Bulgarian Financial Instruments Broker Exam flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

KFN

The Financial Supervision Commission (Komisia za finansov nadzor) is Bulgaria's competent authority for investment firms, trading venues and market abuse, operating under the Markets in Financial Instruments Act.

ZPFI

The Bulgarian Markets in Financial Instruments Act transposing MiFID II; it governs licensing, conduct of business, trading venues and supervisory powers of KFN.

Modified duration

A measure of a bond's price sensitivity to yield changes; the approximate percentage price change equals minus modified duration multiplied by the change in yield.

Gordon growth model

An equity valuation formula: price equals next year's dividend divided by the required return minus the dividend growth rate, assuming constant perpetual growth.

Best execution

The duty to take all sufficient steps to obtain the best possible result for clients considering price, costs, speed, likelihood of execution and settlement, size and nature of the order.

Systematic internaliser

An investment firm that, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market, MTF or OTF.

Suitability assessment

The evaluation required for investment advice and portfolio management, covering the client's knowledge, experience, financial situation, loss-bearing capacity and investment objectives.

Elective professional client

A retail client who opts up by meeting two of three criteria: ten significant transactions per quarter, a portfolio above EUR 500,000, or one year's relevant experience.

Inside information

Precise, non-public information relating to an issuer or instrument that, if made public, would likely significantly affect prices; dealing or tipping on it is prohibited.

STOR

A suspicious transaction and order report submitted to KFN without delay where there are reasonable grounds to suspect insider dealing, market manipulation or attempted market abuse.

Conflicts of interest policy

A documented framework identifying circumstances that may damage client interests, maintaining a conflicts register and applying organisational measures such as information barriers.

Inducements

Fees or benefits paid to or by third parties that must not impair the firm's duty to act honestly and professionally; advice and portfolio management must be inducement-free.

Politically exposed person

An individual entrusted with prominent public functions, plus family members and close associates, subject to enhanced due diligence and senior management approval.

Suspicious activity report

A report of suspected money laundering or terrorist financing submitted to the Financial Intelligence Directorate; tipping off the client about the report is prohibited.

Permanent minimum capital

The own funds floor under the IFR: EUR 75,000 for reception and transmission or execution, EUR 150,000 for dealing or underwriting, EUR 750,000 for market making.

Client money segregation

Holding client funds in accounts separate from the firm's own money with a credit institution or central bank, calculated at least daily and reconciled regularly.

Transaction reporting

The obligation to report complete and accurate details of executed transactions to KFN by end of the next working day, including instrument, price, quantity, venue and capacity.

LEI

A legal entity identifier: a unique 20-character code used to identify parties in transaction reports and regulatory filings, required for the firm and relevant clients.

DORA

The EU Digital Operational Resilience Act, applicable to investment firms from 17 January 2025, requiring ICT risk management, incident reporting, resilience testing and third-party oversight.

SFDR Article 8

A product classification for financial products that promote environmental or social characteristics, provided the companies invested in follow good governance practices.

Fit and proper test

The assessment of senior management and qualifying shareholders for adequate knowledge, skills, experience and good repute, conducted by KFN as part of licensing and supervision.

Complaints register

A record maintained by the firm of client complaints, capturing the date, client, subject matter, outcome and remedial action, used for conduct analysis and KFN reporting.

Delivery versus payment

A settlement mechanism in which the transfer of securities occurs simultaneously with the transfer of funds, used by the Central Depository for BSE trades.

Personal account dealing

Employee trading in financial instruments, requiring prior written approval, avoidance of conflicts with client orders, and compliance with holding-period and reporting rules.

Target market

The defined group of clients for whom a product is intended, identified by the manufacturer and assessed by the distributor before sale.

Trade repository

An entity registered under EMIR that records derivatives transactions reported by counterparties, supporting supervisory access to derivatives data.

Sanctions screening

The process of checking clients and transactions against EU and national sanctions lists at onboarding and on an ongoing basis to prevent prohibited dealings.

Title transfer collateral

An arrangement in which the client transfers full ownership of assets to the firm, requiring disclosure of the risk that the client loses ownership rights.

Passporting

The MiFID II mechanism allowing an EEA investment firm authorised in one member state to provide services in another, supervised by the host regulator for conduct.

Withholding tax on dividends

Bulgarian tax of 5% withheld on dividends paid by Bulgarian companies to individuals and certain foreign recipients, potentially reduced under double tax treaties.

Currency board

Bulgaria's monetary arrangement pegging the lev to the euro at BGN 1.95583 per EUR, under which the central bank cannot set interest rates independently.

Business continuity plan

A documented plan covering critical functions with recovery time and recovery point objectives, tested at least annually and updated after incidents.