Knowledge and Experience Test FAQ

What is the Knowledge and Experience Test?

Our Knowledge and Experience Test assesses whether you have the appropriate level to understand the risks of a complex financial instrument.

The test includes:

• a general knowledge section;
• a section on specific knowledge and experience related to the complex financial instrument.

Based on your answers, your level is:

• inappropriate: you receive a warning indicating that you do not have the appropriate knowledge and/or experience. If you still wish to place the order, you must accept this warning.
• appropriate: you can place your order without any additional warning.

Why does the bank ask you questions before you place an order?

When you invest in a complex financial instrument, the bank must assess whether you have the necessary knowledge and experience to understand the risks involved. This is not advice, but a regulatory requirement to ensure that you understand how the product works and its specific risks.

Is the Knowledge and Experience Test mandatory for all instruments?

No, it isn’t. For some instruments it is and for others, it isn’t. In short, you can place orders at Keytrade Bank:

• On shares, bonds, trackers, and funds considered non-complex: in this case, the bank is not required to assess in advance whether the instrument is appropriate for you.
• On complex financial instruments: in this case, the bank must assess your knowledge and experience via the Knowledge and Experience Test before executing the order.

Can you invest if you refuse to complete the Knowledge and Experience Test?

No, you cannot. If you refuse to answer the questionnaire, the bank will not be able to execute an order involving a complex financial instrument. This rule is intended to protect you.

Which financial instruments are considered complex?

A financial instrument is considered complex when its structure or mechanisms make its risks more difficult to understand.

Examples include:

• Listed shares (and related rights) traded on an OTC market Shares traded over the counter (OTC) are considered complex because these markets involve direct negotiation outside regulated markets.
• Complex bonds
• Funds without a European passport (non-UCITS)
• Certain Exchange Traded Products (ETPs)
  • Non-UCITS ETFs
  • Leveraged ETFs
  • ETNs (Exchange Traded Notes)
  • ETCs (Exchange Traded Commodities)
  • Inverse trackers
• Derivative financial instruments with losses limited to invested capital
  • Turbo®
  • Warrants (covered and non-covered)
  • Structured products (including Leverage & Short Certificates, Factors, Bonus Certificates, Capped Bonus Certificates, Capped and Floored Certificates)
  • Long options (call or put)
• Derivative financial instruments with losses that may exceed invested capital
  • Short options (selling call or put options) In this case, potential losses may exceed the initial investment.

How long are the results of the Knowledge and Experience Test valid?

Your answers remain valid for 3 years. After this period, you must retake the test to invest again in complex instruments.

You may also retake it at any time if your level of knowledge or experience changes.

Can you retake the Knowledge and Experience Test whenever you want?

Yes. You may retake the test at any time so that the results reflect changes in your knowledge or experience. However, for each type of complex financial instrument, the number of attempts is limited to two per day. This limit ensures the quality of your responses.

Does the bank check whether a financial instrument matches your financial situation?

No, Keytrade Bank does not check whether a financial instrument suits your objectives, assets, or risk tolerance. We only assess your ability to understand the risks of this instrument.

What information must the bank provide before you invest?

Before being able to make an informed decision, the bank must provide clear and understandable information on:

• how the financial instrument works;
• its main risks;
• fees;
• trading conditions.