Ibercaja
MIFID DIRECTIVE
Mifid is the directive that regulates the stock markets, the financial instruments traded therein, and the organisation and connection of the financial bodies that provide investment services to their clients as well as protection for the investors.
This directive establishes a framework of rights and obligations with regard to the provision of investment services (both for clients and for the financial bodies) which is collated in a framework contract which must be signed by all clients engaging investment or equity funds (fixed or variable income).
Its main objective is to protect the investor, preventing the contracting of a product without knowledge about its primary characteristics or associated risks.
Thus:
- The entity must assess, based on the client's prior knowledge and experience, if said client is able to understand the characteristics and risks of a product and, hence, determine whether or not said product is advisable for the client.
- In the area of advice for investment matters or the retaining of a managed portfolio, the entity must also consider the client's risk profile, their investment objectives and their financial capacity.
MIFID requires financial bodies and investment services companies to classify their clients according to three types or categories (based on which the client will be granted a greater or lesser degree of protection and right to information): eligible counterparty, professional clients and retail clients.
ELIGIBLE COUNTERPARTY
These are assigned lower protection as they have sufficient knowledge and experience to take their own investment decisions. Examples of eligible counterparties:
- National and regional governments
- Public Bodies that manage public debt
- Central banks
PROFESSIONAL CLIENT
This is attributed to those clients with sufficient activity and frequency of financial operations that they are considered to have a high level of knowledge and experience in the markets.
Examples of professional clients:
- · Entities that need to be authorised or regulated to operate in the financial markets (credit institutions, investment companies, insurance companies, etc.)
- · Big business
RETAIL CLIENT
The retail client category, which covers all clients not included as professionals or eligible counterparties, has the highest level of protection as they are conferred the maximum rights to information both before and after the provision of an investment service.
THE FOLLOWING ARE SUBJECT TO THE MIFID DIRECTIVE:
- Investment funds (variable income, fixed income, guaranteed, etc.).
- Equity securities.
- Debt securities.
- Structured notes and securitisations.
- Promissory notes.
- Public debt.
- Covered bonds.
- Subordinated and/or convertible debt.
- Shares / preference shares.
- Hedge funds / real estate funds.
- Derivatives (futures, options, warrants, caps, floors, etc.).
- Atypical financial contracts.
NOT COVERED BY THE MIFID DIRECTIVE:
- Bank deposits (overnight, agreed maturity, structured, etc.).
- Loans, credit and other asset operations.
- Means of payment.
APPROPRIATENESS TEST
The first step is to check whether or not contracting the product is advisable for the client. For this, Ibercaja needs to know if the client has prior experience with these products, if they have professional training or experience related to them and whether they are aware of the investment risks; hence they are given a convenience test.
At Ibercaja, we wish to ensure the greatest protection for our clients. Thus, if the client wishes to contract a product and the test shows the product is not advisable for them, they will only be able to contract it if they have already indicated that even though we consider they do not have the necessary experience or knowledge they wish to pursue the operation. This is what we refer to as an exception waiver.
Should the product to be contracted be complex, i.e. by its nature the risks are more difficult to understand, Ibercaja will always require the product be advisable for the client. Thus, we ensure that for products which are complicated to understand or require a higher level of knowledge,any client who does not understand the product risks may not contract the product.
WHAT QUESTIONS ARE IN THE APPROPRIATENESS TEST?
In order to define which products are advisable for a client, we need to know how often they have contracted complex or non-complex products in the last 3 or 5 years, respectively, if they have been trained or held a professional post or, where this is not the case, whether they have received information that is sufficiently understandable to give them knowledge about financial markets and instruments.
Furthermore, in order to assess their degree of knowledge of the risks associated with the various financial assets, we question them to identify if the client is aware that the value of particular investments may fluctuate with respect to the initial value (market risks), that sometimes it will be impossible to dispose of the investment when they want (liquidity risk) and that recovery of the capital invested depends on the capacity of the product issuer to cover their debts (credit risk).
SUITABILITY TEST
Should a client be going to receive an investment proposal or wish to contract a portfolio management service , a suitability test is necessary.
In this test, we will calculate their risk profile which will allow us to make a suitable investment proposal or offer a management contract that is suitable to their profile.
WHAT QUESTIONS ARE IN THE SUITABILITY TEST?
In order to calculate the client's risk profile, we ask them about their investment objectives, for which we need to know their risk aversion, their need for liquidity in the medium to long term and their financial position (their normal expenses, the distribution and liquidity of their equity and if the client has anyone who is economically dependent on them).
Depending on this information, we will obtain a risk profile that may be very conservative, conservative, moderate or bold.
Based on the information from the test and the risk profile obtained therein, we will make an investment proposal and/or portfolio management contract in line with the client's investment objectives, the investment time horizon, and their financial situation.
In order to be able to offer the best protection under this directive, it is absolutely necessary for the client to provide us with the information required to assess the advisability of the products and the suitability of the investment.
Pre-contractual information for clients and potential clients on the provision of investment services.
The essential rights and obligations of the retail client and Entity with regard to the provision of investment services are expressly collated in the “Framework contract for the provision of investment services”.
The Framework Contract may be signed by the client in their home branch or on-line through the E-Bank
Meanwhile, with regard to the rights granted to the investor by the MiFID directive, it is noteworthy that Ibercaja has the means necessary to manage a better provision of its services while exhibiting greater transparency in its actions as a trader in investment products through the following policies:
- Order processing and execution policy: with the execution of client orders, Ibercaja adopts all reasonable measures to obtain the best possible result, bearing mind the price, costs, speed, probability of execution and settlement, volume, nature of the operation and any other circumstance pertinent to the execution of the order.
- Financial asset and instrument protection policy: Ibercaja adopts the measures necessary to maintain its records to ensure protection of the financial instruments of its clients.
- Conflict of interest policy: Ibercaja adopts the necessary measures to prevent future conflicts of interest that may arise when providing the investment service.
- Incentives policy: Ibercaja may receive or satisfy specific non-monetary commissions, fees or benefits from third parties with regard to specific orders of securities as long as the quality of service provided to the client is thus improved and the obligation to act in the best interest of the client not impeded. The client must be informed of the existence of said incentives, in addition to their value or how they are calculated, prior to the operation being effected.
The incentives currently received by Ibercaja are detailed below. These incentives are at no extra cost to client. The client may request more detailed information on the incentives from one of our branches.
| Financial Service Provided | Details | Calculation Basis | Incentive Calculation Method |
| Investment Fund Trading, managed by 'Ibercaja Gestión SGIIC S.A.' | Ibercaja receives a percentage of the management commission for the trading of the CII (Collective Investment Institutions). | Management fee | 51% of the management fee for the CII |
| Investment Fund Trading, managed by other CII management companies. | Ibercaja receives a percentage of the management commission for the trading of third party CII. | Management fee | From €0 to 92% of the management fee: - National CII: €0 to 92% (68% on average) - International CII: €0 to 65% (45% on average) |
| Stock services | Ibercaja receives a percentage of the commission charged for operations in international equity securities | Brokerage | From €0 to 50% (with an average of 33%): - Europe (Eurozone): 46% - Europe (Non-Eurozone): 50% - USA and Canada: from €0 to 47% - Rest of the world: no incentives |
| Issuance and placement of securities | From the issuer or third parties (at the behest of the issuers), Ibercaja may receive commissions for the placement of equity securities, debt securities or structured products in the primary or secondary market. | Commission for placement, intermediation, distribution or underwriting | Per the corresponding pamphlet, issuance document or legal papers. |
These policies (summarised in the aforementioned Framework Contract) are available to the client in their home branch or on-line at: www.ibercaja.es.
ANTI MONEY LAUNDERING POLICY
Being within the Spanish financial system, Ibercaja Banco has established specific policies regarding the prevention of money laundering and the funding of terrorism in order to avoid being used for the channelling of funds from illegal activities and to fulfil the entity's legal obligations.
Ibercaja Banco is configured as a Spanish financial institution whose activity is essentially aimed at the retail client; almost the entirety of their business is undertaken in Spain. The headquarters is in Zaragoza, is overseen by the Bank of Spain (SEPBLAC) and is subject, among others, to Law 10/2010, dated 28 April, on the prevention of money laundering and the funding of terrorism. It is also subject to other legislation and regulations corresponding to the financial system, in addition to European Union Directives and Regulations.
In the area of risk management with regard to money laundering, the Entity has a technical unit for the prevention of money laundering and the funding of terrorism. This unit is responsible for implementing a money laundering and terrorism funding prevention programme to cover all activities undertaken by the bank, in accordance with the action lines, principles and recommendations made by the regulators on this matter; this also includes the references established by the FATF, to which Spain belongs.
The aforementioned programme includes the following references:
- Written policies and procedures, approved by the Governing Body.
- A representative on the Commission for the Prevention of Money Laundering and Monetary Infractions (SEPBLAC), who is responsible for supervising compliance with the current legislation on this matter.
- A focus based on risk evaluation and management to counter laundering, inherent to the nature of the business undertaken by the Entity.
- A risk-based client classification programme, with identification, verification and recognition procedures for the same, which includes the following features:
- Client identification and acceptance (admission) policy.
- Implementation of official public lists of terrorists or connected groups.
- Additional due diligence measures for the correspondent bank, people in positions of public responsibility and those clients who present an increased risk.
- Forbidden to work with 'front companies' or 'shell banks'.
- Risk-based systems and procedures to monitor accounts and activities of all clients.
- Internal procedures for the analysis and communication of suspicious operations to the relevant police or judicial authorities.
- Continuous training programmes for all employees and members of the Entity.
- Independent review or audit aimed at the control and oversight of suitable implementation of the policies and procedures in the area of prevention of money laundering and the funding of terrorism.
- Cooperation with the Commission for the Prevention of Money Laundering and Monetary Infractions (SEPBLAC), in accordance with the legally established requirements.
For more information please contact us at cumplimientonormativo@ibercaja.es
Law 10/2010 on the Prevention of Money Laundering and the Funding of Terrorism requires financial institutions to fully identify their clients through the verification, gathering, registration and, where appropriate, updating of all personal information that unequivocally accredits and justifies personal identity.
Compliance with this Law means we are obliged to have a digital copy of our clients' identification documents, in addition to having information and supporting documents showing the nature of their professional or business activity, allowing for continuous monitoring of said activity.
Should this legal requirement not be fulfilled, we may be obliged to restrict the operations of those accounts for which the account holder is not duly identified.
In order to avoid said situation and to prevent any setbacks or inconveniences to our clients, our entire network of branches is available for the undertaking of the necessary tasks to comply with the aforementioned legislation.
