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Investor Profile

MiFID II — Markets In Financial Instruments Directive

Promote greater transparency | Increase investor protection | Adapt investment decisions to investor characteristics.

  • Transparency
  • Protection
  • Suitability
  • Transparency when trading financial instruments

    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 2020 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.

    Investor protection in the provision of investment activities and services.

    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.

    Adapting investment decisions to investor characteristics

    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.