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Whistleblower-System

Tied Agents and Securities Brokers Query

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Investment firms and investment services providers may make use of a tied agent (VGV; vertraglich gebundene Vermittler) and/or a securities broker (WPV; Wertpapiervermittler) for the provision of investment services.


The tied agent may be a natural or legal person. The principle of exclusivity applies to the tied agent. This means that the tied agent is allow allowed to act for a single investment firm, or investment services provider, or credit institution, or insurance undertaking, or branch of an investment firm or a credit institution. The tied agent may be appointed for the promotion of services, acquiring new business or receiving and submission of orders from clients as well as investment advice with regard to the financial instruments and services that are provided by the legal entity.

The legal entity that appoints a tied agent remains liable pursuant to Article 1313a ABGB for any action or omission on the part of the tied agent when acting on behalf of the entity. The legal entity must therefore also monitor the tied agent’s activities accordingly. The tied agent, providing that they are established in Austria, is required to hold a business licence pursuant to Article 136a GewO (as a financial adviser on a commercial basis) and must be entered into a register held by the FMA.


Unlike in the case of tied agents only natural persons may be active as securities brokers. Securities brokers are also only allowed to be active domestically. Securities brokers require a business licence in accordance with Article 136a or Article 136b of the Commercial Code (GewO; Gewerbeordnung). Since the profession of a securities broker is a regulated profession, the person is required to provide a certificate of competence to be able to obtain the necessary business licence.

Contrary to tied agents, the activity of securities brokers is restricted to investment advice and the receiving and transmitting of orders in relation to the financial instruments pursuant to Article 1 no. 7 points a and c WAG 2018 (transferable securities and investment fund units). Securities brokers may act on behalf of and on account of a maximum of three investment firms and/or investment services providers, but may not act for credit institutions or insurance undertakings.

Securities brokers perform their service for the respective legal entity as agents. Their conduct is therefore allocated to the respective legal entity, for which reason the agent liability is assumed by the investment firm or the investment services provider in accordance with Article 1313a ABGB regardless of whether the securities broker has disclosed the principal or not.

Commercial financial advisers are authorised to perform the activities of a securities broker in accordance with the conditions set out in Article 136a paras. 3 to 7 of the Commercial Code of 1994 (GewO; Gewerbeordnung 1994). A commercial financial adviser working as a tied agent shall not be authorised to work concurrently as a securities broker.

Securities brokers are therefore to be entered into the register held by the FMA in the same way as tied agents. A pre-requisite for making use of a securities broker when providing investment services is that so doing has been approved in the administrative decision granting a licence for the investment firm or the investment services provider.

 

Securities Brokers and Tied Agents Query