Regulatory Framework and Market Supervision
Core Concepts
Bulgaria's investment services regulatory framework is anchored in the Markets in Financial Instruments Directive (MiFID II), transposed into the Markets in Financial Instruments Act (MFIA). The Financial Supervision Commission (FSC) is the primary regulator for investment firms, while the Bulgarian National Bank (BNB) supervises banks and payment institutions. The FSC's Investment Supervision Department enforces conduct rules, capital adequacy, and market transparency. Key concepts include: authorisation and passporting (freedom of services and establishment), the role of the European Securities and Markets Authority (ESMA) in coordination, and the distinction between regulated markets (e.g., Bulgarian Stock Exchange), multilateral trading facilities (MTFs), and organised trading facilities (OTFs). Candidates must know the FSC's powers to intervene, impose sanctions, and cooperate with foreign regulators. Traps often appear around the scope of MFIA versus other laws (e.g., Bank Deposit Insurance Act), the classification of financial instruments, and the exact thresholds for exemptions (e.g., dealing on own account, ancillary services). Another trap: the FSC's structure and decision-making bodies, and the appeals process (to the Supreme Administrative Court). Also, the role of the Compensation Fund for Investors (up to EUR 20,000 per investor) and its coverage limits.
Worked Example / Rule of Thumb
A firm providing investment advice on an occasional basis may be exempt from authorisation only if advice is given in the course of a professional activity and not for remuneration. However, if the firm receives any commission or fee, authorisation is required. Rule of thumb: any remuneration triggers full MFIA compliance.
Key Points
- FSC is the main regulator for investment firms; BNB supervises banks.
- MFIA transposes MiFID II; passporting allowed under EU rules.
- Distinguish regulated markets, MTFs, and OTFs.
- Investor compensation fund covers up to EUR 20,000 per investor.
- Sanctions and appeals go to the Supreme Administrative Court.
- Exemptions are narrow; remuneration usually triggers authorisation.