Banco BPI | Ethics and Deontology | Internal Code of Conduct on Securities Markets
Internal Code of Conduct on Securities Markets
1. Introduction and Regulatory Framework
Banco BPI S.A. (hereinafter "Banco BPI", the "Entity", "Institution" or "Bank") is a credit institution of CaixaBank Group that develops banking business activities, including any ancillary, related or similar transactions compatible with said business and to the extent permitted by law, and adopts CaixaBank's corporate policies, with the due adaptations.
This Internal Code of Conduct of Banco BPI (hereinafter referred to as "ICC" or "Code") with regard to the Securities Markets is aligned to the Code of CaixaBank Group and its aim is to ensure that the conduct of Banco BPI (as a credit institution, issuer of securities and provider of financial services) and that of the entities directly or indirectly controlled by it, including the actions of their corporate bodies and Employees, is compliant with the rules of conduct contained, among others, in Regulation (EU) No 596/2014 of the European Parliament and of the Council, of 16 April, on market abuse ("MAR"), and respective standards and implementing rules, insofar as applicable to activities carried out in connection to the securities market. Its ultimate purpose is to promote transparency in markets and to protect, at all times, the legitimate interests of investors.
It is the duty and the intention of Banco BPI to conduct itself with the utmost diligence and transparency in all its actions, to keep the risks of conflicts of interest to a bare minimum and, ultimately, to ensure that investors receive information in an adequate and timely manner, for the benefit of market integrity. All other legislation in force governing the securities market shall also be respected at all times when applying this Code and in carrying out the activities envisaged herein.
This Code has been drawn up in accordance with the applicable national and European laws, as detailed in Appendix I thereto.
2. Scope of application
Chapter I: General Provisions
1. Awareness, compliance and collaboration
All Employees and members of the corporate bodies are required to know, comply with and collaborate in the application of this Code and all the prevailing securities market laws that affect their specific functions and activities.
They must also follow and comply with all operational processes and procedures needed to apply the obligations arising out of this Code, all of which are embodied in an internal set of regulations.
Chapter II: Scope of application
2. General application of the Code: Affected Entities
2.1 This Code is binding to Banco BPI, S.A. and to all entities directly or indirectly controlled by it, including branches and representative offices, that are involved in matters directly or indirectly relating to the securities market, except those that have in place their own internal regulations on this matter ("Affected Entities" or "Banco BPI"), or which operate in connection to the securities market in foreign territories where the domestic law provides further or stricter rules, in which case they will also be bound by those rules.
2.2 It is up to the ICC Committee to identify the Affected Entities bound by this Code.
2.3 The Affected Entities subjected to this Code shall establish their own management and control systems in coordination with Banco BPI's Compliance Division.
2.4 Chapter I of Section IV (Inside information), Section V (Prohibition on market abuse), Section VI (Reporting suspected market abuse transactions), Section VII (Conflicts of interest in relation to the securities market) and articles 45, 47 and 50 of Section IX (Organisational requirements for applying the Code) shall apply to all Employees and Members of the Corporate Bodies of the Affected Entities.
3. Specific application of the Code: Affected Persons
3.1 This Code shall apply in full to the following persons (the "Affected Persons")::
(i) Members of the Board of Directors and, if not Board members, the Company Secretaries of the Affected Entities;
(ii) Any senior level executive who, though not a member of the bodies referred to in paragraph (i), has regular access, directly or indirectly, to inside information, and the power to take management decisions affecting the future developments and business prospects of the Affected Entities;
(iii) Employees of the Affected Entities who work at divisions or units related to the securities markets and/or who have regular access to Inside Information;
Specifically, this Code shall apply to any person who provides services in a separate area (cf. Point 16) and who meets the previous requirements, as well as those who, while their functions do not relate directly to the securities market, must be temporarily subjected to the scope of this Code due to their involvement in or knowledge of transactions in relation to which Inside Information exists; and
(iv) Any other person at the Affected Entities whom the ICC, upon a proposal of the Compliance Division, decides should be subjected to the scope of the Code.
3.2 The ICC Committee shall identify the Affected Persons bound by this Code. These Persons will be entered into the Register referred to in Point 6 below.
4. Acquiring Affected Person Status
Any person acquiring the status of Affected Person must acknowledge receipt of the notice received from the Compliance Division to the effect, state his/her adherence to this Code and undertake to comply with all the obligations thereunder. They shall also provide any information required of them so as to allow for proper control of compliance with the Code.
5. Loss of Affected Person Status
5.1 The status of Affected Person is lost:
(i) Upon termination of the employment or services relationship with the Affected Entities. In this case, the person concerned will be automatically removed from the scope of this Code without the need for notice;
(ii) By resolution of the ICC Committee, acting on the proposal of the Compliance Division, or when requested by the person concerned or by his or her head of department, when that person ceases to provide services relating to the securities market or is no longer privy to inside information.
5.2 The person concerned shall be informed that he/she no longer qualifies as an Affected Person, through the process defined in the internal regulation established for the purpose, save as provided for in Point 5.1. (i).
5.3 Loss of Affected Person status shall effectively extinguish the obligations of the person concerned by reason of their their status as such, but will be without prejudice to their other obligations under applicable securities markets law, as referred to in Point 2.4 of this Code.
6. Register of Affected Persons
The Compliance Division shall keep a register of all Affected Persons bound by the Code.
3. Personal Transactions of Affected Persons
Chapter I: Obligations of Affected Persons
7. Mandatory intermediation
7.1 As a general rule, Affected Persons must conduct their personal transactions involving financial instruments admitted to trading or other financial instruments through the channels made available to Banco BPI Customers, except for the transactions referred to in Point 9.4 of this Code.
Transactions with securities or portfolios held by Affected Persons in other entities, that existed prior to the date said Persons adhered to this Code shall not be subject to mandatory intermediation, however the Affected Persons are required to report to the Compliance Division when selling the financial instruments admitted to trading or financial instruments that make up those portfolios. Aside from the aforementioned situation, all other transactions shall require the mandatory intermediation of Banco BPI.
Upon adhering to this Code, Affected Persons must inform Banco BPI's Compliance Division if they have pre-existing portfolios at other institutions.
7.2 Affected Persons who simultaneously provide services to, or sit on the Board of Directors of, another financial institution authorised to provide investment services are exempted from this obligation to deal on own account through Banco BPI. These persons may choose to carry out their transactions through Banco BPI or another institution, depending on the Internal Code of Conduct to which they decide to adhere. Their decision must be reported to Banco BPI's Compliance Division and to the ICC Committee.
7.3 In exceptional cases, the ICC Committee may expressly authorise intermediation of dealing on own account through other financial intermediaries, following a duly substantiated request from the Affected Person and after the matter has been analysed. However, these transactions shall be subject to the duty to report, as described in the following point.
8. Preliminary control of dealings on own account
8.1 The dealing on own account of Affected Persons, except for the operations referred to in point 9.4 of this Code, may, if the Affected Person so wishes, undergo a preliminary control by Banco BPI's Compliance Division, so as to ensure that they do not concern financial tradable instruments or other financial instruments in respect of which restrictions exist. These restrictions may exist as a result of:
(i) Management of a project with inside information where the Affected Person is included in the List of Persons with access to inside information;
(ii) A restriction approved by the ICC Committee under the terms of point 10.3;
(iii) The application of any of the periods governed by point 13 (restrictions during blackout periods).
The Affected Person may request preliminary control from Banco BPI's Compliance Division at least one business day ahead of the date on which they intend to place the order in question. The Compliance Division shall respond within 24 hours.
If the result of the control is positive, the Affected Person may not carry out the transaction, but may approach Banco BPI's Compliance Division to clear up any doubts they may have in relation to the matter. Otherwise, the Affected Person will have three business days from the control response date in which to place the order. Once this term has elapsed, the control process may have to be repeated.
8.2 Notwithstanding the terms of the preceding paragraph, under no circumstances may dealings involve inside information, pursuant to the terms of point 32 (chapter II: Prohibition on market abuse).
9. Disclosure of dealing on own account
9.1 Affected Persons must, within the first ten days of each month, notify Banco BPI's Compliance Division of all dealing on own account undertaken in the previous month, including those which were authorised to be intermediated by other institutions (other than Banco BPI), save as provided for in point 9.5.
9.2 For the sole purposes of this point, transactions carried out by any Related Party or third party on their behalf shall be treated in the same way as dealings on own account carried out by Affected Persons.
9.3 Affected Persons must declare their Related Parties (natural persons and legal entities) and keep this declaration up-to-date at all times by promptly notifying the Compliance Division of any change that may occur therein.
The Compliance Division shall treat this list as strictly confidential, without prejudice to its duty to cooperate with the judicial and regulatory authorities.
9.4 The following are excluded from this duty to report:
(i) Dealings involving shares or equity units in Portuguese or European harmonised collective investment schemes, or any such schemes subject to supervision in accordance with the laws of the relevant member state insofar as these demand an equivalent level of scrutiny to that required under European Law in relation to the distribution of risks among assets, and providing the Affected Person does not participate in the management of the collective investment institution in question;
(ii) Transactions involving pension plans and financial insurance;
(iii) Transactions resulting from the exercise of shareholders' rights, as well as those that are complementary or ancillary to the foregoing;
(iv) Transactions on own account as part of the discretionary portfolio management service, provided they meet the requirements set out in point 11 below (Portfolio Management), and do not result from orders placed by the Affected Person for the portfolio under management.
9.5 The obligation to disclose dealing on own account by Affected Persons shall be deemed as fulfilled when the Affected Person has previously authorised Banco BPI's Compliance Division to identify those transactions intermediated by Banco BPI. This exception shall only apply in the case of dealing on own account undertaken by Affected Persons through Banco BPI, and it shall not apply to those undertaken by Related Parties, which must be reported.
In all other cases, exceptions from the duty to report do not apply, and the Affected Persons will be required to report their transactions each month to Banco BPI's Compliance Division.
10. Ban on speculative dealings
10.1 Affected Persons may not sell or purchase financial instruments of an identical or equivalent type1 to those they purchased or sold previously on the same day (day-trades).
10.2 Without prejudice to the general rule set out in the previous paragraph, those Affected Persons who trade directly or indirectly in the markets or provide ancillary investment services - whether by receiving, executing, or transmitting orders on behalf of third parties, executing Banco BPI's own transactions, advising third parties or issuing investment recommendations - may not sell or acquire financial instruments that are of an identical nature to those they acquired or sold within the preceding term of one month, unless they have express and substantiated authorisation for doing so, which, if appropriate, shall be granted by Banco BPI's Compliance Division. The ICC Committee, on the proposal of the Compliance Division, shall identify the areas affected by this restriction.
10.3 Similarly, the ICC Committee, on a proposal from the Compliance Division, may determine the financial instruments admitted to trading or other financial instruments which, due to the level of risk involved, Affected Persons may be banned from trading in, in accordance with the list of instruments contained in point 21 (List of Instruments), with this ban to continue for as long as the Committee deems necessary. The decisions that are made in this respect must be communicated personally and in writing to the Affected Persons concerned.
11. Portfolio management
11.1 The framework set out in Points 7, 8 and 9 shall not apply in the case of the dealing on own account of Affected Persons or Related Persons carried out by a third party while providing discretionary management services, provided:
(i) The portfolio manager and the Affected Person have had no previous communication regarding the transaction. Banco BPI's Compliance Division may request a statement to that effect from the Affected Person;
(ii) The management contract was previously submitted to the Compliance Division, and the latter has verified that the conditions defined in the Code have been met, namely the impossibility of the Affected Person to place orders.
11.2 Until Banco BPI's Compliance Division is able to confirm that the contract meets the requirements referred to in the preceding paragraphs, the executed transactions will remain subject to the system of previous control and disclosure to this Division, save if the transactions were carried out through the available channels at Banco BPI.
Chapter II: Specific obligations of persons discharging management responsibilities
12. Disclosure of personal transactions to Banco BPI and the CMVM
12.1 The directors and executives referred to in sub-paragraphs (i) and (ii) of the definition of Affected Persons (Point 3.1) and their respective Related Parties, must notify the Company Secretary of the Affected Entities and the CMVM of all transactions executed on their own account when these involve financial instruments of the Affected Entities. Both such notifications shall be made promptly and no later than three business days of the relevant transaction date, in each case using the legally-stipulated format, content and channels. The Company Secretary shall, for control purposes, report to the Compliance Division on all such communications received.
12.2 As an exception to the provisions of the preceding paragraph, transactions need not be reported when, within a single calendar year, the total amount of those transactions does not exceed 5.000 Euros. The applicable threshold will be calculated as the sum of all transactions executed, without offsetting or netting against this amount transactions of a balancing nature (such as buy and sell transactions). Under no circumstances shall this exception apply to members of the Board of Directors or their Related Parties if, in the latter case, the voting rights are vested in the Director.
12.3 Also excluded from the general disclosure obligation are transactions involving financial instruments where the underlying assets are shares or debt instruments of the Affected Entities provided one or more of the following conditions are met at the time of the transaction:
(i) The financial instrument is a share or equity unit of a collective investment scheme wherein exposure to the shares or debt instruments of the Affected Entities does not exceed 20% of the assets held by the scheme;
(ii) The financial instrument provides exposure to an asset portfolio wherein exposure to the shares or debt instruments of the Affected Entities does not exceed 20% of the assets contained in the portfolio;
(iii) The financial instrument is a share or equity unit of a collective investment scheme or provides exposure to an asset portfolio and the Affected Person, or Related Party, does not know, and cannot know, the composition of the investment or the exposure of that collective investment scheme or asset portfolio in relation to the share or debt instruments and, moreover, they have no reason to believe that the shares or debt instruments of the Affected Entities exceed the thresholds stipulated in the two preceding paragraphs.
When there is available information on the composition of the collective investment scheme or on the exposure to the asset portfolio, the Affected Person or the Related Party shall take every reasonable effort to access that information.
12.4 Transactions that must be notified are all those set out in article 19.7 of the MAR and in article 10 of Commission Delegated Regulation (EU) 2016/522, of 17 December 2015, supplementing the former. These articles are reproduced in Appendix II to this Code.
In particular, the obligation to notify invariably includes transactions executed under the terms of the Portfolio Management Agreement signed by the Affected Person or any of their Related Parties.
12.5 Pursuant to art. 19.5 of the MAR, the Compliance Division shall notify in writing the persons discharging managerial responsibilities of their notification obligations under this chapter.
Furthermore, persons discharging managerial responsibilities shall notify their Related Parties in writing of the obligations incumbent on the latter under this Point and shall retain a copy of that notice.
13. Restrictions during black-out periods
13.1 The Affected Persons indicated in paragraphs (i) and (ii) of article 3.1 above shall not engage in any transactions, whether on their own account or on behalf of third parties, directly or indirectly, in respect of financial instruments issued by the Affected Entities, or derivatives or other related financial instruments, within the period of 30 business days preceding the announcement of an interim or annual financial report, or, as the case may be, from publication by the Affected Entities of financial results to be included in the relevant report (black-out periods). The Compliance Division shall provide sufficient advance notice of the start of each black-out period to those persons affected by this restriction.
13.2 The preceding restrictions will not apply when the Compliance Division grants specific authorisation to trade in any of the following situations during a black-out period, once the person concerned has demonstrated that the specific transaction cannot be carried out at any other time:
(i) Due to the characteristics of the trade in question in transactions made within or related to the scope of an employee share option scheme or share guarantee or entitlement scheme, for transactions where there is no change in the ownership of the relevant security. Here, the prohibition will also be lifted in the case of buy transactions that stem from previously adopted decisions to reinvest dividends or any other return on the tradable financial instruments or other financial instruments, provided those decisions are valid for at least six months and have been notified to the Compliance Division; or
(ii) In transactions where the beneficial interest in the relevant security does not change.
13.3 The ICC Committee, acting on the proposal of the Compliance Division, may move to apply these restrictions to any other Affected Persons and Employees it deems fit, in view of their involvement in the preparation of the financial reports of the Affected Entities. The ICC Committee must notify such persons individually and in writing, providing sufficient advance notice.
13.4 The ICC Committee, acting on the proposal of the Compliance Division, may establish restriction periods on the trading of CaixaBank securities and financial instruments, when so justified by circumstances or events. These restrictions shall apply to those Affected Persons and Employees to whom the ICC Committee deems fit to apply them, and these shall be notified in person and in writing sufficiently in advance of the commencement of the restriction.
4. Inside Information
Chapter I: Personal obligations
14. Scope of application
The general duties set out in this chapter are mandatory and binding on all Employees and members of the corporate bodies. The personal duties described in the other chapters of this Section apply to the Affected Persons of the Affected Entities.
15. Duty to abstain, safeguard and communicate
15.1 Any person having Inside Information, when they know or ought to know that the information is such, must refrain from the following conduct:
(i) Acquiring, transferring, or disposing of the financial instruments to which that information relates, whether for their own account or on behalf of third parties, and whether directly or indirectly. This is deemed to include information on any security, financial instrument or contract, whether or not traded on a regulated market, MTF or OTF, or traded by a systematic internaliser, that has securities or other financial instruments to which the Inside Information relates as the underlying asset.
This includes: in relation to derivative instruments involving commodities, information on the related commodity forwards, the emission allowances, and the auctioned products based on these allowances. Insider dealing will also be deemed to exist when this type of information is used to cancel or amend an order relating to the Security or other Financial Instrument to which that information relates when the order was placed before the person became aware of the Inside Information.
Excepted from the above are the following:
a) Preparing and carrying out transactions whose existence is, in itself, Inside Information;
b) Dealings which are carried out in fulfilment of an obligation, already due, to acquire, transfer, or assign tradable financial instruments or other financial instruments, when those dealings are carried out in good faith and not to circumvent the prohibition on insider dealing and provided also the Compliance Division has been notified and that: 1) that obligation results from an order placed or an agreement concluded before the person concerned possessed the Inside Information; or 2) that transaction is carried out to satisfy a legal obligation that arose before the person concerned possessed the Inside Information.
(ii) Communicating Inside Information to third parties, unless this is necessary in the normal course of the exercise of an employment, profession or duties, and subject to the requirements of this Code.
(iii) Recommending to a third party or encouraging that party to acquire, transfer, or assign tradable financial instruments or other financial instruments in respect of which it has Inside Information, or to cancel or amend an order relating thereto. Insider dealing will be deemed to exist when the third party following the recommendation or inducement knows or ought to know that it was based on Inside Information.
15.2 Moreover, persons having access to Inside Information are required to safeguard the information, without prejudice to their disclosure duties and their duty to collaborate with judicial and administrative authorities under the terms of the MAR and other applicable laws and regulations.
They shall also take the utmost care to keep the Inside Information in safe custody and to ensure that it remains strictly confidential by adopting appropriate measures to prevent the Inside Information from being used in an abusive or unfair manner. In the event that the Inside Information is used in an abusive or unfair manner, any person who has knowledge thereof must promptly notify to the Compliance Division.
15.3 Persons who come into the possession of Inside Information must also inform to the Compliance Division as swiftly as possible. The communication must provide details of the information, the reason why they came into possession of the information and the date and time they came into possession thereof, the financial instruments to which the information relates and the identity of the persons who know of that information.
15.4 Any communication of Inside Information made within the context of a market sounding activity as part the normal functions or the person concerned will not be considered as breach of the duty to safeguard, provided all applicable legal requirements are duly met. They must also observe and satisfy the terms of Point 26 below.
Chapter II: Management structure and Inside Information protection measures
16. Inside Areas
16.1 Inside Areas have been set up so as to ensure that decisions relating to the securities markets are made autonomously by each area, thus preventing conflicts of interest and the improper flow of Inside Information.
In particular, this Code establishes as Inside Areas, both with respect to the rest of the organisation and between themselves, those divisions or work groups that comprise a single work centre or form part of a greater work centre and that engage in own portfolio management activities, third-party portfolio management, and analysis thereof.
The Compliance Division is responsible for establishing further Inside Areas or restructuring existing areas.
Each separate area shall have a head officer, who will be the most senior executive, whose responsibilities will include the duty to oversee and enforce compliance with the terms of this Code.
16.2 The Affected Entities that, in view of their corporate purpose, carry out activities relating to securities markets or investment services are also required to set up inside areas, separated both between themselves and from Banco BPI's other divisions and any other entities.
16.3 Each Inside Area shall exercise full independence and autonomy when making its investment decisions and all other decisions related to the securities market and shall not use any information that comes from other areas unless authorised by the Compliance Division.
17. Hierarchic levels within Inside Areas
The managers and bodies hierarchically above the individual in charge of each separate area, including committees or other collective bodies of which that head officer or a person designated by them may be a member, shall be deemed to be a common structure also above the previously-defined Inside Areas. The Compliance Division must be notified of any transfer of Inside Information to any of such managers or bodies, as part of the corresponding decision-making process.
18. Physical and logical firewalls between Inside Areas
18.1 The Inside Areas shall be located in separate buildings or on separate floors, to the extent possible in view of the Affected Entity's facility structure. In the event that an inside area is located on the same floor as other Inside Areas or other services of the Affected Entity, appropriate separation measures shall be installed. The individual in charge of the inside area concerned shall ensure that these measures are duly in place.
18.2 Where necessary, other appropriate separation measures may also be implemented within an inside area.
18.3 When setting up the physical separation measures referred to in this article, all applicable safety regulations must be observed.
18.4 The Inside Areas shall also have logical or software firewalls and barriers in place to prevent their information from being accessed by other Employees of the Affected Entity.
18.5 The officers in charge of each of the Inside Areas shall notify the Compliance Division of Banco BPI of the physical and logical separation measures that they adopt in their respective Inside Areas, and of any subsequent modification or transfer thereof. These measures will be established in accordance with the risk-based criteria approved the ICC Committee, on the proposal of the Compliance Division.
19. Inside Information protection measures
The necessary security measures will be established to ensure the safekeeping, filing, reproduction, distribution of and access to the Inside Information. By way of example but without limitation, such measures may include the following:
(i) Documents used in transactions must state in a visible place that they are confidential documents intended exclusively for internal use.
(ii) Personnel of the Affected Entities who have access to Inside Information must adopt, as provided for in this Code, the necessary measures to ensure it is correctly protected, preventing the Inside Information from being made available to unauthorised persons or from being improperly transferred.
(iii) The necessary measures will be adopted so that documents, files, pen drives, USB memory sticks, CD-ROMs, DVDs and any other media that contain Inside Information are kept in secure places and under lock and key when not in use, so as to prevent unauthorised access or improper reproduction thereof. Furthermore, computers used in any project or transaction that contains Inside Information must have systems that restrict access exclusively to those persons in the area concerned who are involved in those projects or transactions. The heads of each area shall make the necessary arrangements to ensure full compliance with these measures.
(iv) Conference rooms must be checked before and after meetings to ensure that materials containing Inside Information are removed after meetings have ended and before the room is used again. Special care must be taken with notes and diagrams left on boards and similar equipment.
(v) No aspect of projects or transactions that contain Inside Information may be commented on in public places or in areas where there is a risk of it being overheard by persons who should not be privy to the information.
(vi) Extreme caution must be taken regarding security when communicating through potentially unsecured media such as mobile phones, faxes or email. In particular, information must not be sent to terminals that are unmanned at the time of sending or that could be accessed by unauthorised persons.
Chapter III: Controlling the treatment of Inside Information
20. Insider List
20.1 When studying or negotiating any legal or financial transaction that could appreciably influence the price of any tradable financial instruments or other financial instruments issued by the Affected Entities and, in general, when Inside Information is held as a result of services provided to third parties:
(i) Knowledge of this information shall be strictly limited to the minimum essential persons, within or outside the Affected Entity.
(ii) The head of the area in charge of the transaction (the "Head of the Section") must open the corresponding section and promptly send notice to Banco BPI's Compliance Division, via HRD, so that all the information concerning the persons in the list may be fully completed, under the terms set forth in the Management Procedure for the List of Persons with Access to Inside Information.
(iii) Every time Inside Information is sent to new people, the disclosing party shall notify the Head of Section so that the latter may update the list and notify the Compliance Division of the identity of those new persons.
(iv) The Compliance Division shall oversee all such communications received and keep the lists up-to-date at all times.
(v) The Section Head shall notify to the Compliance Division when the circumstances are such that the Inside Information is no longer classified as such (when the information is made public, or is no longer relevant or becomes obsolete). In all such cases, the relevant Section on the Insider List will be closed. The Compliance Department shall notify the persons concerned of any such circumstance.
(vi) The Insider List will be divided into separate Sections for each piece of Inside Information and set out in the format provided in the Commission Implementing Regulation (EU) 2016/347 of 10 March 2016 and under the terms set forth in Banco BPI'sManagement Procedure for the List of Persons with Access to Inside Information. The ICC Committee, acting on the proposal of the Compliance Division, may agree to insert into the Insider list an additional Section containing details of those persons who have permanent access to Inside Information.
20.2 Each Section must be immediately updated in the following cases:
(i) Where there is a change in the reasons why a person is included in that Section;
(ii) Where a new person is added to that Section;
(iii) Where a person appearing in the Section no longer has access to Inside Information.
When the Section needs to be updated, the head must specify in all cases the date and time of occurrence of the change that prompted the relevant update.
The data contained on the Insider List must be kept for five years from the later of the date the list was created or the last update thereof.
20.3 At the start of each project or transaction that might contain (or be liable to generate) Inside Information and, therefore, an Insider List, the head of the area in question shall assign a code name to identify the information. This code name will be disclosed to each person involved. The code name will be used to identify the transaction or project, thus avoiding the use of the actual name of the securities or other financial instruments and issuers concerned.
20.4 The Compliance Division shall expressly warn the persons appearing on the Insider List of the confidential nature of the information, of their duty to maintain confidentiality, of the prohibitions on use, and of the infractions and penalties applicable in the event of any improper use of such information. The Compliance Division must also inform these individuals that they have been included in the List and of all other aspects envisaged in applicable data protection law.
20.5 The internal regulations implementing this Code shall contain standards and procedures on how to manage the Insider List.
21. List of Instruments
The Compliance Division shall draw up and maintain an up-to-date list of financial instruments admitted to trading or other financial instruments in respect of which Inside Information exists, specifying in all cases the persons who have had access to that information and the relevant dates.
22. Controlling the flow of information
22.1 The heads of projects or transactions containing Inside Information shall adopt appropriate control measures so as to ensure that those projects, transactions or Inside Information are known only by essential persons, whether in-house or external to the Affected Entity.
22.2 Employees in possession of Inside Information shall not pass on this information to any other area or to any other Banco BPI company, except in the following cases:
(i) In the framework of the corresponding decision-making process, to those persons at a higher hierarchical level within the Affected Entity, where this can be defined as a senior common structure. In this case, the Compliance Division must be informed;
(ii) To another area, when this is essential for carrying out the work, again notifying to the Compliance Division;
(iii) To the Compliance Division so that it can discharge its functions;
(iv) In the remaining cases permitted by law.
22.3 If the involvement of third parties otherwise unrelated to the Affected Entity is needed in order to properly carry out the transaction or decision-making process, these should be included in the Insider List and such inclusion reported to the Compliance Division. The third parties must also sign a non-disclosure agreement reflecting the applicable precautionary measures to be taken.
22.4 Monitoring the quoted prices of securities and financial instruments issued by the Affected Entities. Affected Entities shall monitor the market prices of the securities and financial instruments issued by them and shall likewise follow all the latest news and information issued by the international financial information agencies and other media outlets, when this might affect these securities or instruments.
23. Supervision by the Compliance Division
23.1 The Compliance Division shall periodically verify that transactions carried out by Affected Persons and their Related Parties have not been influenced by any improper access to Inside Information. It shall also exercise management and control functions in relation to the Inside Information and the Insider Lists.
The Compliance Department shall also periodically verify that the information firewalls are functioning correctly.
Chapter IV: Special activities
24. Investment reports and recommendations
24.1 When investment recommendations or other information are made, published, or announced and these recommend or suggest an investment strategy in relation to securities or financial instruments ("Recommendations"), Employees must act loyally and impartially so as to ensure that the information is presented objectively and communicate their specific interests or indicate any conflicts of interest relating to the securities or financial instruments to which the information relates.
24.2 Affected Persons belonging to the units tasked with the preparation, publication or dissemination of investment reports and recommendations shall take the necessary measures to ensure compliance with the following requirements:
(i) They may not carry out personal transactions or negotiate on behalf of any person, including the Entity itself, unless they do so as market makers acting in good faith and in the ordinary course of this activity, or when executing an order not solicited by a client, without first submitting it to authorisation, in relation to the financial instruments addressed by a report which has not been made public or disclosed to clients and the content of which cannot easily be inferred from the information available, until the addressees of the report have had a reasonable chance of acting in that regard.
(ii) In circumstances not covered in the preceding paragraph, they may not carry out personal operations with the financial instruments referred to in said reports, or with related financial instruments contrary to current recommendations, except in exceptional circumstances and with prior approval in writing from the Compliance Division.
(iii) The entities providing investment services and the Affected Persons defined in this section may not accept incentives from those that have a relevant interest in the subject matter of the report in question nor can they engage with the issuers in the preparation of favourable reports.
(iv) When the draft investment report contains a recommendation or a price target, issuers or any other person, except for the Affected Persons defined in this section, will not be allowed to review the draft prior the public disclosure of the report, in order to verify the accuracy of objective statements contained in the report, or for any other purpose, except to verify that the company complies with its legal obligations.
(v) They shall not issue reports in relation to which they possess inside information as a result of investment services rendered by other areas or divisions of Banco BPI.
24.3 The head of the area tasked with preparing investment reports and recommendations shall send to the Compliance Division, at least once every six months, a schedule detailing the reports on specific companies which the area intends to draw up during the following six-month period. He/she shall also report on the extent to which the schedule has been met for the relevant six-month period and, where appropriate, offer an explanation for any deviations that may have arisen.
24.4 The Compliance Department shall send regular information and advice on applicable law and regulations to all units tasked with preparing, publishing, or disseminating reports and recommendations. This information will include, in particular:
(i) Rules governing the impartial presentation of reports and recommendations;
(ii) Rules on how and when to report conflicts of interest;
(iii) Rules governing publication of third-party recommendations;
(iv) Rules governing verbal recommendations.
24.5 Once published, the area responsible for preparing, publishing or disseminating that report or recommendation shall send it to the Compliance Department.
25. Market sounding activity
25.1 Market sounding activity may or may not involve Inside Information. This may be assessed either by the person conducting the sounding activity or by the person who receives it, in accordance with article 11 of MAR.
Inside Information resulting from market sounding activity will be deemed to have been communicated lawfully as part of the normal work or functions of an Employee if all applicable legal and regulatory obligations and requirements have been met.
The internal regulations of Banco BPI contain the framework for action of Affected Persons in the context of market sounding activity.
Chapter V: Public disclosure of Inside Information directly concerning Banco BPI.
26. Publication of Inside Information
26.1 The Affected Entity shall see to it that the inside information which directly concerns it is made available to the public as soon as possible.
26.2 The Affected Entity shall ensure that the Inside Information is made public, to allow the public fast access to, and complete, correct and timely assessment of the information.
26.3 Inside Information will be reported to the CMVM through publication of an Inside Information communication, as soon as the event is known, the decision has been made or the relevant agreement or contract with third parties has been signed, and this condition shall be expressly referred to.
Inside Information filings shall be posted on Banco BPI's corporate website as soon as they have been submitted to the CMMV, and also on the CMVM's Information Disclosure System, separately from any other information that may have been communicated by other issuers. The Compliance Division, or the person or persons appointed by the Compliance Division to that effect, shall periodically verify that the content of the Affected Entity's corporate website complies with the aforementioned requirements and, in general, with all reporting requirements applicable to companies with securities admitted to trading on a regulated market or which have required admittance to such a market.
26.4 To ensure that the Inside Information is disclosed to the market symmetrically and equitably, the persons included under the corresponding Section of the Insider List shall refrain from providing analysts, investors or the press with information deemed to be Inside Information and which has not been previously or simultaneously released to the market.
26.5 In the event that a Material Information filing must be corrected, a new filing shall be submitted to the CMVM, clearly identifying the original communication being modified and the particular aspects being amended.
27. Delay in publicly disclosing Inside Information
27.1 The above notwithstanding, the Affected Entity may choose to delay the public disclosure of the Inside Information in accordance with MAR and its implementing regulations, whenever:
(i) Immediate disclosure is liable of harming the legitimate interests of the Affected Entity;
(ii) The postponement of the disclosure is not likely to mislead the public;
(iii) The Affected Entity is able to ensure the confidentiality of this information.
27.2 In the case of a process deployed over time, by stages, intended to achieve or provoke a certain circumstance or event, the Affected Entity may, at its own responsibility, defer the public disclosure of inside information regarding this process, subject to the provisions of the previous point.
27.3 In the event that an Affected Entity has deferred the disclosure of inside information in this context, it shall inform the CMVM of such deferral and provide a written explanation about the compliance with the conditions set forth in the regime, immediately after the information is publicly disclosed.
27.4 With the objective of preserving the stability of the financial system, the Affected Entity may, at its own responsibility, defer the public disclosure of inside information, including information related to a temporary liquidity problem and, in particular, the need to receive temporary assistance in form of liquidity from a central bank or lender of last resort, provided that all the following conditions are met:
(i) disclosure of inside information carries the risk of compromising the financial stability of the Affected Entity and the financial system;
(ii) deferral of disclosure is in the public interest;
(iii) confidentiality of that information can be ensured, and
(iv) the CMVM has agreed to the deferral based on the conditions referred to in (i), (ii) and (iii) of this point being met.
27.5 In order to determine the advisability of delaying the public disclosure of Inside Information, any pertinent recommendations and guidelines issued by the CMVM or the European Securities and Markets Authority (ESMA) will be taken in due account.
27.6 If, having delayed the public disclosure of Material Information as described in the preceding paragraphs, the confidentiality of that information can no longer be guaranteed, the Affected Entity shall make this information public as swiftly as possible. This paragraph includes situations where a rumour explicitly relates to Inside Information the disclosure of which has been delayed, where that rumour is sufficiently accurate to indicate that the confidentiality of that information is no longer ensured.
5. Prohibition on Market Abuse
Chapter I: Personal obligations
28. Scope of application
The general duties set out in this Section are binding for all Employees and members of the corporate bodies.
Chapter II: Prohibition on market abuse
29. Prohibition on the unlawful use of Inside Information
No person may:
(i) Engage or attempt to engage in transactions based on Inside Information;
(ii) Recommend another person to engage in transactions based on Inside Information or encourage them to do so; or
(iii) Unlawfully disclose Inside Information.
30. Prohibition on market manipulation
30.1 No person shall manipulate or attempt to manipulate the market. Accordingly, no person may engage in any of the following activities:
(i) Entering into transactions, placing orders to trade or any other behaviour that:
a) Gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of financial instruments, derivative financial instruments, related spot commodity contracts or products auctioned based on emission licences; or
b) Fixes, or is likely to fix, the price of one or several securities, financial instruments, derivative financial instruments, related spot commodity contracts or auctioned products based on emission allowances at an abnormal or artificial level,
Unless the person entering into a transaction, placing an order to trade or engaging in any other behaviour establishes that such transaction, order or behaviour has been carried out for legitimate reasons, and conforms with an accepted market practice;
(ii) Entering into a transaction, placing an order to trade or any other activity or behaviour which affects or is likely to affect the price of one or several securities or other financial instruments, using a fictitious scheme or any other form of deception or contrivance;
(iii) Disseminating information through the media, including the internet, or by any other means, which conveys, or is likely to convey, false or misleading signals as to the supply of, demand for, or price of, a financial instrument, a related spot commodity contract or an auctioned product based on emission allowances or which secures, or is likely to secure the price at an abnormal or artificial level, including the dissemination of rumours, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading;
(iv) Transmitting false or misleading information or providing false or misleading inputs in relation to a benchmark index where the person who made the transmission or provided the input knew or ought to have known that it was false or misleading, or any other behaviour which manipulates the calculation of a benchmark index. Specifically, all the aforementioned behaviour will constitute market manipulation when it relates to the process of contributing to the Euribor and Eonia (Euro Overnight Index Average) indices.
30.2 Likewise, no person shall engage in any of the following conducts:
(i) The conduct by a person, or persons acting in collusion, to secure a dominant position over the supply of or demand for a security or other Financial Instrument, which has, or is likely to have, the effect of fixing, directly or indirectly, purchase or sale prices or creates, or is likely to create, other unfair trading conditions;
(ii) The buying or selling of a tradable security or other Financial Instrument, at the opening or closing of the market, which has or is likely to have the effect of misleading investors acting on the basis of the prices displayed, including the opening or closing price;
(iii) The placing of orders to a trading venue, including any cancellation or modification thereof, by any available means of trading, including by electronic means, such as algorithmic and high-frequency trading strategies, and which has one of the effects referred to in the previous paragraphs, by:
a) Disrupting or delaying the functioning of the trading system of the trading venue or increasing the changes of such happening;
b) Making it more difficult for genuine orders to be identified or increasing the chances for this to happen, by entering orders which result in the overloading or destabilisation of the order book; or
c) Creating or being likely to create a false or misleading signal about the supply of, or demand for a tradable security or other financial instrument, in particular by entering orders intended to initiate or exacerbate a trend;
(iv) Taking advantage of occasional or regular access to the traditional or electronic media to voice an opinion about a tradable security or other Financial Instrument, or indirectly about its issuer, while having previously taken positions on that tradable security or other Financial Instrument and profiting subsequently from the impact of the opinions voiced, without having simultaneously disclosed that conflict of interest to the public in a proper and effective way;
(v) The buying or selling on the secondary market of emission allowances or related derivatives prior to the auction held pursuant to Regulation (EU) No 1031/2010 with the effect of fixing the auction clearing price for the auctioned products at an abnormal or artificial level or misleading bidders bidding in the auctions;
(vi) Any other action or practice that runs contrary to the free process of price formation.
30.3 To determine whether a behaviour constitutes market manipulation, the indications of manipulation (indications of the use of fictitious devices or any other form of deception or contrivance and indications of false or misleading signals and of price fixing) foreseen in the legislation in force and in the documents issued by the supervision authorities from time to time shall all be taken into account.
6. Reporting Suspected Market Abuse Transactions
Chapter I: Personal obligations
31. Scope of application
The general obligations set out in this Section are binding for Employees and members of the Corporate Bodies.
32. Detection and reporting to the Compliance Division
32.1 All employees receiving, transmitting or executing orders and transactions in a professional capacity and those otherwise involved in these tasks shall decide whether the transaction in question appears suspicious and should be reported to the Compliance Division.
32.2 When an employee becomes aware of a suspected market abuse transaction, they shall promptly notify to the Banco BPI's Compliance Division either directly or indirectly through the head of their area. If the matter is not reported immediately, they must provide valid reasons for the delay and may be found to be in breach of this Code if the reasons provided are not sufficiently convincing.
32.3 This communication must be in writing and set out each and every aspect required by the Compliance Division so that the latter may inform the CMVM.
32.4 Employees shall respond as promptly as possible to requests for information received from the Compliance Division in fulfilment of its duties.
32.5 Employees may not report on the detection, analysis or disclosure of suspected market abuse transactions, or on the existence or content of requests for information related to those transactions, to any of the persons involved in those suspicious transactions, or to their related parties, or to any other person who is not required to be made aware of the detection, analysis or disclosure of suspicious transactions.
Chapter II: Control Structure
33. Measures to prevent suspicious transactions
Affected Entities shall set up and maintain mechanisms, systems and procedures to ensure effective and continuous control so as to flag and identify suspicious transactions and, where appropriate, report them to the CMVM.
34. Detection mechanism
34.1 Computer software and other tools will be set up to help detect suspicious transactions. These tools will have access to information on transactions in the securities market (centralised detection). The task of detecting suspicious transactions will also be carried out by the Employees of the relevant areas of the Affected Entities (decentralised detection).
34.2 All suspicious transactions detected will be sent to the Compliance Division as swiftly as possible, as provided for in the foregoing points.
34.3 Without prejudice to its other functions in this area, the Compliance Division shall assess the suitability and effectiveness of these detection procedures at least once a year. Internal Audit shall also review the effective application of these mechanisms within the scope of its audits.
35. Analysing and reporting suspicious transactions to the CMVM
35.1 Once notice has been received of a suspected market abuse transaction, the Compliance Division shall analyse it and, if deemed necessary, gather any further information it may need in order to determine whether the indications detected are consistent and constitute reasonable grounds for suspicion.
35.2 Once the analysis has been completed, the Compliance Division shall prepare a report stating, as appropriate, its decision to notify the CMVM of the transaction.
The Compliance Division shall notify the CMVM without delay of any detected transactions for which there is reasonable suspicion that they involve market abuse, whether due to the improper use of Inside Information, market manipulation, or any attempted improper use of Inside Information or attempted market manipulation.
The CMVM must also be notified of any suspicious transactions that have taken place in the past, if subsequent events or information have since aroused suspicion. In these cases, the Compliance Division must explain why the matter was not reported immediately.
35.3 The Compliance Division may gather any further information it deems necessary from any office, department or area of the Affected Entities to help it conduct the analysis.
35.4 The Compliance Division shall keep, for at least five years, all information related to the analysis of the suspicious transactions identified, regardless of whether these were reported to the CMVM based on the conclusions of its analysis.
35.5 The process of reporting suspected market abuse transactions to the CMVM must meet the terms of the internal rules implementing this Code.
36. Register of communications sent to the CMVM
The Compliance Division shall keep a register of all communications sent and shall report periodically to the ICC Committee.
7. Conflicts of Interest in Securities Markets
Banco BPI identifies the circumstances that may give rise to actual or potential conflicts of interest, and the procedures that must be followed for their identification, proper management and mitigation within the scope of the Conflict of Interest Management Policies in force at any given time.
8. Organisational Requirements for Applying the Code
Chapter I. Approval
37. Approval and modification
This Code will be approved by Banco BPI's Board of Directors.
This Code is revised on an annual basis or whenever deemed necessary.
Any subsequent modification hereto shall also follow this procedure.
Chapter II. Organisational structure
38. Control and compliance structure
The bodies tasked with approving, implementing, controlling and monitoring the Code are the Board of Directors (BD), the Executive Committee of the Board of Directors (ECBD), the ICC Committee, the Compliance Division and the heads of the Inside Areas.
The terms of this section are without prejudice to any further attribution of functions to any of the bodies as and when decided by the Board of Directors of Banco BPI and to the obligations of each Affected Person as set out in this Code.
39. Board of Directors of Banco BPI
The Board of Directors of Banco BPI has the following functions:
a) Approving this Code and any successive updates thereto;
b) Exercising general oversight functions, to which end it will receive a half-yearly report from the Compliance Division.
40. ECBD of Banco BPI
The ECBD shall assume the following functions:
a) Proposing to the Board of Directors the approval of the Code and all successive updates thereto;
b) Appointing the members of the ICC Committee;
c) Approving, on the proposal of the ICC Committee, the rules and regulations implementing the Code;
d) Ensuring that the half-yearly report issued by the Compliance Division is reported to the Board of Directors;
e) Approving deployment of the resources needed to ensure compliance with the Code and its implementing rules and regulations;
f) Analysing matters relating to compliance with the Code and its implementing rules and regulations, relying to such end on the half-yearly report issued by the Compliance Division; and
g) Approving procedures and action plans for managing the risks deriving from these regulations, on the proposal of the ICC Committee;
41. ICC Committee
41.1 The ICC Committee, whose actions will be governed by a set of internal rules of procedure, will have the following functions, among others:
a) Seeing to it that the Code and its implementing rules and regulations are complied with;
b) Escalating the draft Code and its implementing rules and regulations to the ECBD, as well as any further amendments thereto;
c) Identifying and assessing, with the support of the Compliance Division, all matters concerning compliance risk in relation to the Code and its implementing rules and regulations;
d) Identifying the Related Persons who must be made affected to the Code;
e) Proposing to the ECBD the appropriate procedures and action plans for managing the risks arising out of this Code;
f) Interpreting specific applications of the Code and its application to concrete situations;
g) Approving the Code of Conduct training plan each year, on the proposal of the Compliance Division;
h) Submitting to the ECBD and the AICC the half-yearly report issued by the Compliance Division;
i) Promptly reporting to the Executive Committees of the Affected Entities on any serious breaches of the Code.
41.2 In addition, and within the scope of its remit, the ICC Committee shall see to it that operational risk is duly taken into account when going about its business. To such end, it shall pay due regard to all applicable rules and regulations, both external and internal, and all decisions should be based on prior experience of operational risks or losses. It shall also seek to ensure that business and market development initiatives are associated with suitable controls and measures to allow for effective risk monitoring and management.
42. Banco BPI's Compliance Division
42.1 The Compliance Division, as a control unit acting independently of the areas and activities over which it exercises supervisory functions, will have full authority to require any person or department of the Affected Entities to deliver any information it deems necessary in furtherance of its duties.
42.2 The Compliance Division shall have the duties and functions assigned to it herein, including but not limited to the following:
a) Seeing to it that the necessary internal procedures are developed and implemented to allow for proper enforcement of this Code;
b) Establishing the controls needed to ensure an effective and robust system of enforcement;
c) Identifying compliance risks and the rules for implementing the Code, and carrying out improvements to mitigate those risks;
d) Promoting a culture of compliance, devising training plans and submitting these to the ICC Committee;
e) Advising the management and the areas concerned and responding to any queries raised by them or by any other person whose actions are subject to this Code;
f) Proposing to the ICC Committee the identities of the persons listed in paragraphs (i) and (ii) of article 3.1, and of those persons named in paragraphs (iii) and (iv) who must be made subject to the Code;
g) Managing and maintaining the log of Affected Persons;
h) Overseeing the disclosure of dealing on own account by Affected Persons;
i) Addressing communications and requests for authorisation for dealing on own account;
j) Keeping the Insider List and the list of instruments, in accordance with the terms of this Code;
k) Overseeing procedures for detecting suspected market abuse transactions, conducting the corresponding analysis and, when needed, reporting the matter to the CMVM;
l) Overseeing the proper functioning of the information firewall system;
m) Overseeing procedures for identifying and resolving conflicts of interest in the context of the securities market;
n) Analysing whether any particular aspect of the Code needs to be updated or developed, and reporting its conclusions to the ICC Committee;
o) Immediately reporting any serious irregularities in compliance with the Code to the management and supervisory bodies;
p) Ensuring that the necessary information and documentation on the Code and its implementing rules and regulations are made available to Affected Persons and other Employees on the section or page on the Intranet, with the aim of ensuring compliance with the obligations contained therein;
q) Overseeing and, where appropriate, responding to requests for information from supervisors and liaising with these on a regular basis;
r) Keeping the records and logs needed to control compliance with the obligations set out in the Code;
s) Drawing up a half-yearly report on compliance and reporting this to the ECBD and the Audit and Control Committee; and
t) In general, acting as necessary for the purpose of applying the Code.
42.3 In addition, and within its sphere of responsibilities, the Compliance Division shall ensure that the operational risk involved in its area of activity is duly taken into account. To such end, where applicable, it shall pay due regard to the legislation in force, both external and internal, and all decisions should be based on prior experience of operational risks or losses. It shall also seek to ensure that business and market development initiatives are associated with suitable controls and measures to allow for effective risk monitoring and management.
43. Heads of the Inside Areas
Each Inside Area shall have a head officer, who will be the most senior executive. This person's function will include the duty to monitor and control compliance with the terms of Section IV of this Code, especially with regard to those obligations specifically assigned to them. Specifically, the head officer will act as liaison with the Compliance Division and shall collaborate with the latter in defining and implementing the relevant measures. They shall also report to the Compliance Division on all incoming and outgoing Employees so that the Insider List can be updated accordingly.
Chapter III Reports
44. Half-yearly report issued by the Compliance Division
The Compliance Department shall draw up a half-yearly report for submission to the ICC Committee, the ECBD and the Board of Directors, or, as the case may be, the Internal Audit and Control Committee.
In this report, the Compliance Division shall include:
(i) A summary of all regulatory and other initiatives carried out by the CMVM or any other competent authority in relation to the securities market; and
(ii) An assessment of compliance with this Code, along with a description of the main incidents.
The Compliance Division shall report all incidents it detects to the relevant areas of the Affected Entities responsible for ensuring compliance with the obligation in question. The parties shall then agree upon the corrective measures to be rolled out as swiftly as possible. The Compliance Division shall monitor and oversee the process of implementing these measures.
Chapter IV. Dissemination of the Code and training
45.1 The Compliance Division, in collaboration with the Human Resources and other divisions of the Affected Entities, shall roll out any training initiatives that may be needed in relation to this Code. In order to achieve appropriate training, it may request the collaboration of those areas it deems necessary.
45.2 Affected Persons must undergo training so as to ensure proper compliance with this Code, completing to such end the relevant training programmes arranged by Banco BPI.
45.3 The Compliance Department shall draw up a training plan each year. This plan will be presented to the ICC Committee for assessment and approval in the last quarter of the year preceding the year to which the plan relates.
46. Web Page
The Compliance Division shall maintain a space or web page on the corporate Intranet to which all Employees, especially Affected Persons, will be granted access.
Chapter V. Communications, logs and relations with supervisory bodies
47. Communications with BPI's Compliance Division
Unless stated otherwise, all communications envisaged in this Code that the Affected Persons or any other interested party must address to the Compliance Division may be in writing and sent by email, fax or any other medium providing acknowledgement of receipt.
48. Record keeping
Banco BPI's Compliance Division shall duly keep on record, for at least five years, all communications, notices, and any other actions relating to the obligations set out in this Code.
The Compliance Division shall also conduct periodic reviews of the records kept by other areas in fulfilment of their obligations under this Code.
49. Relations with supervisory bodies
All requests for information received from supervisory bodies in relation to the subject matter and scope of application of this Code must be sent as promptly as possible to the head of the Compliance Division so that they may be recorded, processed and controlled accordingly.
Chapter VI. Non-compliance
Failure to comply with the terms of this Code of Conduct shall warrant a demerit, the seriousness of which will be determined by following the procedure set out under Portuguese law. The foregoing shall apply without prejudice to any administrative, civil or criminal liability that the person breaching this Code may face.
This Code has been drafted in accordance with the applicable law, including the following provisions:
(i) Regulation (EU) No 596/2014 of the European Parliament and of the Council, of 16 April, on market abuse and respective delegated and implementing rules ("Market Abuse Regulation" or "MAR");
(ii) Commission Delegated Regulation (EU) 2016/522 of 17 December 2015 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council;
(iii) Portuguese Securities Code ("Código dos Valores Mobiliários"), approved by Decree-Law no. 486/99, of 13 November, republished by Law no. 35/2018 of 20 July;
(iv) CMVM Regulation no. 5/2008, Disclosure Requirements (as amended),
Transactions that Directors and Executives must disclose (article no. 12.4)
Article 19.7 of Regulation (EU) 596/2014, of the European Parliament and of the Council, of 16 April 2014, on market abuse.
For the purposes of paragraph 1, transactions that must be notified shall also include:
a. the pledging or lending of financial instruments by or on behalf of a person referred to in paragraph 1;
b. transactions undertaken by persons professionally arranging or executing transactions or by another person on behalf of a person discharging managerial responsibilities or a person closely associated with such a person, as referred to in paragraph 1, including where discretion is exercised; and
c. Transactions made under a life insurance policy, defined in accordance with Directive 2009/138/EC of the European Parliament and of the Council, where:
i. The policyholder is a person discharging managerial responsibilities or a person closely associated with such a person, as referred to in paragraph 1;
ii. The investment risk is borne by the policyholder; and
iii. The policyholder has the power or discretion to make investment decisions regarding specific instruments in that life insurance policy or to execute transactions regarding specific instruments for that life insurance policy.
For the purposes of paragraph (a), a pledge, or a similar security interest, of financial instruments in connection with the depositing of the financial instruments in a custody account does not need to be notified, unless and until such time that such pledge or other security interest is designated to secure a specific credit facility.
To the extent that an insurance policyholder has the obligation to notify transactions in accordance with this paragraph, the insurance company shall be exempt from the notification requirement.
Article 10 of Commission Delegated Regulation (EU) 2016/522 of 17 December 2015, supplementing Regulation (EU) 596/2014, on market abuse.
Pursuant to Article 19 of Regulation (EU) No 596/2014 and in addition to transactions referred to in Article 19(7) of that Regulation, persons discharging managerial responsibilities within an issuer or an emission allowance market participant and persons closely associated with them shall notify the issuer or the emission allowance market participant and the competent authority of their transactions.
These notified transactions shall include all transactions conducted by persons discharging managerial responsibilities on their own account relating, in respect of the issuers, to the shares or debt instruments of the issuer or to derivatives or other financial instruments linked thereto, and in respect of emission allowance market participants, to emission allowances, to auction products based thereon or to derivatives relating thereto.
These notified transactions shall include the following:
a) Acquisition, disposal, short sale, subscription or exchange;
b) Acceptance or exercise of a stock option, including of a stock option granted to managers or employees as part of their remuneration package, and the disposal of shares stemming from the exercise of a stock option;
c) Entering into or exercise of equity swaps;
d) Transactions in or related to derivatives, including cash-settled transactions;
e) Entering into a contract for difference on a financial instrument of the concerned issuer or on emission allowances or auctioned products based thereon;
f) Acquisition, disposal or exercise of rights, including put and call options, and warrants;
g) Subscription to a capital increase or debt instrument issuance;
h) Transactions in derivatives and financial instruments linked to a debt instrument of the concerned issuer, including credit default swaps;
i) Conditional transactions upon the occurrence of the conditions and actual execution of the transactions;
j) Automatic or non-automatic conversion of a financial instrument into another financial instrument, including the exchange of convertible bonds to shares;
k) Gifts and donations made or received, and inheritance received;
l) Transactions executed in index-related products, baskets and derivatives, insofar as required by Article 19 of Regulation (EU) No 596/2014;
m) Transactions executed in shares or units of investment funds, including alternative investment funds (AIFs) referred to in Article 1 of Directive 2011/61/EU of the European Parliament and Council5, insofar as required by Article 19 of Regulation (EU) No 596/2014;
n) Transactions executed by a manager of an AIF in which the person discharging managerial responsibilities or a person closely associated with such a person has invested, insofar as required by Article 19 of Regulation (EU) No 596/2014;
o) Transactions executed by a third party under an individual portfolio or asset management mandate on behalf or for the benefit of a person discharging managerial responsibilities or a person closely associated with such a person;
p) Borrowing or lending of shares or debt instruments of the issuer or derivatives or other financial instruments linked thereto.
For the purpose of this Code of Conduct, the following definitions will apply:
- Inside Area:
For the purposes of this Code, an inside or separate area is defined as each department or work group of the Affected Entities engaged in activities relating to the securities market, with tradable instruments or other financial instruments, or relating to the issuers and/or entities that may have regular access to Inside Information.
- Inside Information:
Inside Information means information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more tradable securities or financial instruments or related derivatives, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or related derivative instruments.
The information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or which may reasonably be expected to come into existence, or an event which has occurred or which may reasonably be expected to occur, where it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of the financial instruments or the related derivatives.
In this respect in the case of a protracted process that is intended to bring about, or that results in, particular circumstances or a particular event, those future circumstances or that future event, and also the intermediate steps of that process which are connected with bringing about or resulting in those future circumstances or that future event, may be deemed to be precise information.
Therefore, such information is deemed to be that which a reasonable investor would be likely to use as part of the basis of his or her investment decisions.
For persons in charge with the execution of orders concerning tradable securities or other financial instruments, Inside Information also includes information transmitted by a client and relating to the client's pending orders in financial instruments, which is of a precise nature, relating, directly or indirectly, to one or more issuers of tradable securities or other financial instruments or to one or more tradable securities or other financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments admitted to trading or other financial instruments, or on the price of related derivatives.
In relation to commodity derivatives, Inside Information will include all information of a precise nature, which has not been made public, relating, directly or indirectly to one or more such derivatives or relating directly to the related spot commodity contract, and which, if it were made public, would be likely to have a significant effect on the prices of such derivatives or related spot commodity contracts, and where this is information which is reasonably expected to be disclosed or is required to be disclosed in accordance with legal or regulatory provisions at the European Union or national level, market rules, contract, practice or custom, on the relevant commodity derivatives markets or spot markets.
In relation to emission allowances or auctioned products based thereon, Inside Information means information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more such instruments, and which, if it were made public, would be likely to have a significant effect on the prices of such instruments or on the prices of related derivatives.
- Investment Report
Report or other information which, without factoring in the specific personal circumstances of the client to whom it is addressed, recommends or suggests an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuers, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public, provided it goes by the name of investment report or recommendation, financial analysis, or similar title and, in all cases, is presented as an objective or independent explanation of those issuers or instruments being recommended or suggested.
Recommendations that do not fulfil the requirements defined in the previous point shall be considered marketing material and must be identified as such.
With the coming into force of MiFID II, the concept of "personal recommendation" in terms of investment was broadened, as previously recommendations made through distribution channels (social networks, newsletters via mailing lists) that reached a large number of investors / potential investors were not considered "personal recommendations" and were not under the MiFID rules.
- Financial instruments:
In accordance with Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014, the following are deemed to be Financial Instruments:
1. Transferable securities;
2. Money market instruments;
3. Units in collective investment undertakings;
4. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to securities, currencies, interest rates or yields, emission allowances or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash;
5. Options, futures, swaps, forwards and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;
6. Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled;
7. Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments;
8. Derivative instruments for the transfer of credit risk;
9. Financial contracts for differences;
10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in the preceding sections of this article, which have the characteristics of other derivative financial instruments, having regard, inter alia, to whether they are traded on a regulated market, an OTF or a MTF; and
11. Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).
- Systematic internaliser
An investment firm which (or, as the case may be, credit institution authorised to provide investment services), on an organised, frequent and systematic and substantial basis, that deals on own account by executing client orders outside a regulated market, a multilateral trading facility (MTF) or an organised trading facility (OTF), without operating a multilateral facility.
The frequent and systematic basis shall be measured by the number of OTC trades in the financial instrument carried out by the investment firm on own account when executing client orders. The substantial basis shall be measured either by the size of the OTC trading carried out by the investment firm in relation to the total trading of the investment firm in a specific financial instrument or by the size of the OTC trading carried out by the investment firm in relation to the total trading in the Union in a specific financial instrument. The definition of a systematic internaliser shall apply only where the pre-set limits for a frequent and systematic basis and for a substantial basis are both crossed or where an investment firm chooses to opt-in under the systematic internaliser regime.
- Insider List/ List of persons with access to inside information:
List of all the persons who have access to inside information and who are working for an issuer or investment service provider under a contract of employment, or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies.
- Regulated market
Multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of multiple third-party buying and selling interests in financial instruments - in the system and in accordance with its non-discretionary rules - in a way that results in a contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with Title III of Directive 2014/65/EU (MiFID II).
- Dealing on own account:
Dealing on own account means those transactions carried out by Affected Persons involving tradable securities or other financial instruments, in accordance with applicable law.
- Related Persons:
A Related Person of an Affected Person means:
(i) Their spouse, or a partner considered to be equivalent to a spouse in accordance with national law;
(ii) Dependent children and step-children;
(iii) Any other person who has shared the same household for at least one year on the date of the transaction concerned;
(iv) A legal person, natural or corporate, with which the Affected persons or any of the persons identified hereinabove maintains close links, or which was set up for the benefit of such a person, or the economic interests of which are substantially equivalent to those of the Affected Person concerned;
(v) For the purpose of Point 12 of this Code, any of the persons referred to in the preceding paragraphs, as well as the legal person, trust or association in which the Affected Person or the persons referred to in the preceding paragraphs discharge managerial responsibilities.
A close relationship is deemed to exist when:
a) There is a direct or indirect holding of no less than 20% in the share capital or voting rights;
b) There is a relationship of control; or
c) There is a long-standing link to a same third party through a relationship of control.
A "relationship of control" is deemed when any of the following applies:
a) A majority of the voting rights are held;
b) The person concerned has the right to appoint or remove more than half of the members of the management or supervisory body;
c) The person concerned has the right to exercise a dominant influence over the company pursuant to a contractor to a provision in its memorandum or articles of association;
d) The person concerned is a partner in the company and controls by itself, under an agreement with the other partners of the company, the majority of the voting rights;
e) The person concerned may exercise, or effectively exercises, a dominant influence or control over the company.
- Market sounding
A market sounding consists of the communication of information to one or more potential investors, prior to the announcement of a transaction, in order to gauge the interest of such potential investors in a possible transaction and the conditions relating to it such as its potential size or pricing.
Multilateral trading facility operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments - in the system and in accordance with non-discretionary rules - in a way that results in a contract in accordance with Title II of Directive 2014/65/EU (MiFID II).
Any multilateral trading system for financial instruments must be authorised as a regulated market, multilateral trading facility or organised trading system.
Organised trading facility means a multilateral system which is not a regulated market or an MTF and in which multiple third-party buying and selling interests in bonds, structured finance products, emission allowances or derivatives are able to interact in the system in a way that results in a contract in accordance with Title II of Directive 2014/65/EU (MiFID II).