Investor Information
Uma conta pensada para o dia a dia, preparada para o futuro.
The entry into force of Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (MiFID II) and related regulation in January 2018 applies to all persons and entities operating in financial markets. It aims to strengthen investor protection and increase transparency and the quality of the functioning of the financial market and the services provided.
This regulation requires reinforced duties for financial intermediaries, as well as changes to the rules for marketing financial instruments, namely:
Additional requirements for collecting client information and assessing it for the purposes of determining whether financial instruments or investment services are appropriate and suitable for the client’s investment profile.
New rules for the creation, distribution and monitoring of financial instruments, including, among others, the duty to define a target market for the financial instruments that the financial intermediary produces or distributes.
New requirements regarding the recording and keeping of records of communications between financial intermediaries and Clients.
New requirements for providing investment advice and portfolio management services.
Strengthening of the rules applicable to prevent conflicts of interest and safeguarding client assets.
Accordingly, novobanco discloses the following relevant aspects of this regulation:
Recording and keeping records of communications
novobanco is required to maintain recordings and records of all communications with clients and prospective clients regarding all services, activities and operations carried out by it.
Communications between the parties may originate from various channels, namely email, the novobanco website, telephone or in person meetings. The purpose of recording and keeping records is to ensure the existence of evidence of the services provided and the transactions executed by novobanco.
Client classification
novobanco classifies its clients for the purposes of transactions in financial instruments into one of three categories: retail, professional and eligible counterparty.
These classifications affect the level of investor protection. The level of protection is higher where the client is considered to have less knowledge and experience regarding markets and financial instruments.
| Retail Client |
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This is the category intended for most individual clients and companies, and it offers the highest level of investor protection. This category is based on: • A higher level of detail in the information the Bank provides about products and services in commercial communications and financial promotion. |
| PROFESSIONAL CLIENT |
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The professional client category offers an intermediate level of investor protection. Clients who have the experience and knowledge required to make their own investment decisions and to properly assess the risks involved are considered professional clients. These are typically larger legal entities. Clients may also be classified as professional upon request, provided they demonstrate compliance with two of the three criteria identified in Articles 317 and following of the Portuguese Securities Code, which in summary are: (i) having carried out significant volume transactions in the market, with an average frequency of ten transactions per quarter over the last four quarters; (ii) having a portfolio of financial instruments, including cash deposits, exceeding €500,000; (iii) working or having worked in the financial sector for at least one year in a position requiring knowledge of the services or operations concerned. |
| ELIGIBLE COUNTERPARTY |
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This classification is typically assigned to banks, other financial institutions and national governments and corresponds to the category that offers the lowest level of investor protection. Eligible counterparties are exempt from the legal requirement to comply with conduct of business rules in the reception, transmission and execution of orders and in own account dealing, because they are presumed to have the knowledge and experience to protect themselves. The general principles of investor relations remain applicable to eligible counterparties, as do the duties of asset segregation, securities deposit and registration, deposit of client funds, accounting and record keeping obligations, conflicts of interest obligations and market integrity obligations. |
Suitability and Appropriateness Assessment
Under applicable law, the bank must assess whether a given investment product or service is suitable for a given client.
The information required from the client to perform such an assessment differs depending on the type of service the bank provides.
For services involving the reception, transmission and execution of orders, the bank requests only information on the client’s knowledge and experience in investment matters in order to assess whether the client understands the risks involved. This is an appropriateness assessment.
For discretionary portfolio management services, investment consultancy, and advice on insurance based investment products, and in order to recommend the most suitable service and financial instruments, the bank must also collect, in addition to the information above, information on the client’s financial position, including their ability to bear losses, and on the client’s investment objectives, including their risk tolerance and any sustainability preferences. This is a suitability assessment.
To assess the client’s investor profile, the bank uses a standardised questionnaire (the investor profile questionnaire) applicable to individuals and legal entities, aimed at collecting information about:
(i) investment knowledge and experience
(ii) financial position, including the ability to bear losses
(iii) investment objectives, including risk tolerance
If the client does not wish to subscribe to discretionary portfolio management services, investment consultancy or advice on insurance based investment products, the client may answer only the questions relating to knowledge and experience. However, to access investment consultancy or portfolio management services, the client must complete the full investor profile questionnaire, including questions about financial position, ability to bear losses, investment objectives, risk tolerance and sustainability preferences.
To identify potential client sustainability preferences, the Bank also uses a standardised questionnaire (sustainability preferences questionnaire) applicable to individuals and legal entities. The regulatory context and information relating to sustainability preference questions included in this questionnaire are available in the investor information area.
Since the suitability assessment is performed by the bank in the best interests of its clients and is based on the information provided by clients in these questionnaires, it is important that clients provide accurate, complete, up to date and sufficient information regarding their knowledge, experience, financial position and investment objectives.
For more information, you can consult the Suitability Assessment Policy.
Investment consultancy
novobanco provides non independent investment consultancy in financial instruments, consultancy in plain and structured deposits, and advice on insurance based investment products on a non impartial and personal basis. In this context, novobanco issues recommendations regarding products or packages of products and or services that are appropriate for the client’s investor profile, based on the client’s answers to the investor profile and sustainability references questionnaires, market conditions and the offer available at any given time.
The service consists on a personalised investment proposal supported by financial asset allocation models that combine the client’s knowledge and experience with financial position (including ability to bear losses) and investment objectives (including risk tolerance, sustainability preferences and time horizon).
The recommended products may be issued by novobanco or by entities that are part of its group, in compliance with the conflict of interest prevention and management policy available at all times in the Investor Information area or at any bank Branch.
Integration of sustainability risks in investment consultancy
novobanco carries out an analysis based on a proprietary model using quantitative and qualitative data on the financial instruments it advises. In line with the universe of assets defined in the general conditions of the consultancy service, this procedure applies at novobanco to UCITS registered in Portugal.
For quantitative analysis, the model includes 6 criteria translated into one or more variables or indicators. These consider, for example, relative and absolute performance, risk and the experience of the management team of each fund from a financial perspective. In the most recent update to the selection model, the Morningstar Sustainability Rating was introduced to integrate sustainability risks into the selection model.
For qualitative analysis, specifically on sustainability, the scores resulting from the quantitative assessment are evaluated, giving preference to funds with higher scores that are classified under Article 8 or Article 9 of Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability related disclosures in the financial services sector (SFDR). However, this is not an exclusive factor. If no fund is classified under Article 8 or Article 9, the fund that best meets all criteria of the qualitative analysis is selected. This means that exclusive selection of funds with sustainability objectives or funds that promote ESG characteristics is not guaranteed.
All sustainability related information, including the statement on principal adverse impacts of investment advice services on sustainability factors, is available in the investor information area.
Provision of information
novobanco will provide, in due time, to its retail investor clients, prior to the conclusion of any transaction involving packaged retail and insurance based investment products (PRIIPs), a Key Information Document (KID) relating to those products.
The KID is intended to allow the investor to fully understand the product’s characteristics before entering into the contract. It therefore includes essential information about the instrument, such as nature and characteristics, potential capital loss, costs involved, the product’s risk profile and other relevant performance information.
novobanco will provide the KID on paper or another durable medium, or where the investor selects this option and where applicable, through access via the novobanco website.
MiFID II also requires enhanced pre contractual, contractual and post contractual information to be provided to clients on product and service characteristics not covered by the KID, namely regarding costs and charges.
LEI (Lei Entity Identifier)
Applicable to legal entities or sole traders acting within their business activity.
To carry out any transaction in financial instruments admitted to trading or traded on trading venues, Clients that are legal entities must obtain an LEI code. novobanco may only execute orders or request settlement if the Client’s LEI code is recorded on its systems.
Information on where and how to request a LEI code is available in the Investor Information area.
Financial Intermediation Price List
When contracting investment services in securities, non-qualified investors should carefully review the price list to calculate the foreseeable total costs of the investment, including those arising from holding securities in custody, and compare them with potential expected returns. Before contracting the service, investors should consult the recommendations issued by the Portuguese Securities Market Commission and may compare price lists of authorised financial intermediaries and perform cost simulations.
The novobanco Financial Intermediation Price List is available in the Investor Information area.
Order Execution Policy
Introduction
This document discloses the Order Execution Policy of NOVO BANCO, S.A. (the Policy). It describes the rules and procedures, strategies and practices applied when executing client orders and or transmitting them to other authorised entities for execution, in order to ensure compliance with applicable legal requirements arising from MiFID II and related legislation and regulation.
Scope
This Policy applies to investment services provided by novobanco in the reception, transmission and or execution of orders to buy and sell securities and other financial instruments for clients classified as retail and professional clients under MiFID II. It does not apply to clients classified as eligible counterparties.
If any client does not know or has doubts about its category, client may contact his/her usual contact at the bank.
Criteria and factors for best execution
Under MiFID II, novobanco must seek the best possible result for its clients’ orders. To safeguard client interests, novobanco undertakes to execute and or transmit orders considering relevant factors such as price, costs, speed of execution, likelihood of execution and settlement, order size or nature and any other relevant considerations.
Client characteristics, order characteristics, characteristics of the underlying financial instruments, liquidity and availability of trading venues to which the order is transmitted, and the market impact of the order may determine the importance of each factor. In certain circumstances, novobanco may consider some factors more relevant than others in order to achieve the best possible result.
Execution, reception and transmission of orders
Client orders are executed under the conditions and at the time indicated by the client. Orders are valid for the period defined by the client and may not exceed 30 days from the day following receipt of the order by the bank, except for orders transmitted to Euronext Lisbon, where orders may be valid for up to 365 days.
Orders may be cancelled due to corporate events or by initiative of the exchange. Orders may also be partially executed depending on market conditions and liquidity.
Orders may also not be executed and or transmitted in whole or in part due to corporate events or by initiative of the trading venue, in accordance with market conditions and liquidity and the rules of the relevant trading venue.
When acting under the order execution policy, novobanco may execute orders on behalf of clients or transmit them to another financial intermediary for execution, depending on the nature of the financial instrument, the platforms on which it acts directly, and the objective of obtaining the best possible execution for the client.
After considering all relevant factors, client orders are directed to a trading venue for execution. These execution venues include, in decreasing order of desirable priority, regulated markets, multilateral trading facilities, organised trading facilities, systematic internalisers, market makers and other liquidity providers, as well as entities outside the European Economic Area performing an equivalent function.
The bank may refuse an order, namely where it identifies insufficient funds in the current account to meet all costs, charges and liabilities arising from the order, where the bank considers that the order was not given in the required manner or by a person with the necessary powers, where the client is a legal entity without an active LEI, where execution would involve a relevant operational, regulatory or reputational risk, where client identification data are insufficient or outdated, and in other cases provided by law.
Where orders relate to securities issued or integrated in foreign systems that would need to be deposited or registered in the intermediary financial account, the bank may refuse execution if it has no established relationships with entities integrated in those systems or if such entities refuse to take the necessary steps to allow execution.
Orders are executed under the conditions and at the time indicated by the client, unless the order’s characteristics, such as limit price orders, or prevailing market conditions make this impracticable, or where client protection requires an alternative procedure.
After considering all relevant factors, client orders are directed through brokers to an execution venue for execution.
Specific client instructions
Subject to the rules of each market to which orders are transmitted, where a client provides a specific instruction in relation to an order, including execution on a specific trading venue, novobanco will execute the order in accordance with that instruction. Such instructions override the order execution policy in this document.
As a result, novobanco warns that specific client instructions may prevent the bank from taking the steps it has designed and implemented under this policy and may prevent the bank from obtaining the best possible result for the client regarding the elements covered by those instructions.
Aggregation and allocation of orders
Where the bank intends to aggregate orders from several clients or its own account trades into a single order, it ensures that aggregation is unlikely, overall, to be detrimental to clients.
The client may object to aggregation of its order.
In the course of executing and or transmitting orders, the bank may aggregate client orders or own account trades provided that:
It is unlikely, overall, that aggregation will be detrimental to clients and the bank uses best efforts to ensure this.
The client whose order has been aggregated is informed that aggregation may be detrimental to the specific order and the client has not objected to aggregation.
Dealing against the bank's account
Whilst executing client orders, novobanco may execute against its own book, acting as the client’s counterparty, where this represents the best option for the client in order to obtain the best possible result.
The client will be informed in advance that the transaction may be carried out in these circumstances and the client may accept or reject it.
Channels for reception, transmission and execution of orders and execution venues
Depending on the type of financial instrument, client orders may be transmitted through different channels and to different execution venues, as summarised in the table referred to in this policy.
This policy applies to all types of financial instruments identified in it for which novobanco accepts orders. It applies regardless of the channel through which the order is transmitted and in accordance with contractual conditions agreed with novobanco.
Produtos OTC
When executing orders related to OTC Products (options, futures, swaps and other derivatives), including bespoke products, novobanco must ensure the fairness of the price offered to the client by collecting the market data used to estimate the price of that product and, whenever possible, comparing it with similar or comparable products.
For this purpose, novobanco has implemented processes and agreements, as well as valuation systems and pricing models, which allow it to consistently verify price fairness, also taking into account external market data and externally verifiable reference prices (whenever available).
novobanco provides its clients with the possibility to execute orders outside a trading venue. When executing orders related to OTC Products, including bespoke products, novobanco ensures the fairness of the price offered to the client by collecting the market data used to estimate the price of that product and, whenever possible, comparing it with similar or comparable products.
For this purpose, novobanco has implemented processes and agreements, as well as valuation systems and pricing models, which allow it to consistently verify price fairness, also taking into account external market data and externally verifiable reference prices (whenever available).
Monitoring and review of the policy
novobanco has implemented processes to assess the effectiveness of its order execution policy and execution arrangements in order to identify and implement improvements and correct any deficiencies.
Monitoring mechanisms aim to test the quality of execution and the quality and adequacy of execution arrangements on an ex ante and ex post basis, supported by internal validation processes and control mechanisms.
Client consent and disclosure of the policy
Clients provide consent to novobanco’s execution policy when formalising the contract for registration, custody, reception, execution and transmission of orders, which also indicates where the policy can be consulted.
novobanco can demonstrate that client orders were executed in accordance with the execution policy provided to clients. Where a client presents reasonable and proportionate requests for information regarding policies or mechanisms and how they are reviewed, novobanco will provide a clear response within a reasonable timeframe.
The bank cannot execute any order without the client’s express consent to this policy, even where such consent may be provided generally.
The current version of novobanco’s order execution policy has been in force since 1 March 2022.
The full text of the Policy is available in the Investor Information area.
In line with MiFID II requirements and Commission Delegated Regulation 2017/576, novobanco publishes an annual report evaluating the execution venues used for trading financial instruments. The Best Execution Report is available in the Investor Information area.
Conflict of interest policy
In financial intermediation activities, the Bank may face conflicts of interest, either between the Bank’s interests and those of its Clients or between the interests of different Clients.
Such situations may compromise the impartiality and independence of the Bank’s actions. Therefore, it is a priority for the Bank to define rules and procedures to prevent, identify and mitigate conflicts of interest and to act in accordance with applicable legal and regulatory rules.
Under this Policy, a conflict of interest situation may be presumed whenever novobanco:
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May obtain a financial gain or avoid a financial loss at the expense of the client,
except where it acts as counterparty in operations with clients in the normal course of business
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Has an interest in the outcome of a service provided to the client
or a transaction carried out on behalf of the client that is unrelated to that service or transaction
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Receives a financial or other incentive
to favour the interests of one client over another
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Receives financial or other incentives from the client
beyond agreed commissions or fees
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Carries out the same activities
as the client
The full text of the policy is available in the investor information area.
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Safeguarding of client assets
| INTRODUCTION |
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The Portuguese Securities Code provides that the financial intermediary must adopt procedures and implement measures to ensure a clear distinction between assets belonging to its own estate and assets belonging to each client, so that insolvency or restructuring proceedings do not affect acts carried out by the financial intermediary on behalf of clients. The intermediary may not, in its own interest or in the interest of third parties, dispose of clients’ financial instruments or exercise the rights attached to them without the holders’ agreement. Likewise, investment firms may not use client funds in their own interest or in the interest of third parties. The Executive Board appoints a person responsible for controlling compliance with safeguarding duties. This person has sufficient powers to fulfil this responsibility and is responsible for monitoring and periodically assessing compliance with safeguarding principles and duties, including maintaining an adequate and effective internal control system and taking measures to correct deficiencies and prevent recurrence. |
| DUTIES OF THE FINANCIAL INTERMEDIARY REGARDING SAFEGUARDING |
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The Portuguese Securities Code provides that the financial intermediary must adopt procedures and implement measures to ensure a clear distinction between assets belonging to its own estate and assets belonging to each client, so that insolvency or restructuring proceedings do not affect acts carried out by the financial intermediary on behalf of clients. The intermediary may not, in its own interest or in the interest of third parties, dispose of clients’ financial instruments or exercise the rights attached to them without the holders’ agreement. Likewise, investment firms may not use client funds in their own interest or in the interest of third parties. The Executive Board appoints a person responsible for controlling compliance with safeguarding duties. This person has sufficient powers to fulfil this responsibility and is responsible for monitoring and periodically assessing compliance with safeguarding principles and duties, including maintaining an adequate and effective internal control system and taking measures to correct deficiencies and prevent recurrence. Duties of the financial intermediary regarding safeguarding • Keep records and accounts enabling it at any time to immediately distinguish assets belonging to one client from those belonging to another client and from its own assets. When client financial instruments are deposited or registered with third parties, the intermediary must exercise high standards of professional diligence in selecting, appointing and periodically evaluating such third parties, considering technical capacity, market reputation, legal or regulatory requirements and market practices that may negatively affect clients’ rights. |
| SAFEGUARDING OF ASSETS AT NOVO BANCO, S.A. |
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NOVO BANCO, S.A. considers that it complies with legal requirements and has implemented procedures and measures necessary to ensure a clear distinction between its own assets and client assets. NOVO BANCO, S.A. is audited annually by an external entity regarding safeguarding procedures and measures. A compliance report is issued and sent to the Portuguese Securities Market Commission. NOVO BANCO, S.A. is a member of: • The Investor Compensation Scheme, which protects investors in case of financial incapacity of authorised financial intermediaries in Portugal. |
| INVESTOR COMPENSATION SCHEME |
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The Investor Compensation Scheme aims to protect retail investors in case of financial incapacity of participating intermediaries to reimburse or return money or financial instruments belonging to investors, covering amounts due relating to financial instruments and funds intended expressly for their purchase. The scheme covers shares, bonds, participation units, units in investment funds, commercial paper, treasury bills, futures and options on financial instruments, FRAs and certain derivatives. It also covers cash amounts delivered by clients intended expressly to be invested in financial instruments. The scheme does not compensate for price declines. Compensation is calculated based on the value of the instruments at the date of activation of the scheme. The scheme guarantees reimbursement up to €25,000 per investor. Additional information is available at any NOVO BANCO, S.A. Branch. |
| DEPOSIT GUARANTEE SCHEME |
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The scheme guarantees reimbursement, per credit institution, of the total value of cash balances of each depositor, up to €100,000. More information is available in the Investor Information area. |
You may consult the full text of the Client Asset Safeguarding Policy here.
Valuation criteria for securities held at NOVOBANCO, S.A.
This section presents the valuation criteria for securities held in custody by clients at NOVO BANCO, S.A.
The main objectives are:
• To provide the client, namely in statements and digital channels, information on the value attributed to securities, in fulfilment of legal information duties.
• To provide a reference for calculating commissions where these are based on the securities portfolio.
The criteria adopted include:
Investment fund units
Net asset value published by fund managers, transfer agents or specialised information agencies.Securities admitted to trading on regulated markets
Where possible, prices quoted on regulated markets where the securities are admitted, obtained through specialised information agencies.Other securities not admitted to trading on regulated markets or where a quote could not be obtained
Quotes provided by valuation services of specialised information agencies.Securities for which valuation cannot be obtained under the criteria above
Securities issued by GNB valued, where possible, using theoretical models considered appropriate given the asset characteristics.
For others, nominal value.
Where not possible, indication of value not available, zero or equivalent.
The values shown reflect the valuation determined on the relevant date. Where this cannot be determined, the valuation from the immediately preceding business day is used.
NOVO BANCO, S.A. does not guarantee that the values presented correspond to the values that may be obtained through sale, which may be lower.
The information provided does not constitute an investment or divestment recommendation, nor a purchase or sale proposal or commitment. NOVO BANCO, S.A. cannot be held liable for damages or losses arising from use of this information.
Contract for registrarion and custody of financial instruments
Consult the document.
Additional information
PUB | NOVO BANCO S.A. | Registered no. 7 at Banco de Portugal