Publication date: 15.03.2021
1. What care
should the investor take when using digital platforms to get advice and invest?
use digital platforms for investment should be knowledgeable about the
functioning of the capital markets. In particular, they must ensure that the
platform is authorised to provide financial intermediation services in
Portugal, the financial instruments in which they invest or which they intend
to invest in, the risks involved in the investment and the respective operating
mechanisms (for example, price formation, the nature of the counterparties with
which the business is conducted, the applicability and operation of the
margins, the impact of the volatility associated with the assets on the
investment or the commissions charged). It is worth noting that some financial
instruments have a high technical complexity and may even, in cases where they
allow leveraged positions, generate capital losses higher than the amount
before making investment decisions, investors should:
- Search for information or clarifications from
official and reliable sources
- Always ensure that the entity with which they are
considering establishing an investment relationship is registered with the
- Be familiar with the functioning of the financial
instruments in question and the risks involved
- Question the service provider about the person
responsible for the platform, the mechanisms for operating the platform
and pricing, as well as the fees that will be charged
- Be aware that relevant returns usually carry high
risk, such as the loss of all invested capital
precautions are particularly important when the investor is the target of an
unsolicited contact to invest and or when expectations of quick and very high
profits are generated.
The CMVM has content
available on its website that aims to share and raise awareness of these and
other phenomena, namely a brochure and video
on digital fraud, general recommendations for investors in the brochure “CMVM Tips
for investors” as well as a area on financial innovation and a brochure on Fintech.
requirements must be met by entities wishing to provide financial
intermediation services on digital financial instruments in Portugal?
established in Portugal, wishing to provide financial intermediation services
in Portugal, involving financial instruments, must apply for registration with
the CMVM and are required to comply with the legislation in force. Another way
for entities to be able to operate in our country is under the Free Service
Provision (LPS) regime, better known as a European passport. In this case, it
is necessary for the CMVM to be notified by the authority of the European Union
country that authorised the entity.
platforms wishing to provide investment services in financial instruments, such
as the receipt and execution of orders, can only do so via financial
intermediaries qualified to operate in Portugal, in the aforementioned manner
(whether established in Portugal and authorised by the CMVM or qualified to
provide services in Portugal under the LPS regime).
Entities that do
not fall within these two categories are neither allowed to operate in
Portugal, nor perform any type advertising or prospecting for investors in
Portugal, on own account or by related agents who represent them. Consequently,
the activity that these entities may carry out outside the established rules is
not supervised and, as such, carries high risks for those who establish
investment or similar relationships with them.
3. How may
investors know whether certain entities are authorised to provide these
The CMVM makes
available, on its website, information on all the entities that are authorised
to provide services in Portugal, whether they are financial intermediaries or
the identity of the tied agents to which financial intermediaries may resort.
Other people who can also provide services in Portugal, such as independent
financial analysts and independent investment consultants can also be consulted
on the CMVM website.
can be consulted in an aggregated form on the warning notices
page where, in addition to access to national and international warnings
regarding unauthorised entities - non-exhaustive list -, you can also find an
updated list of authorised entities:
- Entities authorised or registered with the CMVM for the exercise of financial intermediation activities in Portugal;
- Collective investment management companies authorised by the CMVM;
- Entities qualified to provide financial services in Portugal under the Free Service Provision (LPS) regime;
- Tied agents that represent the financial intermediary;
- Registered entities linked to venture capital, social entrepreneurship and specialised investment;
- Entities related to securitisation;
- Registered crowdfunding platform management entities.
You can also
find the lists of independent financial analysts
and authorised independent investment advisors
on the CMVM website, under the Information Disclosure System menu.
are not included in the public records made available on the CMVM website are
not authorised to provide any investment services in Portugal or to advertise
or prospect for investors, therefore investors should not establish any
investment relationships with them. This warning also applies to tied agents.
When it is not
possible to clearly identify the entity that operates a particular website, it
is important not to share any personal data or make any investments.
In case of doubt
about whether an entity or tied agent can provide services in Portugal, you
should contact the CMVM through the Investor Support Line (800 205 339) or one
of the other means available on our website.
4. What are the
consequences of investments via unauthorised entities?
be aware that the money delivered and invested through unqualified entities
operating in Portugal is not covered by the compensation systems that protect
deposits or compensation to investors and that these entities are not subject
to scrutiny by national and European supervision. Thus, these investments do
not benefit from any protection afforded to investors, so services related to
financial instruments should never be contracted or any amounts given to
entities that are not included in the lists of authorised or qualified entities
(see questions 2 and 3).
The practice of the
financial intermediation activity by an unqualified entity constitutes a very
serious administrative infraction, punishable, among other sanctions, with a
fine of up to € 5,000,000, according to the Securities Code. For the detection
of these situations, complaints and requests for information submitted by
investors or by people who suspect or have knowledge of situations that may
fall into these situations, are relevant.
5. How can the
investor know if trading of a certain asset is within the powers of the CMVM?
supervises the market for financial instruments. Their powers and action are
limited to assets legally classified as securities, namely shares, bonds, equity
securities, units in collective investment undertakings (investment funds) and
other financial products, including covered warrants, money market instruments
(with the exception of payment means), derivative instruments for the transfer
of credit risk, contracts for differences, options, futures, swaps, forward
contracts and derivative contracts, among others, and emission allowance
contracts, as defined in Articles 1 and 2 of the
in any products or entering into any so-called investment contracts, it is
important that the investor makes sure that it is a financial instrument
covered by the CMVM's supervision or that the product or contract is under the
supervision of another financial supervisor, such as Banco de Portugal or the Insurance
and Pension Funds Supervisory Authority. Prior to the decision to invest, the
risk of investing in products or services that are not part of the supervisory scope
of these authorities must be very well assessed (see question 4).
In case of doubt
on whether an asset or financial instrument is within the scope and supervision
of the CMVM, investors should contact the CMVM through the Investor Support
Line (800 205 339) or by one of the other means available on our website.
6. Are bitcoin
and other cryptoassets supervised by the CMVM?
other cryptocurrencies (virtual currencies) are not supervised by the CMVM. The
CMVM only supervises cryptoassets that can be legally qualified as securities
or instruments equivalent to them (see previous question).
Information on the
risks of investing in cryptoassets and its qualification as a security,
including the requirements that a cryptoasset will have to meet in order to be
considered as such, can be found in the Investor Area of the CMVM website in
the form of two sets of questions and answers on
cryptoassets designed for investors and supervised entities.
In short, and as
per the CMVM’s warning in 2018, when investing in cryptoassets, investors
should be aware of at least the following risks:
- Liquidity risk: investors may not be able to sell
the cryptoassets they have purchased, as there are no interested buyers or
suitable channels to do so.
- Risk of partial or total loss of invested
amounts: the invested capital is not guaranteed, the risks associated with
the investment may not be mentioned in the documents published by the
issuer of the cryptoasset and may not be supervised instruments.
- Risk of insufficient available information: the
information made available to investors may be missing, inaccurate,
incomplete and unclear, requiring that people who intend to acquire them have
high technical knowledge to be able to understand the characteristics of
- Risk of fraud: the issuer of the cryptoasset
often has more information than the investor about its risks and
functioning; the inherent complexity of cryptoassets makes it difficult
for investors to understand their operation and purpose.
- No specific regulation to protect investors from
cryptoassets other than securities: it is necessary to analyse each case
to determine whether or not cryptoassets are covered by the regulations
applicable to the securities market and whether or not they are
- Most agents that sell cryptoassets are not based
in Portugal: the resolution of conflicts may be outside the competence of
the national authorities, which can unprotect national investors.
- Risk in the formation of cryptographic prices:
the formation of the price is, in many cases, not transparent, and its
assumptions are not known or knowable, so it may not correspond to the
real market value of that cryptoasset.
- High volatility: the value of a cryptoasset is
prone to sudden and large-scale changes.
- Risk of money laundering and financing of illegal
activities: due to the anonymity associated with cryptoassets, there may
be a concealment of the origin and destination of the invested funds.
- Risk of experimentation or innovation: projects
financed through the issuance of virtual assets (ICO) are often in an
initial phase, of implementation or development, or business models are
- Risk of losing the access code to the cryptoassets:
The loss of the access code may prevent the permanent movement of
investment in the cryptoassets.
In 2018, the
National Council of Financial Supervisors, warned investors to
the risks associated with investing in virtual currencies and said warnings are
mainly still valid.
7. Is the
investor protected when trading in assets that are not regulated by the CMVM?
No. Hence, the
CMVM has been warning on a relevant number of proposals presented to investors
for investments in products that are not under its supervision. In these cases,
therefore, investors do not have any protection from supervisors and are also exposed
to high risks of fraud and scams.
8. What are the
risks of investments based on information from social networks or online
The CMVM has increased
warnings on the significant risks that result from following information,
indications and suggestions, sometimes implicit and often unsubstantiated,
biased and incomplete, by third parties not authorised to provide investment
services, namely advisory, consultancy, advertising or receiving and executing
not make base their investment decisions on information that circulates on
social networks or online forums. They should always validate the quality of
that information, namely knowing its origin, the authors' intentions, checking
if the entities in question are authorised or if they are within the scope of
the competent authorities, understanding the products offered and whether there
are any conflicts of interest.
and globalisation in the providing investment services, combined with the
confinement imposed by the pandemic, has led to an increase in the use of
digital media by investors. And in the context of Covid-19, they have also
added to situations of greater economic and social uncertainty, financial
fragility and volatility in the markets. These situations are likely to
jeopardize an adequate weighting of investment alternatives by investors,
increasing the risk of fraud and weighted investment decision-making. For these
reasons, the CMVM published guidelines for investors
in 2020 on the importance of open markets, precautions be taken in the face of
market volatility, common behavioural biases in times of turbulence and tips
for facing increased risk of fraud, among others.
activity does not fall within the CMVM's activity scope, namely due to
suspected swindling or fraud, the investor must file a complaint with the
competent authorities, namely the Judiciary Police or the Public Prosecutor.
9. What powers
does the CMVM have regarding the advertising of financial products and services
and attracting customers by unauthorised entities?
mentioned in question 4, according to the Securities Code, the professional
practice of financial intermediation by an unqualified entity constitutes a
very serious administrative infraction which is punishable, among other
sanctions, with a fine of up to € 5,000,000, according to the Securities Code. Advertising
and prospecting, when carried out by unqualified entities, is also punishable,
with equivalent sanctions.
In addition to
the sanction for the unauthorised exercise of financial intermediation, in the
case of entities whose activities do not relate to instruments or practices
under the supervision of the CMVM, the CMVM may refer the facts, elements and
other relevant information to the competent authorities, namely to the Public Prosecutor,
if there are signs of fraud, fraud or money laundering.
As for the
entities that are registered and authorised to operate in Portugal, the CMVM
monitors and supervises the activities carried out by them. This scope includes
the advertising of financial products and services and attracting customers,
which are limited to financial intermediaries and their related agents. They
are regulated by the Securities Code,
namely by Articles 7 on “Information Quality”, 292 on “Advertising and Prospecting”,
and 366 on “Supervision relating to Advertising and General Contractual Clauses”.
The law applies to advertising initiatives disseminated through any means,
10. What are the
CMVM's powers on authorised digital platforms that attract Portuguese
customers, but which are based in third countries?
responsibility for supervising financial intermediaries that manage electronic
platforms for receiving orders registered in another Member State, lies
primarily with the supervisory authorities of the country where the financial
intermediary that owns the platform is domiciled. The supervision of the
regular functioning of the market wherein the financial instruments are traded,
however, rests with the supervisory authority of the country wherein the
transaction market operates. To this extent, the CMVM often cooperates with its
international counterparts, in Europe and outside Europe, in the context of the
cross-border activity of financial intermediaries and investors.
of responsibilities advises investors to take special care when choosing to
invest through platforms that are not managed by national financial
intermediaries and to bear in mind the transaction markets.
increasingly global and digital nature of transactions, the CMVM publishes warnings
issued by authorities in other countries regarding unauthorised entities that
are operating in those jurisdictions, which can be consulted on this page.
entity that is not qualified to engage in financial intermediation activities
in financial instruments or other subject to authorisation by the CMVM in
Portugal is detected, a warning to the market is issued. These warnings can be
found on this
compliance with the powers conferred on it by the law, the CMVM monitors and
supervises the activities carried out by financial intermediaries and related
agents registered with the CMVM.
11. What are the
CMVM's powers of action regarding financial advice provided through social
networks/influencers? What about classes, courses taught?
and other training activities do not, in themselves, constitute activities that
fall within the competence of the CMVM. However, the CMVM warns on the risk that may
be associated with these initiatives, with the possibility that these
activities may serve to attract investors to make investments through unauthorised
entities or, simply, to fraud situations.
As mentioned in
question 9, in compliance with the powers conferred on it by the law, the CMVM
monitors and supervises the activities carried out by the financial
intermediaries and related agents registered with the CMVM. Included in this
scope are the activities of advertising financial products and services and
attracting customers, which are limited to financial intermediaries and their
related agents, and which are regulated, in particular, by Articles 7
("Quality of information" ), 292 (“Advertising and Prospecting”) and
366 (“Supervision related to advertising and general contractual clauses”) of
the Portuguese Securities Code. The CMVM has, to this extent, acted in several
situations, namely, determining the cancellation or alterations to illegal
advertising initiatives, as well as cooperating with counterparts when
difference between investment recommendations and investment advice or
personalized advice is highlighted. Investment recommendations are regulated by
European legislation (Market Abuse Regulation) in matters of content, statement
of conflicts of interest and disclosure. Their object of analysis is a specific
company or financial instrument and they do not have a specific recipient, they
are intended for the general public.
investment advice or personalised advice, is a service aimed at a specific
client and whose investment proposal is subject to suitability requirements.
This means that, before making the investment proposal, the consultant has the
duty to know the client's profile, to assess the investor's investment knowledge
and experience, to know his/her financial situation and investment objectives,
as well as the level of risk appetite. This tailored advice for a given client
is an activity carried out by financial intermediaries or independent
consultants that requires registration with the CMVM.