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The new regulatory framework for financial markets and instruments came into force on 3 January 2018 based on the MiFID II Directive and the MiFIR regulation, updating the previous MiFID requirements.

The Markets in Financial Instruments Directive (MiFID II) establishes the conditions under which Investment Services Firms are authorised and operate, strengthening investor protection and the transparency requirements already in place under MiFID.

Meanwhile, EU Regulation (EU) No 600/2014 regulates:

  • Pre and post-trade transparency with regard to the competent authorities and investors.
  • The requirements and obligations affecting data service providers.
  • The trading obligation for derivatives in trading venues.
  • Certain supervisory arrangements.

This Directive is being transposed into Spanish law through Royal Decree-Law 21/2017, the Draft Securities Market Act and the Royal Decree on the regulatory implementation of the securities market act.

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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