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Descripion of Investment products and related risks

Classification of Investment Products

SEB assesses whether or not the intended investment service or product is appropriate for the client when providing investment services. SEB has classified financial instruments and products into five risk levels in order to make the assessment process easier.

Classification is based on the nature and general complexity of the financial instruments and the risks associated with investing in them. Financial instruments with very low risk level are generally the least complex and least risky, whilst financial instruments with very high risk level are the most complex and the riskiest.

If SEB decides on the basis of the information provided by the client that a financial instrument or product is appropriate for the client then SEB also considers financial instruments or products of the same type but with a lower risk level to be appropriate for the client. If based on the assessment the financial instrument or product is considered appropriate for the client, it does not mean that SEB gives advice to purchase or sell such instrument or product.

Clients should keep in mind that several types of risk have not been considered in the classification of financial instruments and products. Information can also be found in the rules, prospectuses, simplified prospectuses, factsheets and other materials of financial instruments and other products.

Classification

  • Very low risk level financial products - mainly short-term investments. Under normal circumstances, there is generally a very low risk of loss associated with such financial instruments and products, provided that the financial instrument and/or product is quoted in major currency and is kept until maturity.
  • Low risk level financial instruments and products - carry the risk that you may lose part of your investment.
  • Medium risk level financial instruments and products - carry the risk that you may lose a significant part of your investments.
  • High risk level financial instruments and products - carry the risk that you may lose all of the capital invested. The financial instruments in this product group are more complex and may be difficult to understand than lower risk level products.
  • Very high risk level financial instruments and products - the riskiest investments where you may lose more than the initial investment and may be required to pay additional amounts. These products are more complex than most other products and should only be considered by investors with significant experience.

Complexity - financial instruments are classified into two complexity groups: complex (the appropriateness of financial instruments is generally tested) and non-complex (the appropriateness of financial instruments is generally not tested).

In all risk levels each product has a risk to lose the initial investment, just the probability of it happening depend on the risk level of a particular product – the lower the risk level, the lower the probability.

Important general information

The placement of a financial instrument or product in the product classification may change in time depending on the instrument’s or product’s characteristics. For example, the rating of a bond may vary over time and its classification may therefore also change. SEB tries to assess the appropriateness of an instrument or product to its clients on the basis of the instrument’s classification at the time of the transaction. Although financial instruments and products are classified with the best intentions and as a result of a thorough analysis, SEB cannot be held liable for any inaccuracies that may occur. Also, there may be financial instruments that SEB has not yet classified.

Excluded Risks

Several types of risks have been excluded in the classification of financial instruments and products.

  • The currency risk, which may emerge when a client invests in a currency that differs from their major currency, has not been considered. For investors it is less risky to invest in their major currency, unless they have extensive knowledge of currency risks;
  • Liquidity risk (the tradability of an instrument on the market) may vary over time;
  • The investment horizon or investment goal of the specific client is not considered in the classification of products. Clients who invest in an instrument or product must understand the following:
    • investments are made only at the client’s own risk;
    • clients should acquaint themselves with the general trading terms and conditions of the intermediaries via whom they trade in financial instruments;
    • when trading in financial instruments, clients should carefully read the transaction confirmations and promptly notify SEB of any possible errors;
    • clients should regularly monitor the changes in the value of their holdings and positions in financial instruments;
    • clients should implement appropriate measures whenever necessary to reduce the losses relating to their investments.
  • Tax risk, which is related to any type of taxes in activity of investing (e.g. income tax to paid on the sale of a product). Clients should independently evaluate all circumstances related to taxes on investments or their return even if in the material provided to the clients the bank has indicated particular tax aspects.

Definition of Major Currencies

EUR, GBP, USD, CHF, CAD, AUD, JPY, SEK, DKK and NOK are defined as major currencies.

SEB banka informs that financial instruments, that are available only on the customer’s own initiative are not subject of target market assessment, only the knowledge and experience of the customer will be evaluated (if applicable). Financial instruments that SEB banka actively offers to clients, recommends, distributes marketing material or otherwise promotes product sales, are subject to target market assessment in order to meet the needs, characteristics, and objectives of an identified target market.

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