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On 1 November 2007 the European Union Markets in Financial Instruments Directive (MiFID) came into effect.

The Directive regulates the provision of investment services and the functioning of financial markets.

It was further developed via European Union Regulation no. 1287/2006 implementing the Directive as regards recordkeeping obligations for investment firms, transaction reporting, market transparency, admission of financial instruments to trading, and defined terms for the purposes of that Directive.

The European Directive was transposed into Spanish law via Law 47/2007 of 19 December 2007, amending Law 24/1988 of 28 July 1988 on the Securities Market, and Royal Decree 217/2008 of 15 February 2008 on the legal regime of investment firms and other undertakings that provide investment services

MiFID requires that the provision of investment services always be carried on within a framework of high-level protection for investors, which implies the adoption of a number of measures aimed at strengthening that protection:

  • With respect to the classification of clients based on their knowledge, qualification and experience as investors, they are divided into the following categories: retail, which will consist of the great majority of customers, who will thus be afforded the highest level of protection; professionals, intended for institutional investors and large companies; and eligible counterparties, consisting of investment firms, insurance companies, credit institutions, etc. Any customer may ask to be switched from one category to another, provided the legally stipulated requirements and procedures are followed.
  • As regards the classification of products, the principal investment products regulated by the MiFID rules are investment funds, shares (equities), fixed-income securities and derivatives, and, depending on their degree of complexity and associated risks, they are classified as complex or non-complex.
  • The MiFID rules also regulate the suitability and appropriateness tests, which means that the financial institutions must know the expectations and preferences of their clients when carrying out their investments.
  • Lastly, with respect to disclosures to clients, all information must be fair, clear and not misleading, so that the customer can understand the nature and risks of the service or product, as well as the expenses involved. This extends to marketing communications, pre-contract information (description of products and policies on asset protection, conflicts of interest and execution of orders, which must be delivered to clients so they can make their investment decisions), contracts and post-contract information (content and frequency of statements and confirmations of orders).

Bankia has adopted various policies aimed at offering adequate protection within the framework of securities exchange laws:

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