Markets in Financial Instruments Directive (MiFID)

Information about MiFID

The constantly increasing activity of the investors on the financial markets of the European Union throughout the last decade necessitates the undertaking of adequate and competent measures for harmonization of regulations, procedures and requirements concerning the investment intermediaries thus deriving to higher level of protection and security for the clients. All these factors brought up the release of the Markets in Financial Instruments Directive, or also known as MiFID.

As in favor of the clients the Directive works in benefit of the investment intermediaries as well, by allowing them operate freely on a unified European market, by complying with similar regulations..

The first issue of the MiFID (Markets in Financial Instruments Directive) dates 21st April 2004 (2004/39/EC). Its final implementation comes into regulation with Directive (2006/73/EC) of the European Parliament and the Commission of the European Union from 10th August 2006. In a few words the MiFID is pursuing the objective of achieving benefits for the financial investment markets similar to the ones that the common European market is striving to provide as environment for all other goods and services within the European Union.

MiFID (the directive) by itself is not a binding regulatory base for the countries in the European Union, but each country-member is required to adopt its requirements in the local regulatory landscape. Bulgaria in its capacity of a newly affiliated member of the union obeyed this requirement by officially releasing the national Law of markets for financial instruments, acknowledged in National Gazette No:52/ 29.06.2007, and Ordinance № 38 for the requirements towards the activities of the investment intermediaries, both coming into force as of 01.11.2007 in compliance with MiFID.

There are various aspects of MiFID, impacting on the operational model of the investment intermediaries, thus striving to achieve higher protection or customers, easier operation for the intermediaries at unified standard. These objectives of the directive and the local regulatory framework lead to more detailed breakdown of requirements that set the pattern for UniCredit Bulbank AD.

MiFID compliant client classification

All clients (investors) that will be classified by UniCredit Bulbank AD in compliance with MiFID and the national Law for Markets in financial instruments and Ordinance №38 by definition of the listed regulatory documents are clients, that do not answer to the necessary criteria for professional clients.

All clients (investors) that will be classified by UniCredit Bulbank AD in compliance with MiFID and the national Law for Markets in financial instruments and Ordinance №38 by definition of the listed regulatory documents are clients that possess experience, knowledge and skills in order to undertake self-dependent investment decisions and properly assess all related risks.

Further to the described above definition as professional clients the Bank may classify:

a) Credit instructions

b) Investment intermediaries

c) Other institutions that are liable to licensing

d) Insurance companies

e) Collective investment enterprises

f) Pension funds

g) Entities that by profession trade with derivative financial instruments on commodities

h) Legal entities that offer investment services or execute investment activities that are expressed only in trading for their own account on markets for financial futures or options or other derivative financial instruments on the money market with the only objective hedging of positions on the markets of derivative financial instruments, or when they trade on someone else’s account (also participant in the market) on these markets, or determine the price for them and when they are guaranteed by a clearing member of the very same market, when the responsibilities for execution of the contracts closed by such entities are assumed by a clearing member of that market.

i) Other institutional investors

j) Big companies that comply with at least two of the listed below criteria:

  • Profit and Loss balance- at least € 20.000.000 in BGN equivalency
  • Net turnover - at least € 40.000.000 in BGN equivalency
  • Own capital - at least € 2.000.000 in BGN equivalency

k) National and regional state agencies and state agencies that participate in the governing of the national debt, central banks, international institutions such as the World Bank, International Currency Fund, Central European Bank, European Investment Banks and other similar international organizations.

l) Other institutional investors whose major activity is the investment in financial instruments, including entities that perform the services of securitization of actives or other financial transactions.

Furthermore, relying on the possibilities that MiFID and the national Law for Markets in financial instruments and Ordinance №38 allow, a client that has initially been classified as a retail client may be treated by UniCredit Bulbank AD as a professional one upon his request if he answers to at least two from the listed below criteria

a) Throughout the last year, the client has made an average of 10 deals with significant volume on the respective market.

b) The worth of the investment portfolio of the person that includes financial instruments and money deposits exceeds the BGN equivalency of € 500.000

c) The person works or has worked in the financial sector for no less than one year and captures/ has captured a position that requires knowledge of the respective deals or services

All clients (investors) that will be classified by UniCredit Bulbank AD in compliance with MiFID and the national Law for Markets in financial instruments and Ordinance №38 by definition of the listed regulatory documents are:

  • Investment intermediaries
  • Credit institutions
  • Insurance companies
  • Collective investment schemes
  • Pension funds
  • Pension - insurance associations
  • Governments
  • State agencies that participate in the governing of the national debt
  • Central Banks and international institutions

Level of protection

According to the regulations of MiFID and the national legislative framework, depending on the client class that you will be granted with, UniCredit Bulbank AD will provide you with the necessary level of protection prior execution of your investment orders.

For instance, if you are classified as a retail client (by the MiFID standards), the Bank specialist who will take care of your order will ask you various questions related to your knowledge, experience and know-how in deals with investment instruments. Also you may be addressed with a questions aiming to furnish the Bank with information related to your financial situation and risk bearing willingness in order to assess to what extend the investment instrument subject to your contractual relationships with UniCredit Bulbank AD are appropriate for you. In order to secure more clear perception of your personal risk bearing scope, you will be kindly requested to personally declare your risk type on a scale from R1 to R5 (for better understanding of our risk matrix, please see the table below):

Risk class

Definition of class


No fluctuations in value apart from the risks mentioned, e.g. deposits, savings books, saving with building societies


Slight fluctuations in value (from a current perspective, up to 10% p.a.; stronger fluctuations are possible)


Medium-level fluctuations in value (over 10% p.a.; in exceptional cases, a complete loss is possible)


Speculative investments which may involve the complete loss of the invested capital, because the client wants to take advantage of a very high earnings potential


Extremely risky investments which may involve, beyond the complete loss of the invested capital, the demand for additional funds

Surely, it is your legitimate right to decline provision of the requested information, but in such a case UniCredit Bulbank AD shall be not kept responsible for any kind of risk that may occur at a given point in time throughout the lifetime of your investment. This means that all risks will be for your personal account. 

In comparison, if you are classified as a professional client, prior acceptance of your order for investment deals with securities UniCredit Bulbank AD will try to obtain information only related to your investment objectives, and if you are an eligible counterparty according to the MiFID and local legislation standards, the Bank will assume that you possess the necessary funds, knowledge, know-how and experience and will execute your orders at your own responsibility.

According to MiFID and local legislation, you have the right to request different client class level. Please see below chart:

Further to the described above information MiFID and its local legislative equivalency oblige all investment intermediaries to develop and make known to the public the following policies:

  • Execution policy (list of execution venues will be part of the Execution policy)
  • MiFID compliant general terms and conditions for investment intermediation
  • Investment products risk classification matrix
  • Compliance and conflict of interests policy

More detailed information regarding above policies will be listed on our Internet page in a due course.