Corporate Governance and Remuneration Policy

Based on the improvement of the rules already adopted by MiFID, the new regulatory framework regulates the conditions for the authorisation and operation of Investment Services Firms (ESIs).

It aims to reinforce existing European securities markets regulation in several ways:

  • It seeks to ensure that organised trading takes place on regulated platforms.
  • It introduces rules on algorithmic and high-frequency trading.
  • It improves transparency and supervision of financial markets, including derivatives markets.
  • It strengthens investor protection and conduct of business rules, as well as the conditions for competition in the trading and settlement of financial instruments.

The investment products encompassed under the MIFID Directive can be divided into the following categories according to their level of complexity:

Complex Products:
Non-complex products:
– Derivatives products
– Bonds and convertible bonds
– Subordinated debt
– Structured products
– Convertible and preferred shares
– Hedge Funds
–  Non-fixed Income IFs, Fixed income IFs, Mixed IFs and Monetary Ifs
– Guaranteed IFs, Real Estate IFs and VaR
– Bond markets
– Equity markets

In order for the entities to adopt the necessary measures to protect each type of investor while contracting products and services, the new Directive proposes the classification of clients into three categories:

  1. Retail Client:

    • A Retail Client is any client not classified under the professional client category.
    • A Retail Client is considered a client needing a greater level of protection regarding the purchased investment products and services.
  2. Professional Client:

    • A Professional Client is considered a client with the necessary experience, knowledge and qualifications to make its own investment decisions and to correctly assess the risks inherent to such decisions.
    • According to regulations, this type of client will therefore require a lower level of protection than the retail client.
    • According to its size and scope of operations, a Professional Client is classified in two groups:
        1. Automatic:
          • Entities subject to regulator supervision and authorized to operate in financial markets.
          • Companies complying, individually, with two of the following requirements:
            Total Balance: 20 million Euros. Net Business Turnover: 40 million Euros Shareholders’ Equity: 2 million Euros.
          • National and regional governments, public organizations managing public debt, central banks and other similar international organizations.
          • Other institutional investors, the activity of which as a company is to invest in financial instruments.
        1. Voluntary: Those not included under the automatic Professional Client description when complying with a minimum of two of the following requirements:
          • The client has undertaken transactions of significant volume in the securities market with an average frequency of 10 times per quarter over the past four previous quarters.
          • The value of the client’s financial instrument portfolio is greater than 500,000 Euros.
          • That the client holds or has held, for at least one year, a professional position in the financial sector requiring knowledge of the transactions or services rendered.
  1. Eligible Counterparty:

    • The Eligible counterparty is a sub-group within the professional client group made up of professionals with extensive knowledge, experience and financial capacity in the securities markets. Such is the case of investment companies, collective investment organizations and asset management companies, pension funds and fund managers, government administrations, central banks and international organizations.
    • This kind of client has maximum flexibility

The retail client can request in writing a change of category to a voluntary professional client providing it complies with aforementioned requirements. However, the classification as a Professional Client implies lower levels of protection regarding the provision of investment products and services.

Likewise, the Professional client can request in writing a change of category to retail client for the purpose of ensuring a greater level of protection.


This classification aims at offering clients the investments that best suit their profile. Therefore, the entity rendering the investment services must obtain specific information from the client in order to assess the suitability and convenience of the products the client needs. In order to obtain such information the client must undertake two tests:

  1. Convenience Test:

    The test assesses the client’s knowledge on the group of financial products it wishes to operate with. In the event of a professional client, it will be assumed that such client has the necessary experience and knowledge to understand the risks of the transactions, services and products.

  2. Suitability Test:

    This test assesses the client’s risk profile, as well as its knowledge and economic situation in respect of the financial products. The test also allows obtaining information regarding the client’s investment objectives. The client must report any significant change in its situation. In the event of a retail client, it must provide all the aforementioned information.

    If the information required from the client is not provided, the entity rendering the services will notify the client that it cannot recommend investment services or financial instruments in relation to which such information is necessary. It can only recommend the investment services or financial instruments it has sufficient information on in order to provide recommendations.


Reception and processing of ordersPortfolio management and advisory
RetailConvenience TestConvenience Test
ProfessionalWithout TestConvenience Test
Eligible CounterpartyWithout Test Without Test

If the required information is not obtained from the client, the entity providing the services shall inform the client that it cannot recommend investment services or financial instruments for which such information is necessary, and may only recommend those investment services or financial instruments for which the entity has sufficient information.

With reference to the performance of the entity providing the investment services, and according to the principles of best execution of orders established by MiFID, the entity shall take reasonable steps to obtain the best possible result for its clients.