The Portuguese Securities Market Commission, also known by its initials "CMVM", was established in April 1991 with the task of supervising and regulating securities and other financial instruments markets (traditionally known as “stock markets”), as well as the activity of all those who operate within said markets.

The CMVM is an independent public institution, with administrative and financial autonomy. The CMVM derives its income from supervision fees charged for services and not the General State Budget.

What is supervision?

The supervision carried out by the CMVM includes the following:

• Constant supervision of the acts of individuals or entities, which operate in capital markets, for the purpose of detecting unlawful acts, particularly in stock market trading;
• Monitoring rules compliance;
• Detection of criminal offences;
• Punishment of infringers, namely by the imposition of fines;
• Grant registrations of individuals and operations to check the compliance with applicable rules;
• Information disclosure, particularly on listed companies, through its website on the Internet.

Who are the individuals or entities that are subject to the CMVM’s supervision?

The following individuals and entities are subject to the supervision of the CMVM:

• Securities issuers;
• Financial intermediaries;
• Independent investment advisors;
• Markets, settlement and centralized systems managing entities and the entities whose object is the clearing of operations on commodities in derivatives markets;
• Institutional investors;
• Investment funds;
• Holders of qualifying holdings in public companies;
• Sinking funds, investment compensation schemes and respective managing entities;
• Auditors and risk rating companies;
• Risk capital companies and funds;
• Securitization companies and funds and also the managing companies of said funds;
• Other individuals that pursue, professionally or not, activities related with securities.

These entities, being subject to the supervision of the CMVM, should provide all the co-operation requested.

Within the limits of the law, the CMVM informs the public of the infringements of the law and fines imposed.

The CMVM carries out the “on-site” supervision of the financial intermediaries and markets, centralized and settlement systems management entities. This supervision is carried out routinely by teams which monitor the activities of these entities, both at their premises as well as through the Internet or electronic means of direct and continuous control.

What is Regulation?

Regulation comprises of preparing rules on the functioning of an economic segment and/or functioning of the markets and activity of the respective operators.

The CMVM regulates the functioning of the securities markets, public offerings, actions of all the market operators and, in general, all matters pertaining to this area of activity.

In regulating, the CMVM approves and publishes the following in a monthly Bulletin:

• Regulations;
• Instructions that define internal procedures of certain entity categories;
• Recommendations aimed at one or more individuals subject to supervision;
• General opinions on issues that are presented in writing by any of the entities that are subject to supervision or respective associations.

In approving these acts, the CMVM contributes to the Portuguese Securities Market being endowed with modern and updated regulations.

There exists rules applicable to the markets and related activities that assume the form of Law or Decree-Law and, therefore, are not approved by the CMVM but by the Assembly of the Republic or the Government. This is the case with the most important legislation in this sector – the Securities Code, approved by the Decree-Law No. 486/99 dated 13 November 1999.

What is co-operation?

By co-operation, the CMVM seeks to:

• Make the supervision more efficient;
• Establish a closer link to the practices of counterparties in other countries;
• Combat international fraudulent acts.

The CMVM co-operates with other national authorities with responsibilities in the supervision and regulation of the financial system such as:

• The Bank of Portugal (Banco de Portugal-BdP);
• The Portuguese Insurance Institute (ISP).

The CMVM participates in international organisations, namely the International Organisation of Securities Commissions (IOSCO), the European Securities and Markets Authority (ESMA) and the Ibero-American Securities Institute (IIMV), as well as following up on the projects of the institutions of the European Union (EU).

What are the goals of the CMVM?

The CMVM pursues the following objectives:

• Investor protection;
• Efficient and regular functioning of markets;
• Control of information;
• Risk prevention;
• Prevention and suppression of illegal acts.

How does the CMVM protect Investors?

In the financial sector and, in particular, the capital markets, the protection mechanisms have been reinforced for those that have the greatest difficulty in defending their rights – the investors. This is a requirement resulting from the technical sophistication and complexity that has followed the development of the markets.

The CMVM protects investors both by constant supervision and regulation conferred by law, as well as also developing services which ensures direct support to the general public and the investors in particular.

What services are offered to the Public by the CMVM?

The CMVM offers the following to the public:

• Investor Assistance;
• Conflict Mediation;
• Investor Compensation Scheme;
• Internet website at www.cmvm.pt/en.
  

How is the CMVM structured?

The CMVM is managed by an Executive Board, which is comprised of a Chairman, Vice-Chairman and three Members, appointed by the Council of Ministers on the proposal of the Minister of Finance, for a five year-term.

The Supervisory Board and Advisory Board are also bodies of the CMVM.

The Supervisory Board, appointed by the Finance Minister, supervises and monitors the financial management of the CMVM and is comprised of three members, of which one is an officially accredited Accountant.

The Advisory Board is a consultative and advisory body to the Executive Board. It is responsible for considering issues that are referred and presents recommendations and proposals. The Advisory Board is comprised of representatives of entities subject to the supervision of the CMVM.

Internally, the CMVM is structured in Divisions, Offices, Departments and Services. The general responsibilities of the different units are set out in the CMVM’s Internal Rules and Procedures.

Supervision of the CMVM’s activities

The activity of CMVM is supervised by various entities and through diverse means, namely:

I. Supervision by the CMVM’s governing bodies:

• Supervisory Board of the CMVM (comprised of three members, one being an Accredited Chartered Accountant, appointed by the Finance Minister):
  
  • Oversees and supervises the financial management of the CMVM.
  • Analyses and issues opinions on the CMVM’s annual budget.
  • Examines and issues opinions on the activity report and the annual financial statements of the CMVM.
  • Monitors the accounting procedures of the CMVM and its compliance with legal provisions and internal rules and procedures applicable to the budget, accounting, and treasury, and informs the Executive Board of the CMVM of any discrepancies or anomalies found.
  • Considers any matter within its jurisdiction that is referred by the Executive Board of the CMVM
• Advisory Board of the CMVM (comprised of representatives from nearly all the entities operating in the securities market):
   
  • Considers matters, which is referred by the Executive Board of the CMVM.
  • Submits, on its own initiative, recommendations and proposals to the Executive Board.

II. External supervision:

a) Mainly Financial:

• Minister of Finance (officially responsible for the CMVM):

• Approves the annual plan of the CMVM’s activities and budget.
• Approves the report of activities carried out, balance sheet and annual financial statements of the management of the CMVM (that are published in the Portuguese Official Gazette, jointly with the opinion of the CMVM’s Supervisory Board, within 30 days of its approval).
• Receives annually the presentation of the report on the general situation of the securities market which is prepared by the CMVM.
• Appoints the members of the Supervisory Board of the CMVM.
• Proposes to the Council of Ministers the nomination of the members of the Executive Board of the CMVM.
• Authorises the acquisition, alienation and financial leasing of immovable property for the installation, equipment and functioning of the CMVM.
• Authorises the members of the Executive Board of the CMVM to lecture in higher education during their term in office (provided that this does not conflict with their duties).
• Authorises the alienation, by the members of the Executive Board of the CMVM, during their term in office, of shares of which they were titleholders on the date that they assumed office.
• Sets by Ministerial Order the remuneration of the members of the Executive Board and the Advisory Board of the CMVM.

• Assembly of the Republic:

• Analyses and approves the budget of the CMVM that is incorporated in the Draft State Budget Law;
• Examines and approves the financial statements of the CMVM that is incorporated in the State General Accounts.
• May order the presence of members of the Executive Board of the CMVM and any of its employees, to provide information or discuss matters (particularly by its committees or in the area of parliamentary surveys).
• Budget Directorate-General: to which the CMVM presents monthly, quarterly and annual financial statements.
• External auditor: Examines and issues an opinion on the annual financial statements of the CMVM.
• Court of Auditors:
  • Monitors the legality and the regularity of income and expenditure of the CMVM.
  • Analyses the proper financial management of the CMVM.

• Tax Court, at the request of private individuals: Private individuals have the right to request a judicial review of the fees collected by the CMVM.

b) General:

• Council of Ministers:
  • Appoints, on a proposal by the Minister of Finance, the members of the Executive Board of the CMVM.
  • Requests the resignation of the members of the Executive Board of the CMVM, in the event of proven serious misconduct committed by the member in the performance of his duties or in compliance with an obligation derived from his position.
• Administrative Courts, at the request of private individuals: Private individuals have the right to request a judicial review of the administrative activity of the CMVM.
• Petty Criminal Court of Lisbon, at the request of private individuals: Private individuals have the right to request a judicial review of the decisions on the imposition of fines, orders and other measures taken by the CMVM in administrative infraction proceedings within its jurisdiction.
• Private Individuals, directly:
  • Obtain information of the activity of the CMVM from its public disclosures.
  • May have access to the processes and documents of the CMVM (without any prejudice to the legal restrictions of this right).