Promote greater transparency | Increase investor protection | Adapt investment decisions to investor characteristics.
MiFID II enhances the transparency of transactions in financial instrument markets, in both the pre-trade and post-trade periods, as well as the reporting of information to the competent authorities. To this end, it introduced a set of measures for financial intermediation activity:
Reporting to the competent
authorities, namely to the Comissão do Mercado de Valores
Mobiliários
(Securities and Exchange Commission — CMVM) in Portugal, on
transactions carried out with regard to the various financial
instruments, within or outside the regulated market, including
information such as the traded instrument,
traded quantities and prices and the parties (buyer and seller) involved
in each trade.
Adoption of a specific policy to
ensure better reception and transmission of orders for financial
instruments
when banks or other finance companies act on behalf of their customers.
Please see the Best Bank Order Reception and Transmission Policy and the 2023 report.
Provision of information on costs and
charges associated with the various products and services, whether
ex-ante or ex-post to the relevant trade or transaction.
Provision of information on the
nature, operation and risks of the various financial products and
services,
as well as their fiscal framework and target market.
Disclosure of information on financial
compensation, or compensation of another nature, received by financial
intermediaries and their employees from third parties.
MiFID II has introduced a set of measures aimed at enhancing investor protection, which include:
Classification of customers as
different types of investors: retail, professional and eligible
counterparty.
This classification has implications for investor protection, with
regard to the various products and services purchased, since it
corresponds to greater or lesser protection. The degree of protection
set out by MiFID II is greater
the lesser the Customer's knowledge and experience with regard to
financial markets and instruments is estimated to be, with retail
Customers therefore benefiting from greater protection.
Recording of evidence of all contact
with Customers prior to executing transactions on financial instruments.
Recording telephone conversations or electronic communications involving
Customer orders is justified in order to enhance investor protection,
improve market surveillance and increase legal certainty for investment
firms and their
Customers. Such records should ensure that there is evidence to prove
the terms of any orders given by Customers and their correspondence with
transactions executed by investment firms, as well as to detect any
behavior that may
be relevant in terms of market abuse, namely when firms trade on their
own account.
Provision of information on costs and
charges associated with the various products and services, whether
ex-ante or ex-post to the relevant trade or transaction.
Provision of information on the
nature, operation and risks of the various financial products and
services,
as well as their fiscal framework and target market.
Disclosure of information on financial
compensation, or compensation of another nature, received by financial
intermediaries and their employees from third parties.
Where orders are communicated by Customers through channels other than by telephone, such communications must be made through a durable medium such as mail, email or documentation of Customer orders made at meetings. For example, the content of a face-to-face conversation with a Customer may be recorded by minutes.
Adoption of a policy for managing
conflicts of interest in financial intermediation activities. Please
see the Best Bank Conflict of Interest Policy.
Reinforcement of training for
employees who provide information about financial products and services
or who provide investment advice services.
In order to adapt products and services to investor characteristics, in particular to their knowledge and experience, ability to bear losses, risk tolerance and objectives and needs, MiFID II sets forth that producers (creators of financial products) should define a target market for each product or service.
This target market can be subdivided into:
Positive target market: Identifies the
characteristics of investors for whom the product in question is
particularly suitable.
Negative target market: Identifies the
characteristics of investors for whom the product in question is
not suitable, and investors with these characteristics are even advised
not to buy said product.
By completing the investor profile questionnaire, we will help you identify your characteristics in terms of your knowledge and experience, ability to bear losses, risk tolerance and objectives and needs, and thus, depending on the information about the target market for a particular product, you can easily see whether or not it is suitable for you.
