Law 14/2010 (MiFID)
Law 14/2010 on the legal regime of banking entities and basic administrative regime of entities operating in the financial system
This is a law which lays down the principles established in the Community Directive known as MiFID (Markets in Financial Instruments Directive). The law regulates the way in which financial entities must provide their investment services, to ensure that these are offered with a high degree of protection for the investor. The law classifies clients into three categories to determine the level of protection and information.
-
What is this new law intended to do?
- Protect the investor’s interests
- Ensure that the investor understands the products and services purchased and the risks associated with them
- Encourage transparency and effectiveness
-
What is meant by complex and non-complex products?
The law classifies banking products as complex or non-complex.
Complex products are defined as those which, due to their special features, are subject to various risk factors (liquidity, volatility, exchange rate, etc.), where their complexity requires knowledge and experience in order to be understood. These would be, for example:
- Preference shares, convertible bonds, perpetual bonds, etc.
- Hedge funds
- Derivatives (futures, options, warrants, caps, floors, exchange insurance, etc.)
- Structured products, both our own and those offered by others
Non-complex products are those which involve little complexity and risk, such as, for example, shares quoted in a regulated market, money market instruments, etc.
-
The law classifies clients into the following groups:
Retail clients Maximum level of protection Professional clients With experience, knowledge and the necessary qualifications to make decisions on investments and evaluate the inherent risks The level of protection is limited. Eligible counterparties Institutional investors. -
What will Crèdit Andorrà do to guarantee the correct marketing of its products and services? What is this new law intended to do?
According to the type of product or service the following will apply:
Suitability test
When supplying a service of discretional portfolio management or advice, a test must be made to determine each client’s investment risk profile, their knowledge and experience in the financial world, their situation and financial capacity and the investment aims pursued.
Adaptation test
When marketing certain complex products, a test must be made to ensure that the product is right for the client. This test will assess the client’s knowledge and experience in relation with the product in question.
Contract of advisory services
For clients who want to contract advisory services which include recommendations of products
-
Which are the most important policies and procedures established by Crèdit Andorrà for the supply of investment services?
Policy on executing orders
To obtain the best possible results, reasonable measures are taken over clients’ transactions, taking into account the price, costs, speed and probability of execution and settlement, volume, nature and any other consideration pertinent to carrying out the order.
Policy on asset protection
Adequate measures are taken to protect the clients’ rights of ownership over the financial instruments and funds entrusted to us.
Policy on managing conflicts of interest
Measures are taken and prevention and management procedures applied in situations identified as possibly producing conflicts between clients and Crèdit Andorrà or between the clients themselves.
For more information: +376 88 99 88
Publications
- 12 April 2012 Crèdit Andorrà signed a sub advisory agreement with GAMCO Asset Management to manage their dollar portfolios
- 17 October 2011 The Crèdit Andorrà Group acquires an 80% stake in Beta Capital Management LP and establishes itself in the United States
- 12 October 2011 The Crèdit Andorrà Group buys 85% of Banco Alcalá