Under MiFID, when dealing in CFDs with no investment advice given to the client, which assessment must the firm perform?

• A. A Appropriateness assessment.
• B. B Suitability assessment.
• C. C No assessment required.
• D. D Mandatory face-to-face meeting.

Answer: (A)

MiFID distinguishes what happens when you provide investment advice versus when you don’t. When a firm deals in CFDs without giving investment advice, it must carry out an appropriateness assessment to check that the client has sufficient knowledge and experience to understand the product and its risks. CFDs are leveraged and complex, so this assessment helps verify the client’s ability to grasp the potential downsides before the trade proceeds. Suitability is reserved for situations where advice or personal recommendations are provided, evaluating whether a recommended product or strategy fits the client’s objectives and risk tolerance. There is no mandatory face-to-face meeting required by MiFID, and stating that no assessment is needed contradicts the rule for execution-only services.