08.01.2019

Practice Areas: Finance

Industries: Insurance

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CMVM Regulation n.º 8/2018

CMVM Regulation No. 8/2018 (hereinafter “Regulation”) introduces specific rules regarding information and trading
duties of packaged retail and insurance-based investment products (PRIIPs) in the Portuguese regulatory framework.

 

Scope of application

The Regulation applies exclusively to PRIIPs whose issuance, trading or provision of consulting services is supervised
by CMVM, pursuant to Annex II of Law No. 35/2018, of 20 July. For this reason, the retail and insurance-based
investment products controlled by Banco de Portugal and the Portuguese Insurance and Pension Funds Supervisory
Authority are excluded from its scope.

 

Object

As the regulatory entity responsible for supervising the issuance, trading and provision of consulting services related
to PRIIPs, CMVM regulates the information and trading duties of PRIIPs, specifically information to be made available,
its content, document preservation and related trading and advertising records obligations.

Five key categories:

(i) Language and features of the key information document (hereinafter “KID”)

The Regulation starts by setting forth the language of the KID (key information document –regulated by Law No.
35/2018, of 20 July), which must be either Portuguese or a language commonly used in financial markets (should
the latter be the case, the investor must make sure they have sufficient knowledge of such foreign language to
understand the content of the document).

(ii) The content of PRIIP advertising and the prior notification of KID;

With respect to the prior notification to CMVM of the KID and its contents, the law establishes rules on how to provide
this information, regarding the means and the way it is submitted. Upon notification, CMVM discloses on its website
the KID and respective contents.

This regulation also includes some specific instructions as regards the elements included in PRIIP advertising, specifically by prohibiting the use of expressions that may lead to erroneous conclusions or that are not the sole
responsibility of the entity providing them.

In PRIIP advertising, the advertiser must identify the PRIIP issuer, the PRIIP traders, and the entity responsible for the
advertising. Detailed rules concerning online advertising and the conditions under which it is to be carried out are
also laid down.

(iii) Protection measures for non-professional investors.

This regulation instructs on the content of the PRIIP subscription and/or acquisition document defining specific
requirements applicable to non-professional investors. It is important to emphasize the obligation to include certain
expressions in order to raise awareness and hold the investor accountable for their options and respective risks.
In this context, PRIIP traders must inform non-professional investors individually about any relevant changes that
may be introduced to the KID, in order to ensure that the investor has effective and timely knowledge of same and
enabling the supervision activity by CMVM.

(iv) Other communication duties

The information about the result of the PRIIP trading must be provided by the PRIIP traders (or a common representative designated by the issuer) to CMVM within fifteen business days upon closing of the transaction.
When a public offering of PRIIPs is made, either the issuer or the trader, as applicable, must disclose the offer to the
market, through CMVM’s information disclosure system, and release information regarding (i) any changes occurring at
the issuer or traders’ level, (ii) possible suspension of the trading and respective grounds, (iii) the date of extinction
of the indefinite duration PRIIP, (iv) all results of such public offering, and (v) the reason for extinguishing the PRIIP
and, if other than expected, the reason for the change in the amounts of the redemption cash flows.

(v)Archive and Registration Duties

The PRIIP trader shall keep on file the documents and records relating to contracts with customers or documents
containing the conditions under which the entity provides services to the customer, as well as proof of compliance
with the requirement to provide KID under the terms of the law and proof that guarantees the registration of the
declarations in the document of subscription or acquisition, for a five-year period as of the termination of the
customer relationship.

There is also an obligation on the part of the issuer to keep all the documents related to the PRIIP risk reports and the
elements that have sustained any review and subsequent decision to review or revise the KID for a period of one year.

 

Applicable regime

All complex financial products traded under CMVM Regulation No. 2/2012 and CMVM Instruction No. 3/2013 before
January 1, 2018, are subject to the provisions of those same regulations.

The products traded between 1 January 2018 and the date of entry into force of this Regulation are subject to a transitional regime with notification and reporting obligations.

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