27 Mar

CNMV approves a new Circular related to financial instruments (published today in BOE)

The National Securities Market Commission (CNMV) has approved Circular 1/2018 on warnings related to financial instruments. The Circular reinforces the obligation to issue warnings in relation to very specific financial instruments, such as CFDs, contingently convertible or subordinated bank bonds or certain structured bonds referenced to illiquid securities or to credit events. This Circular has been published today in the Official State Gazette (Boletin Oficial del Estado, BOE) and it will enter into force within three months.

It also reinforces transparency on the prices at which retail investors acquire or sell financial products (when they differ significantly from their fair value).

According to the CNMV, the objective of this Cricular is to increase retail investor protection and improve transparency in the distribution of financial instruments.


The new Circular establishes that investors must state the following in writing: “This product may be difficult to understand. CNMV considers that, in general, it is not appropriate for retail investors”, in the contractual documentation corresponding to the following financial products:

– CFDs and binary options

– Complex financial instruments classed as own capital of credit institutions, such as convertible debt, perpetual debt and, in certain cases, subordinated debt

– Certain complex structured products and OTC derivatives (referenced to illiquid securities or to credit events, or with a high speculative purpose in the case of OTC derivatives).

In addition, the Circular obliges credit institutions and investment firms to warn their clients about the following:

– The risk of losses in securities market instruments within the scope of the bail-in tool.

– The existence of significant differences between the effective amount at which the purchase or sale will be made with the client and the estimated current value of the product, a situation in which the inherent costs for the investor are highlighted (certain fixed income instruments, structured contracts and OTC derivatives, etc.).

The purpose of this Circular is to increase the protection of retail investors by reinforcing their informed consent and improving information transparency in the distribution of financial instruments.

Remember that if you are thinking about forming a company in Spain, don´t hesitate to contact our team of experts for further informations.

By: Estela Martín

Linkedin TopVoices España 2020. DirCom & RSC en ...


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