25 June 2020
Increasing investor protection, including in the supervision of the robustness of financial institutions, in the verification of the marketing of financial products and services and in the support and analysis of complaints; timely response to the market and investors; regulatory simplification and focus on market development; and a strong commitment to the CMVM's modernisation, in the close monitoring of innovation, and in the knowledge of market needs and risks. These were key lines for the CMVM's activity in 2019.
The results achieved include better response times to requests for registration and prospectus analysis, as well as authorisations and registrations within the scope of asset management and financial intermediation, the strengthening prudential supervision, with emphasis on the preparation of the entry into force of the new duties on collective investment fund management companies and securitisation funds and the detailed analysis on the financial health of investment funds and venture capital companies.
Concerning investor support, it is worth mentioning the supervision of the application of the new protection rules for investors that were approved in the aftermath of the previous crisis, wherein the CMVM identified weaknesses and promoted better practices for assessing and adapting financial products to customers and the restriction of marketing in Portugal of certain complex and high-risk financial instruments. A new complaints management model was also implemented with improvements in response times and for the first time, the publication of a report with an annual balance of complaints and topics on investor support, identifying the most claimed entities by investors.
On the regulatory front, the simplification programme aimed at reducing regulatory fees continued, rendering, among other initiatives, new proposals for the Securities Code and the Legal Framework for Audit Supervision; a project to simplify reporting duties was also initiated, which will continue until 2021, and which is included in the CMVM's technological modernisation and management plan.
In the supervision of the markets, 527 potentially anomalous situations were identified over the course of the various trading sessions (604 in 2018), with the need to initiate more detailed analyses in 24 cases. Within the scope of market abuse, 4 on-site supervisory actions were also carried out in order to verify the respective systems and procedures for detecting and communicating orders and transactions that could constitute market abuse. The methodology used in these supervisions was the subject of an evaluation exercise (peer review) by ESMA in 2019, with the CMVM positioned as one of the best rated authorities.
Regarding the supervision of asset management and financial intermediation, and in addition to the marketing practices of financial products, in the prudential area, highlight is given to the monitoring of venture capital companies and venture capital fund management companies, including the investment consultancy activity, the transversal supervision carried out on the activity developed by the depositary banks, and the supervision of investment funds in liquidation and/or with negative global net value, for which the action plans were monitored.
In sanctioning activity, highlight is given to 26 decisions in administrative infraction proceedings from a total of €1.88 million in fines being imposed, while continuing to reduce the number of pending cases,
registering the lowest number of pending cases since 2009 (79) at the end of the year.
As regards the international activity, and in addition to preparing for the impacts of the United Kingdom's exit from the European Union and the participation in the discussion of the alignment measures with the Capital Markets Union, the CMVM's chairship is worth noting, taken on as of February, of ESMA's Investment Management Standing Committee (IMSC), wherein in-depth was given to the supervisory convergence work in the fund industry, namely within the scope of reporting duties and testing of the funds' liquidity and a public consultation was held on the variable fees of the funds with direct impact on investors.
"2019 was the year that affirmed the values of the CMVM. In the context of our mission and the vision we have for the CMVM, we assumed for ourselves and before all a set of values that have guided us in fulfilling the Priorities that we have defined and disseminated, in line with the accountability that we pursued last year. Collaboration, Timeliness, Transparency, Discipline, Innovation, and Integrity have guided and will guide the CMVM, giving coherence to everything we do to protect the investor and to contribute to market development and financial stability."
Gabriela Figueiredo Dias
CMVM | 2019 Annual Report
In the year's balance, the monitoring of transversal themes that are shaping the future of the markets, such as sustainability and technological innovation, was also emphasised, as well as an increase of the characterisation and market knowledge initiatives, risk assessment, communication and relationship with all stakeholders.
The annual report details the execution of the priorities and activities announced for 2019, with an overall execution rate of 91% for all 7 priorities, ranging from 82% to 100%: "Better service, greater proximity, better communication" and "Preparing Portugal for the challenges of the European Union, namely, Brexit and the Capital Markets Union" (100%); "Integration of sustainability principles in the CMVM's performance" (93%); "Simpler regulation, more efficient enforcement" (89%); "CMVM empowerment as an organisation" (87%); "Market development and responsible adherence to innovation" (85%); reinforcement and refinement of supervision (82%).
The publication of the 2019 Annual Report includes an update of the 2020 priorities. The initial impact caused by the Covid-19 pandemic led us to adopt a set of measures, recommendations and actions with the objective of ensuring an adequate functioning of the markets and investor protection. In view of the new challenges that emerge from this crisis, the CMVM recognises that it is now important to appreciate the role of the capitals market in a robust strategy for recovery in the medium and long term, taking into account the requirements for financing the economy, financial stability and investor protection.
In this context, the CMVM's action priorities announced in January proved to be even more fitting, namely in areas that value the quality of financial information, the adoption of principles of sound corporate governance and sustainability, as well as the protection and support to the investor. However, the adjustment of certain priorities and activities is still appropriate, considering budgetary impacts, new risks resulting from the effects of the crisis and the desirable contribution of the capitals market in financing recovery. The management of liquidity, credit risk and asset valuation practices, the practices of sale of services and financial instruments and investor protection will require the CMVM to focus and allocate specific resources in those areas that show higher risk.