law to report on its capital
adequacy on a monthly basis. The Senior Management as well as the Risk Manager monitor
such reporting and have policies and procedures in place to help meet the specific
regulatory requirements. This is achieved through the preparation (on a monthly
basis) of accounts to monitor the financial and capital position of the Company.

The Company manages its capital structure and makes adjustments to it in light of
the changes in the economic and business conditions and the risk characteristics
of its activities. The capital adequacy ratio of the Company is 13.05 %.

3. OTHER MATTERS

3.1 The Ongoing Financial Crisis

The Company’s business primarily involves the offering of investment services relating
to non-deliverable foreign exchange, mainly to Retail Clients. Despite the ongoing
uncertainty over the global economic conditions and the volatility of the financial
markets during the period under review, the activity level of the retail foreign
exchange market has endured the financial crisis relatively better than most other
investment firms involved in other type of investment services and/or financial
instruments, and, as such, the Company’s business has not been significantly affected
by the ongoing financial crisis. Nevertheless, the Company is closely monitoring
the effects of the ongoing global financial crisis, and it is ready to take the
relevant actions when and where necessary.

3.2 Data Retention Policy

The Company pays particular attention to its data retention. To this end, the Company
conducts frequent backups with respect to all the Company’s IT systems for all types
of data and information and stores these backups at a safe remote location outside
the Company’s head offices.

4. TRAINING

During the period under review, a number of the Company’s employees, including the
Risk Manager, have attended a one day In-House AML Workshop as well as courses on
the applicable Compliance legislation and its relevant procedures. In addition,
financial controller and management attend on few days in house sessions of advanced
Capital adequacy Workshop . Further to this, the Risk Manager has provided advice
and assistance, when it was required, to the Company’s personnel through one-to-one
sessions, as applicable and in addition any new employee receive training sessions
from the relevant department related to risk issues. Furthermore, due to the nature
of the Risk Manager function, the Risk Manager receives information through various
online sources with respect to the modern risk management practices and any potential
new risks.

To present you the work and activities undertaken by the Risk Manager of the Company
during the period from the 1st of January 2011 to the 31st of December 2011, for
the evaluation and management of the various risks faced by the Company. The Report
has been prepared in accordance with the relevant provisions of Law 144(I)/2007,
as amended (hereinafter, the “Law”), Law 188(I)/2007 (consolidated with Law 58(I)/2010)
and the relevant Directives and Circulars issued by the Cyprus Securities and Exchange
Commission (hereinafter, the “CySEC”).