Order No. 50 of 30.03.2022 on Capital Adequacy, Liquidity of Investment Intermediaries and Supervision of Compliance

ORDER No. 50 of 30.03.2022 on Capital Adequacy, Liquidity of Investment Intermediaries and Supervision of Compliance Pub. - State Gazette, No. 27 of 05.04.2022, effective from 05.04.2021; amended, No. 36 of 21.04.2023; amended, No. 52 of 18.06.2024; amended, No. 20 of 11.03.2025, effective from the date of introduction of the euro in the Republic of Bulgaria; amended, No. 65 of 08.08.2025, effective from 08.08.2025; amended, No. 54 of 12.06.2026. Adopted by Decision No. 234-N of 30.03.2022 of the Financial Supervision Commission

Chapter One
GENERAL PROVISIONS

Art. 1. (Amended - State Gazette, No. 52 of 2024) (1) This Order determines:

1. requirements for investment intermediaries regarding capital, including the holding of additional own funds;
2. requirements for investment intermediaries regarding capital adequacy and liquidity;
3. the types of capital buffers that investment intermediaries under Art. 9a, para. 2 of the Markets in Financial Instruments Act (MIFIA) must maintain, the scope, conditions and procedure for their formation and updating;
4. the conditions, criteria and procedure for exemption from liquidity requirements;
5. requirements for keeping accounting records and disclosure of information by parent undertakings and investment intermediaries;
6. supervision of compliance with the requirements of items 1-5;
7. financial instruments that investment intermediaries may hold for their own account, in cases where they provide investment services under Art. 6, para. 2, item 2 of MIFIA;
8. the conditions and procedure for issuing a permit under Art. 11, para. 3 of MIFIA and the procedure for issuing permits and approvals under Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on prudential requirements for investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ, L 314/1 of 5 December 2019) (Regulation (EU) 2019/2033), under Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ, L 176/1 of 27 June 2013) (Regulation (EU) No 575/2013), under Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (OJ, L 173/84 of 12 June 2014) (Regulation (EU) No 600/2014), under Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on over-the-counter derivatives, central counterparties and trade repositories (OJ, L 201/1 of 27 July 2012) (Regulation (EU) No 648/2012), under the implementing acts thereto, as well as under the implementing acts of Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and 2014/65/EU (OJ, L 314/64 of 5 December 2019), Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ, L 176/338 of 27 June 2013) (Directive 2013/36/EU) and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ, L 173/349 of 12 June 2014) (Directive 2014/65/EU);
9. additional requirements for significant investment intermediaries;
10. requirements for risk committees and remuneration committees in investment intermediaries under Art. 61a, para. 1 of MIFIA;
11. requirements for remuneration, the remuneration policy and its implementation;
12. the procedure, manner, scope and criteria for conducting the review and assessment of the rules, strategies, processes and mechanisms introduced by the investment intermediary;
13. requirements for the recovery plan and the procedure for its approval;
14. the requirements that transactions must meet to be considered significant.

(2) The requirements of Chapters Two and Five apply to investment intermediaries under Art. 9a, para. 1 of MIFIA, and the requirements of Chapters Three, Four and Five apply to investment intermediaries under Art. 9a, para. 2 of MIFIA.

(3) (New - State Gazette, No. 52 of 2024) The provisions of Art. 31, para. 4 also apply to:

1. banks - investment intermediaries;
2. investment intermediaries and banks when they sell (offer) structured deposits or advise clients in relation to structured deposits.

Art. 1a. (New - State Gazette, No. 54 of 2026) The Financial Supervision Commission, hereinafter referred to as "the Commission", is a data collection body within the meaning of Art. 2, item 2 of Regulation (EU) 2023/2859 of the European Parliament and of the Council of 13 December 2023 establishing a European Single Access Point providing centralised access to publicly available information relevant to financial services, capital markets and sustainable development (OJ, L 2023/2859 of 20 December 2023), hereinafter referred to as "Regulation (EU) 2023/2859", for the purpose of ensuring access via the European Single Access Point to the information under Art. 38, para. 4.

Chapter Two
REQUIREMENTS FOR INVESTMENT INTERMEDIARIES UNDER ART. 9a, PARA. 1 OF MIFIA

Section I
Requirements for investment intermediaries that meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033

Art. 2. (Amended and supplemented - State Gazette, No. 54 of 2026) (1) The requirements of Art. 15-17, Art. 18, para. 1, item 2, Art. 22-32 and Art. 37, para. 3 do not apply to investment intermediaries that meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033.

(2) (Amended - State Gazette, No. 54 of 2026) When an investment intermediary that does not meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033, subsequently fulfils these conditions, the requirements of Art. 15-17, Art. 18, para. 1, item 2, Art. 22-32 and Art. 37, para. 3 do not apply to the investment intermediary after the expiry of six months from the date on which these conditions were fulfilled, if it has complied with these conditions throughout the specified period and has notified the Commission thereof.

(3) An investment intermediary that meets the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033, shall assess whether it continues to meet the conditions defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033.

(4) If as a result of the assessment under para. 3 the investment intermediary finds that it does not meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033, it shall notify the Commission and begin to comply with the requirements of Art. 15-17, Art. 18, para. 1, item 2, Art. 22-32 and Art. 37, para. 3 within 12 months from the date on which the assessment under para. 3 was carried out.

(5) The investment intermediary shall comply with the requirements of Art. 25-29 regarding remuneration for services provided or work performed during the financial year following the one in which the assessment under para. 3 was carried out.

(6) (Amended - State Gazette, No. 54 of 2026) An investment intermediary that does not meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033, shall apply Art. 8 of Regulation (EU) 2019/2033 and the requirements of Art. 28, para. 2, item 2, Art. 61a, 64, 65, 65a and 134 of MIFIA and Chapter Two of this Order on an individual basis.

(7) (Amended - State Gazette, No. 54 of 2026) An investment intermediary that does not meet the conditions for small and non-interconnected investment intermediaries, as defined in Art. 12, paragraph 1 of Regulation (EU) 2019/2033, shall apply Art. 7 of Regulation (EU) 2019/2033 and the requirements of Art. 28, para. 2, item 2, Art. 61a, 64, 65, 65a and 134 of MIFIA and Chapter Two of this Order on an individual and consolidated basis.

(8) (Amended - State Gazette, No. 54 of 2026) Paragraph 7 shall not apply to subsidiaries included in the consolidated situation of a group that are established in third countries, if the parent undertaking in the Union provides evidence to the Commission that the application of Art. 28, para. 2, item 2, Art. 61a, 64, 65, 65a and 134 of MIFIA and Chapter Two of this Order is not permitted under the applicable legislation of the third country in which these subsidiaries are established.

Section II
Requirements regarding capital, including the holding of additional own funds. Requirements for the recovery plan and procedure for its approval

Art. 3. The initial capital of an operating company shall be determined in accordance with Art. 9 of Regulation (EU) 2019/2033.

Art. 4. In the initial capital of an operating company, calculated in accordance with Art. 3, which owns real rights over immovable property, only the value of the rights that are directly related to the activities and services under Art. 6, para. 2 and 3 of MIFIA shall be included, in an amount not exceeding 20 percent of the required minimum size of capital under Art. 10 of MIFIA.

Art. 5. (1) The conditions for issuing a permit under Art. 11, para. 3, item 1 of MIFIA to an investment intermediary that does not provide any of the investment services and activities under Art. 6, para. 2, items 3 and 6 of MIFIA and that executes client orders in relation to financial instruments to hold such instruments for its own account are as follows:

1. the positions arose as a result of the investment intermediary's inability to execute the orders accurately;
2. the total market value of all such positions may not exceed 15% of the initial capital of the investment intermediary;
3. the investment intermediary complies with the requirements of Art. 11 of Regulation (EU) 2019/2033;
4. such positions are of a random and temporary nature and are strictly limited to the time necessary to complete the relevant transaction.

(2) In the event of the emergence of proprietary positions under para. 1, the investment intermediary shall notify the Commission immediately, but no later than the end of the working day following the day of emergence, by submitting a notification specifying at least the type, volume and value of the financial instruments, the time necessary to close the positions, as well as the reasons for the emergence of these positions.

(3) The Commission, upon the proposal of the Vice-President in charge of "Supervision of Investment Activity" (the Vice-President), shall issue the permit under para. 1 within 3 working days from receipt of the notification, and when additional data and documents have been requested - within 3 working days from their receipt, respectively, from the expiry of the specified period for their provision. Art. 167 shall apply mutatis mutandis.

(4) When the Commission does not issue the permit under para. 3, the investment intermediary shall close the position immediately.

Art. 6. (Amended - State Gazette, No. 52 of 2024) (1) An investment intermediary seeking to obtain a permit under Art. 78 of Regulation (EU) No 575/2013 shall submit an application to the Commission in compliance with the requirements of Commission Delegated Regulation (EU) No 241/2014 of 7 January 2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council as regards regulatory technical standards for the capital requirements of institutions (OJ, L 74/8 of 14 March 2014) (Delegated Regulation (EU) No 241/2014), to which it shall attach a certified copy of the decision of the competent authority.

(2) The Commission shall refuse to issue the permit under para. 1 when the requirements of Regulation (EU) 2019/2033, Regulation (EU) No 575/2013, MIFIA, the implementing acts thereto or the Commercial Law are not complied with.

(3) The permit under para. 1 shall be granted in accordance with Art. 172 within the period under Art. 31, paragraph 3 of Delegated Regulation (EU) No 241/2014.

(4) Paras 1-3 shall not apply if one of the conditions specified in Art. 78, paragraph 1, point 'a' or paragraph 4 of Regulation (EU) No 575/2013 is fulfilled. In the cases under the first sentence, the permit shall be deemed granted as the investment intermediary submits a notification to the Commission, to which it shall attach a certified copy of the decision of the competent authority together with reasons for the existence of the conditions specified in Art. 78, paragraph 1, point 'a' or paragraph 4 of Regulation (EU) No 575/2013. The notification shall be submitted within a 7-day period from the taking of the decision by the competent authority of the investment intermediary.

Art. 7. (Repealed - State Gazette, No. 52 of 2024)

Art. 8. (Repealed - State Gazette, No. 52 of 2024)

Art. 9. (Amended - State Gazette, No. 52 of 2024) (1) An investment intermediary seeking to obtain a permit under Art. 26, paragraph 2 of Regulation (EU) No 575/2013 for the inclusion of interim or annual profit in the Common Equity Tier 1 capital, before its competent authority takes, respectively proposes to the relevant competent authority, an official decision on the annual result, shall submit an application to the Commission, to which it shall attach:

1. a document certified by the auditor of the investment intermediary confirming the profit, as:
   a) regarding annual profit, an audit report or a certificate letter shall be submitted, stating that the audit has not been completed and that the auditors have not found anything that would give them reason to believe that the final report will contain a modified opinion; b) regarding interim profit, an audit report (in case of an audit carried out), a review report within the meaning of ISA 2400 "Engagements to Perform Review of Financial Statements" or a certificate letter in accordance with the conditions of point 'a', if the confirmation submitted by the company is not an audit report;
2. a declaration signed by the persons managing and representing the investment intermediary that the profit has been recorded in accordance with the principles provided for in the applicable accounting framework and that the scope of prudential consolidation is not significantly wider than the scope of the confirmation contained in the auditor's document under item 1;
3. a declaration in accordance with Annex No. 1, signed by the persons managing and representing the investment intermediary, stating the main elements of the interim or annual profit, including deductions for expected distributions from profit or expected dividends or other documents confirming expected distributions from profit or dividends;
4. a certified copy of the decision/proposal of the competent authority of the investment intermediary for the inclusion of interim or annual profit in the Common Equity Tier 1 capital.

(2) In cases where interim or annual profit is included on a consolidated basis, the requirements of para. 1, items 2 and 3 shall be fulfilled by the Union parent investment intermediary, the Union parent investment holding or the Union parent mixed financial holding.

(3) The amount of deductions for expected dividends and expected distributions from profit shall be determined in accordance with Art. 2 and 3 of Delegated Regulation (EU) No 241/2014.

(4) The Commission shall refuse to issue the permit under para. 1 when the conditions under Regulation (EU) No 575/2013, Delegated Regulation (EU) No 241/2014 or this Order are not fulfilled, as well as when the conditions under Regulation (EU) 2019/2033 are not fulfilled.

(5) Art. 172 shall apply mutatis mutandis for the issuance of the permit under para. 1.

Art. 10. (Amended - State Gazette, No. 52 of 2024) (1) An investment intermediary seeking to obtain a permit under Art. 26, paragraph 3 of Regulation (EU) No 575/2013 for the inclusion of capital instruments under Art. 26, paragraph 1, point 'a' of Regulation (EU) No 575/2013 in the Common Equity Tier 1 capital, shall submit an application to the Commission, to which it shall attach:

1. a certified copy of the decision of the competent authority of the investment intermediary for the issuance of capital instruments and for the amendment of the articles of association, respectively the partnership agreement;
2. a list of persons who acquired capital instruments, data regarding the size of the instruments acquired by each person and documents confirming that each person who acquired capital instruments has paid their value into the subscription account of the investment intermediary, as well as documents proving the origin of the funds;
3. a declaration signed by the persons managing and representing the investment intermediary that the investment intermediary has not directly or indirectly financed the acquisition of the instruments;
4. the data and documents under Art. 4 and 5 of Commission Delegated Regulation (EU) No 2017/1946 of 11 July 2017 supplementing Directives 2004/39/EC and 2014/65/EU of the European Parliament and of the Council as regards regulatory technical standards for the preparation of a comprehensive list of information to be included in the notification of a proposed acquisition of a qualifying holding in an investment intermediary (OJ, L 276/32 of 26 October 2017) (Delegated Regulation (EU) No 2017/1946) and Order No. 11 of 3.12.2003 on licenses for carrying out activities as a regulated market, market operator, for organizing a multilateral trading system or organized trading system, for carrying out activities as an investment intermediary, investment company, management company, special purpose investment company, national investment fund, person managing an alternative investment fund, and data reporting provider (State Gazette, No. 109 of 2003) (Order No. 11 of 3.12.2003) for persons who as a result of the capital increase will acquire directly or indirectly 10 and over 10 percent of the shares with voting rights, respectively the shares;
5. a certificate issued by "Central Depository" - AD, for the registration of the issuance of capital instruments in cases where shares are issued;
6. amended articles of association, respectively partnership agreement, containing the new size of the capital;
7. a table for assessing the compliance of capital instruments with the requirements of Regulation (EU) No 575/2013 and Delegated Regulation (EU) No 241/2014 in accordance with Annex No. 2, which is prepared by the investment intermediary and contains information on the compliance of the capital instruments with the corresponding requirements of the specified regulations for their inclusion as Common Equity Tier 1 capital;
8. a declaration signed by the persons managing and representing the investment intermediary that the submitted information is accurate and complete, as well as that the capital instruments meet the conditions for their inclusion as Common Equity Tier 1 capital.

(2) The Commission shall refuse to issue the permit under para. 1 when the conditions of Regulation (EU) No 575/2013, Delegated Regulation (EU) No 241/2014 or this Order are not fulfilled, as well as when the conditions of Regulation (EU) 2019/2033 are not fulfilled.

(3) Art. 172 shall apply mutatis mutandis for the issuance of the permit under para. 1.

Art. 10a. (New - State Gazette, No. 52 of 2024) (1) An investment intermediary seeking to rely on the derogation under Art. 26, paragraph 3, para. 2 of Regulation (EU) No 575/2013 shall submit a notification, to which it shall attach:

1. a certified copy of the decision of the general meeting of shareholders for the issuance of capital instruments and for the amendment of the articles of association;
2. a list of persons who acquired capital instruments, data regarding the size of the instruments acquired by each person and documents confirming that each person who acquired capital instruments has paid their value into the subscription account of the investment intermediary, as well as documents proving the origin of the funds.

(2) The notification under para. 1 shall be submitted within a period of up to 20 working days before the classification of the instruments as Common Equity Tier 1 capital instruments.

Art. 11. (Amended - State Gazette, No. 52 of 2024) (1) An investment intermediary seeking to include capital instruments and subordinated loans in Additional Tier 1 capital, respectively Tier 2 capital, shall submit an application for approval to the Commission, to which it shall attach:

1. a contract or other document for the issuance of the capital instrument or for obtaining the subordinated loan and a certified copy of the decision of the competent authority of the investment intermediary for the conclusion of the contract or issuance of the instrument;
2. for capital instruments and subordinated loans with new or complex characteristics - a reasoned and independent legal opinion confirming that the capital instruments or subordinated loans meet the conditions for their inclusion as Additional Tier 1 capital or Tier 2 capital instruments;
3. for capital instruments for which approval is sought for their inclusion as Additional Tier 1 capital instruments - a statement of the minimum amount of base capital that would be formed if the principal value of the instrument were fully reduced or converted into base capital (Art. 54, paragraph 3 of Regulation (EU) No 575/2013) after the reduction of all foreseeable tax liabilities or payments resulting from the conversion or reduction or arising and related to the instrument at the time of conversion or reduction, as the investment intermediary must assess and explain the amount based on the tax treatment applicable on the date of the assessment and the structure of the group;
4. a table for assessing the compliance of the capital instrument, respectively the subordinated loan, with the requirements of Regulation (EU) No 575/2013 and Delegated Regulation (EU) No 241/2014 in accordance with Annex No. 3, which is prepared by the investment intermediary and contains information on the compliance of the capital instrument, respectively the subordinated loan, with the requirements of the specified regulations for their inclusion as Additional Tier 1 capital, respectively Tier 2 capital, taking into account the applicable questions and answers of the European Banking Authority (EBA) and the EBA Report on the supervision of Additional Tier 1 capital instruments;
5. a declaration signed by the persons managing and representing the investment intermediary that the investment intermediary has not directly or indirectly financed the acquisition of the instruments;
6. a declaration signed by the persons managing and representing the investment intermediary that the submitted information is accurate and complete, that the capital instruments meet the conditions for their inclusion as Additional Tier 1 capital or Tier 2 capital and that there are no undisclosed agreements that would affect their eligibility;
7. a document for the receipt of funds into the bank account of the investment intermediary;
8. other documents at the discretion of the investment intermediary, necessary for carrying out the assessment of whether to issue the requested approval.

(2) The investment intermediary shall specify in the application the reasons for the issuance of the capital instrument and the planning of the loan, as well as their compliance with the capital plan (on an individual and consolidated basis). The application under para. 1 shall also include a description of the impact on own funds (Common Equity Tier 1 capital, Additional Tier 1 capital and total capital) and the leverage ratio (for Additional Tier 1 capital) for all levels of application in accordance with Part One, Title Two of Regulation (EU) No 575/2013 for a three-year period, based on a forecast of the capital plan and taking into account para. 1, item 3.

(3) The investment intermediary may use the standardized templates published by the EBA for the characteristics and conditions of the issuance of capital instruments