Gabriela Figueiredo Dias, in the balance sheet of the CMVM's activity made today at the Budget and Finance Committee, highlighted the “sanctioning activity, which has been greatly affected in recent years by the weight of the complex cases of the previous crisis - 'PT', 'BES / KPMG' or Banif - which are already concluded or for which the conclusion is expected in 2021, as well as a further reduction of pending administrative proceedings against 2019 - which had already been the year with the least pending cases since 2009; and a significant increase in the fines imposed, which this year will approach 6 million euros ”.
Since the last crisis, European institutional changes, namely the progressive realization of the projects of the Banking Union and the Capital Market Union; strengthening the powers of the European supervisory authorities; and regulatory harmonization and supervisory convergence “have evolved in an essential way to reinforce the resilience of the financial system, evidenced, moreover, in the quick and effective reaction of central banks, governments, and capital market regulators, having allowed to avoid disruptions economic, financial and social issues like the ones we experienced at the turn of the decade at the international level ”, recalled the CMVM president.
Gabriela Figueiredo Dias detailed the reasons that support the assessment that the national capital market, and its regulation and supervision, are today better prepared to face the difficulties.
“On the regulatory front, investor protection and simplification are worth mentioning,” he says. The Financial Instruments Markets Directive, transposed in 2018, reinforced the protection of non-professional investors, in particular in the information that must be provided to them, in the adaptation of investment proposals to the risk profile of each one, and in the knowledge and skills required to the employees of the financial intermediaries, he reminded today at the Budget and Finance Committee.
"The impacts on the behavior of market agents and investor protection levels are already sensitive today, which result not only from the rules and duties imposed, but also from a progressive cultural change on the supply and demand side", he stresses.
CMVM's President recalls the revision of the Code, which has already been completed but which is awaiting the Executive
The CMVM presented to the Ministry of Finance “a proposal for revision of the Securities Code that will allow a 43% reduction in non-periodic reporting duties” and which ends up being duplicated, at the end of last year.
“As for regulatory simplification, we published a few weeks ago the result of a work started in 2017 that will already determine in 2021 a reduction by one third in the duties of regular reporting of information to the CMVM, in addition to the review, already concluded, of the Code Securities and Audit Supervision Legal Regime and the ongoing review of the fund and investment company regime, ”he reminded the deputies.
The purpose of the diplomas is to clarify and reduce regulatory burdens. The CMVM has been waiting for the green light from the government, but some regulatory simplification projects need investment, and the regulator has not been able to do so, despite having reserves that it could use for this purpose, but that it cannot release, for being captivated, as the CMVM president has said several times.
In supervision, Gabriela Figueiredo Dias highlighted at COF "the strengthening of macro and micro risk analysis, aligned and concerted at European level, which allows us today to take a more focused, relevant, punctual and effective action".
It should be noted, he says, “as a relevant change for the CMVM, the growing importance of prudential supervision, due to the new powers that have been assigned to us in terms of the supervision of asset management entities until this year exercised by Banco de Portugal; but also by revising our approach to activities and entities that we already supervised, but whose prudential dimensions became at the center of our analysis and monitoring ”.
The responsible for the regulatory entity says that “the impacts of the functioning of the market on financial stability, namely resulting from asset management and central counterparties, namely with regard to the analysis of prudential liquidity, own funds and valuation ratios, have gained a central place. in our supervision, particularly in a context of crisis such as the one we continue to face, with the CMVM playing a crucial and leading role at the European level on this front ”.
“In turn, the supervision of independence, competence and suitability requirements has become a priority for us, with results materialized in various sectors subject to our supervision, particularly in the last two years”, recalls Gabriela Figueiredo Dias.
The CMVM stresses that, combining the prudential and behavioral aspects of supervision, “this is an example of an innovative line of action, of which we are convinced, and which aims to enhance relevant increases in the protection and recovery of investor confidence, on the one hand , and financial stability, on the other hand, taking into account the known impacts of some examples of unusual conduct, in a broad sense, in both dimensions ”.
Within the scope of its Activity Plan, the CMVM also invokes audit supervision. “In almost four years, we have assumed, structured and implemented a supervisory team and model, with important results in terms of assessing the independence of the auditors, the respective rotation and the assessment of suitability, not forgetting the continuous improvement and improvement of supervisory models , namely through the design of audit quality indicators that are already a reference in the international panorama ”, he said.
The reinforcement of investor protection “was due to the rapid and exhaustive implementation of the MiFID II rules, a combined and exemplary result of the CMVM's collaborative and attentive action and the great responsibility and commitment shown by the financial intermediaries in this matter”, stresses the manager who also recalls the “in-depth review of the complaints handling system by the CMVM; the establishment of more effective reporting mechanisms and analysis; and determining the criteria for disclosing cases of unauthorized financial intermediation ”.
The CMVM president told deputies that “we have reached the current crisis with no outstanding complaints associated with the dramatic events of the beginning of the decade; we guarantee a faster handling of new complaints - less than 30 days of response in 2020 against more than 80 days in 2018; we provide more and better information and support to investors, with emphasis in 2020, among several examples, the issue of specific guidelines for investors in a context of crisis and the increase in the number of alerts to investors, which this year already exceeds four dozen ” .
Gabriela Figueiredo Dias also says that the improvement in the service levels of the CMVM “is also benefiting the supervised entities, namely by anticipating by about 40% the legally established deadlines for authorizations and registrations at the CMVM, or reductions of the same magnitude compared to 2018 approval of prospects. This without neglecting supervisory care, and even reinforcing our scrutiny in the face of the pandemic context and particularly complex operations in 2020 ”, stresses the chairman of the Securities Market Commission.
The CMVM says that it opted for a “very significant” evolution of communication “by developing this dimension as an instrument to enhance the effectiveness of regulation and supervision, and of increased protection for investors and their confidence. Assuming our role as regulator-modeler, we guarantee a direct and frequent relationship with stakeholders, market consultations, higher quality publications, website improvement and annual disclosure of CMVM's general and supervisory priorities at the beginning of each year, accompanied by accountability on their level of achievement at the beginning of the following year ”.
To conclude, he noted the “reinforcement of investment and digital modernization and management tools that we have been operating, and which can be illustrated by tripling in the last four years the average annual volume of investment in information technologies”. But also “due to even greater increases in the volume of supervisory data processed and transmitted between financial intermediaries, the CMVM and the European supervisory authorities; for the renewal of the management board, which is smaller and younger; or by introducing consistent planning and performance design and evaluation systems ”.
CMVM warns of threats to the financial system and investors in 2021 to the vulnerability of companies and families
“Bearing in mind the performance so far and the high uncertainty that persists, we highlight among the main threats to the financial system and investors in 2021 the vulnerability of companies and families after the strong recession this year and the timid recovery that is anticipated”, alerts Gabriela Figueiredo Dias at the Budget and Finance Commission (COF).
The CMVM president had already warned of the increase in indebtedness and possible deterioration in the credit quality of national and international issuers, as one of the risks.
But it also warned of a reduction in transparency regarding the knowledge of the real and complete financial situation of companies, as well as the offer of innovative, but not always safe, investment alternatives, namely by digital means; and, finally, for the “still insufficient availability of diversified and safe investment alternatives, as well as the retraction of investors in relation to investment and the systematic channeling of savings into bank deposits - options with less risk, but with practically zero return - in what constitutes an obstacle to the relaunch of the national economy ”.