The Markets in Financial Instruments Directive is the EU Directive (Directive 2004/39/EC), that came into force on 1 November 2007. The main objectives of this regulation are to:
The MiFID covers the member states of the European Union plus Iceland, Norway and Liechtenstein.
In the Diário da República (supplement) of 31 October, several laws that operate the transposition of the MiFID into Portuguese law were published. To be pointed out is Decree-Law no. 357-A/2007of 31 October that greatly amends and republishes the Portuguese Securities Code.
The laws transposing the MiFID were published on the website of the online Diário da República on 01/11/ 2007, integrating the 2nd Supplement of the DR, no. 210 of 31 October 2007.
You may consult Brochuras sobre DMIF da CMVM (Brochures on the MiFID of the CMVM).
Financial intermediaries are now required to meet a new set of obligations towards their Clients, in particular:
There are three categories of investors: Eligible Counterparties, qualified Investors and non-qualified Investors, under article 317 of the Portuguese Securities Code. Each category is based on an assumption about the knowledge and experience necessary for decision-making on investments in financial instruments, in particular the implicit risks. For this reason the law determines the degree of protection for each type of investor, especially with regard to the information provided and the analysis of the adequacy of the operations or services in relation to the investor. Non-qualified investors enjoy a higher degree of protection and eligible counterparties have a lesser degree of protection.
Eligible Counterparties – This category includes:
Qualified Investors – By default, under this category are:
Non-qualified investors – Includes all investors who do not meet the criteria defined for the other categories.
Yes. You can always ask for increased protection.
Moreover, non-qualified investors may request treatment as qualified investors if they meet two of the following requirements:
The legal persons that may request treatment as an eligible counterparty are those whose size, according to their last annual accounts, meet two of the following criteria:
The request for change of treatment can refer to all of the client’s relationship with the financial intermediary, to only one type of transaction/service or to a specific transaction/service.
The reduction in protection is always subject to review by the Bank, which is reported to the client. After receiving the approval of the request by the Bank the client must state in writing, in a separate document, that he is aware of the consequences of his choice.
The change in classification only enters into force after confirmation from the Bank.
For transactions or services on financial markets Instruments the Bank analyses their adequacy to the client profile.
In the activity of receiving and transmission or execution of orders the Bank analyses the knowledge and experience for complex financial instruments on which the client is classified as a non-qualified investor.
In the activities of portfolio management on account or investment consultancy, the Bank analyses, besides the knowledge and experience of the services or financial instruments covered, the information on the financial situation and investment objectives.
In cases where the Bank cannot guarantee the adequacy, the client can accept to continue with the transaction or service under its sole and full responsibility by stating this in writing.
According to the Portuguese Securities Code, non-complex financial instruments are:
As long as:
Complex instruments are the financial instruments that are not considered non-complex, including:
The differences in protection are defined in the articles listed below of the Portuguese Securities Code, which may be consulted at Portuguese Securities Code:
Banco Carregosa provides similar treatment to all types of investors offering, as far as possible, the greatest degree of protection. Exceptions are the situations in which the Bank considers that a greater degree of protection reduces the operability of the client, or those in which the client so requests.
It has to be pointed out that the Bank has unique systems regarding the abovementioned points 6, 7, 8, 9, 10, 12, 13, 14, 15 and16.
Due to the qualified investors’ implicit nature, the Bank uses, by default, the protection reductions provided for in the abovementioned points 11 and17.
Thus, whenever permissible under the law, there will be no assessment of the adequacy of operations by the Bank for the accounts, instruments/services for which the classification as non-qualified investor has been put aside. Similarly, no specific authorisation is required for each operation in which the Bank acts as counterparty to the client.