The Financial Supervision Commission notifies all concerned parties that on 18 June 2013 the Competent Authority of Austria (Financial Market Authority) has informed about a particular natural or legal person named “Unterstützungskasse für Arbeitnehmerschutz und Vorsorge” which is not entitled to operate the contractual insurance business or to provide certain insurance services.

FSC has not been notified of the intention of the aforementioned natural or legal person to operate on the territory of the Republic of Bulgaria under the right of establishment or the freedom to provide services.

The Financial Supervision Commission notifies all concerned parties that on 12 April 2013 the competent authority of United Kingdom (Prudential Regulation Authority) has informed that the transfer of life insurance business of Tunbridge Wells Equitable Friendly Society Ltd (transferring insurer) to Forester Life Ltd (transferee) was confirmed by the PRA on 3 April 2013 and took effect on the same date.

FSC has not been notified of the intention of the transferee to operate on the territory of the Republic of Bulgaria under the right of establishment or the freedom to provide services.

The Financial Supervision Commission (FSC) notifies all concerned parties that on 28 May 2013 the competent authority of the United Kingdom (Prudential Regulation Authority) has informed about the intention of B & CE Insurance Limited (transferring insurer) to transfer certain of its life insurance business to Partnership Life Assurance Company Limited (transferee).
FSC has not been notified on the intention of the transferee to operate on the territory of Bulgaria under the right of establishment or the freedom to provide services.

The Financial Supervision Commission (FSC) notifies all concerned parties that on 13 May 2013 the competent authority of the United Kingdom (Prudential Regulation Authority) has informed about the intention of Guardian Pensions Management Limited and Guardian Linked Life Assurance Limited (transferring insurers) to transfer all of their insurance business to Guardian Assurance Limited (transferee).
 FSC has not been notified on the intention of the transferee to operate on the territory of Bulgaria under the right of establishment or the freedom to provide services.

Prime Minister Marin Raykov, BNB Governor Ivan Iskrov and the President of the Bulgarian National Audit Office, Valeri Dimitrov, delivered speeches on the occasion of the 10th Anniversary of the FSC 

Last week the FSC officially celebrated its 10th Anniversary in the presence of Prime Minister Marin Raykov, the Minister of Finance Kalin Hristov, the Bulgarian National Bank Governor Ivan Iskrov, the President of the Bulgarian National Audit Office Valeri Dimitrov, ambassadors, representatives of the financial community in the country and partners.

In his opening speech the Chairman of the FSC Stoyan Mavrodiev stressed that it is the good work and responsible behavior of the institution that have contributed to keeping Bulgaria financially stable without serious disruptions and without the need of loans. As a Member of the Financial Stability Council, the FSC works together with all the institutions concerned for making sound policy and averting experiments in the financial field. “Despite all the difficulties that the country and its citizens face, Bulgaria has been relatively stable throughout the global crisis”, he added. Stoyan Mavrodiev focused on the successful international performance of the Commission, which is actively involved in the new European supervisory architecture.

In his speech Prime Minister Marin Raykov said that the creation of strong, independent, effective and accountable regulators is a prerequisite for the proper functioning of any economy. The purpose of the 2003 reform was to create a regulator to consolidate and ensure effective supervision of the non-banking financial sector. According to the Prime Minister, the effects of the banking and non-banking sector regulation are visible in various aspects of the economy. He stressed that the example of the well structured regulators in the financial sector should be applied in the reform process of all regulatory bodies in the country. Prime Minister Raykov reported that as a result of the activities of the FSC and the BNB, the financial sector in the country has sailed smoothly through the global financial crisis, which is a clear indicator of the regulators’ quality. “From the standpoint of the experience accumulated over the past decade and the supervisory capacity within the FSC, it can be safely stated that the creation of a unified regulatory authority in 2003 was a modern and effective solution helping to build a stable non-banking financial sector”, concluded the Prime Minister.

The Governor of the Bulgarian National Bank Ivan Iskrov, who was involved in the introduction of the FSC Act, presented a brief history and the reasons for the establishment of the Commission. “We strove to create a strong, united, independent regulator of the financial markets similar to the banking supervision through the merger of the three agencies dependent on the executive power – the State Securities Commission, the Insurance Supervision Agency and the Agency for Social Insurance Supervision”, said the Governor. According to him, the strong personal and financial independence of the FSC, which should be accountable to the National Assembly and the public, is the key to a good operation. “Over the past few years, the Financial Supervision Commission went through a very difficult period of intense audit and check-ups including attempts to subordinate the regulator and experiments, such as budget cuts, etc., but it resisted, which means that its mechanism has been correctly set”. Mr. Iskrov recalled that the previous Minister of Finance was trying to take BGN 2 bil. from the Silver Fund, but the idea was undermined by the BNB and the FSC with the support of the ECB and the IMF, allowing today’s fiscal reserve of the country to be nearly BGN 5 bil. In his speech, the Governor of the Bank also said: “Today, the Financial Supervision Commission works very successfully with its Bulgarian and European partners. The Commission has a good reputation on an European level, which is very important for our country”.

The President of the Bulgarian National Audit Office, Prof. Valeri Dimitrov, who was also one of the architects of the Commission 10 years ago, said that the FSC is a stable institution which has proved to be very efficient. Along with the National Bank, the Commission is a modern authority that follows the best practices. Prof. Dimitrov wished Mr. Mavrodiev to continue his successful mission for effective regulation and supervision of non-banking sector, and the good interaction with the BNB and MoF.

In connection with signals submitted in the Bulgarian Financial Supervision Commission (BFSC) and regarding numerous publications for providing investment services and activities, including through electronic platforms for trading and financial instruments, from companies which are not licensed by the BFSC to operate as investment intermediaries, the BFSC would like to notify the investors about the following:

The companies listed below are not licensed by the BFSC and hence they are not eligible to provide investment services and activities under the Markets in Financial Instruments Act in the territory of the Republic of Bulgaria, including through electronic platforms for trading with financial instruments:

– InstaForex, Russia
– Insta Sofia Ltd.

We would like also to inform the potential investors that the investment services and activities can be provided only by companies licensed by the BFSC to act as an investment intermediaries, banks licensed by the Bulgarian National Bank and entered in the register of the BFSC as investment intermediaries, investment intermediaries from member states under the freedom to provide of services rules through a branch in the Republic of Bulgaria.

Regarding the activity of management of portfolios of financial instruments and bankroll, except the aforementioned companies, authorized to carry out this activity are companies licensed to operate as a management company or a management company from a member state.

The investors are advised to check whether the respective company is licensed by the BFSC and if it is authorized, in accordance to the issued license, to provide investment services and activities to the clients.

List of investment intermediaries and management companies licensed by the BFSC could be found on the FSC’s website at:
http://www.fsc.bg/Lists-of-supervised-entities-en-148

List of investment intermediaries from EU member states notified the BFSC for their intention to provide services and activities on the territory of the Republic of Bulgaria could be found on the follow link:
http://www.fsc.bg/Notifications-en-111

The investors should consider that the contracting and submission of orders, including the provision of funds for concluding transactions with financial instruments using the services of companies that are not licensed by the BFSC or by the competent authority of another member state, might lead the potential investors to deception and significant financial losses.

The financial assets and funds provided by the investors to the companies which are not licensed and therefore supervised by BFSC are not guaranteed by the Investor Compensation Fund.

The Deputy Chairman of the Financial Supervision Commission (FSC), in charge of Investment Supervision Division has decided to execute a Coercive Administrative Procedure under article 118, paragraph 1, p. 1 and p. 4 from the Markets in Financial Instruments Act against BULGARIAN STOCK EXCHANGE – SOFIA JSC for the following:

 Oblige the BULGARIAN STOCK EXCHANGE – SOFIA JSC to hereby undertake the necessary actions, immediately, as a result from which, within an hour of receipt of this notice, to stop the trading of shares, emission ISIN BG1100028080, issued by MOUNTAIN PARADISE INVEST REIT (“Маунтин Парадайс Инвест” АДСИЦ) allowed to be traded as of this moment as a segment of the regulated market.”

The motives for this administrative procedure are as follows:

Thе legislation does not foresee for a legal mechanism for changing MOUNTAIN PARADISE INVEST REIT’s activities or for its conversion into another type of company. At the same time the license of the entity as a special purpose vehicle has been revoked, consequently it has no longer right to undertake the activities subject to its license. In this connection, MOUNTAIN PARADISE INVEST REIT has no longer legal and factual right to execute its investment goals, stated in its prospectus, namely to acquire investment properties, realize capital gains from their sale or lease, and to insure current income for the shareholders. The only legal possibility in the current situation is its liquidation.

On the other hand, following the decision of FSC dated 05.12.2012 for the revoking of MOUNTAIN PARADISE INVEST REIT’ license, the shares of the company, traded on the regulated market, organized by the BULGARIAN STOCK EXCHANGE – SOFIA JSC, are being traded actively. Following the date the license was revoked, the shares issued by MOUNTAIN PARADISE INVEST REIT, have been traded at a price much higher than their net book value as per their latest published financial statements.

The described actual situation creates conditions for destabilization of the market, which generates turnover on sales of shares in which prices frequently exceed their balance values. All this factors, taken together with the lack of perspectives for future development has threatened the interests of investors.

The prohibition of the trade on regulated market with financial instruments, issued by MOUNTAIN PARADISE INVEST REIT is necessary in order to preventively protect the interests of the investors. Therefore, it is necessary that the change of the shareholding structure of the company through deals on regulated market to be prohibited. Such deals presume that the company corresponds to definitive criteria, in relation to which it was allowed to be traded on this market, however, at the moment it does not comply with the requirements.

The initiation of the recent proceeding of Coercive Administrative Measure refers to provision of stability of the financial market and the prevention of significant unexpected financial losses from the side of the participants and the necessity of preventive protection of the investors’ interests.

The interested parties may present to FSC explanations and/or objections under the initiated proceeding until January 7, 2013.

On December 11th and 12th, a meeting of the Euroins Insurance Group College of Supervisors was held at the premises of the Financial Supervision Commission (FSC) in Sofia for the third consecutive year.
The first (closed) session of the supervisors was attended by representatives of the European Insurance and Occupational Pensions Authority (EIOPA), the Romanian Insurance Supervisory Commission, the Insurance Supervisory Agency of Macedonia, and FSC experts from the Insurance Supervision Division and the International Cooperation Directorate. At the session, the results of the operation of the Group and its subsidiaries in Romania and Macedonia in 2012 were discussed, and some recent legislative changes were announced.
On the second day, which was held in an open format, representatives of Euroins Insurance Group Ltd., Bulgaria made a presentation on the position and the future plans of the Group in connection with the forthcoming introduction of the EU Solvency II Directive.
Following the presentations and discussions, conclusions were made and appropriate measures for 2013 were identified.
The official representative of EIOPA, Ms. Rita Szep, expressed her satisfaction from the meeting held by the Supervisory College. She emphasized the excellent cooperation and the significant results in the exchange of information and experience between the three authorities. She also made some recommendations and welcomed the efforts made by the Management and the personnel of Euroins Insurance Group Ltd., Bulgaria to strengthen the holding, to expand its market share, and to bring its operation in line with the EU requirements.

According to the Statute of EIOPA, one of its functions is to monitor the annual meetings and to coordinate the activity of the supervisory colleges for cross-border insurance groups.

Since 1 November 2012 the application of the Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps (the Regulation) has commenced.

In the Regulation and its implementing acts there are requirements for information disclosure to national competent authorities by natural and legal persons having net short positions in relation to issued share capital of an entity, whose shares have been admitted to trading. The notification threshold, as stated in art. 5 of the Regulation, is 0.2 % of the issued share capital of the relevant entity and each 0.1 % above this percent.

The requirement for disclosure to the national competent authority comes into force on the first day following the day of starting applying the Regulation, i.e. on 2 November 2012. The relevant time for calculation of a net short position is at midnight at the end of the trading day on which the natural or legal person holds the relevant position. The disclosure is made not later than 15.30 on the following trading day.

With regard to the Regulation a new section on the FSC’s website was created – Short selling – http://www.fsc.bg/en/registers-and-checks/short-selling/notification-templates/ . The texts of the main Regulation and the Deledated Regulations in Bulgarian and in English were published in this section. In accordance with the accepted in the Delegated Regulations formats for information disclosure the FSC has prepared and published notification templates in .xls format in Short Selling Section. These templates have to be sent to the national supervisor by persons having net short position in shares of at least 0.2 %.

The notifications should:
– be sent to the following e-mail address: delovodstvo@fsc.bg, signed with electronic signature; or 
– be sent by post mail, accompanied by a durable medium (containing .xls file); or
– be submitted in the FSC premises, accompanied by a durable medium.

The Regulation contains provisions for public disclosure of information regarding the net short positions of natural and legal persons in respect of the issued share capital of the entity whose shares are admitted to trading. In this case the threshold, according to art. 21 of the European Commission Delegated Regulation № 918/2012 of 5 July 2012 supplementing Regulation № 236/2012, is 0.5 % of the issued share capital of the entity and each 0.1% above this percent.

Notification templates for public disclosure of information can be found in the Short Selling Section / Notification templates. They should: 
– be sent to the email address: delovodstvo@fsc.bg , signed with electronic signature; or
– be sent by post mail, accompanied by a durable medium (containing .xls file); or
– be submitted in the FSC premises, accompanied by a durable medium.

Public disclosure will be made by the FSC in Short Selling Section / Information on significant net short positions in shares.
Information regarding the obligation for information disclosure by natural or legal persons of significant net short positions in sovereign debt and of uncovered positions in sovereign credit default swaps might be found on internet page of the Bulgarian Ministry of Finance: http://www.minfin.bg/en/page/819.

The meeting held on July 6th, organized by the Financial Supervision Commission in connection with the working visit of Mr. Patrick Hoedjes, Chair of EIOPA IT & Data Committee, and Mr. Kitzmantel, IT Project Manager, was attended by representatives of insurance companies, members of the Association of Bulgarian Insurers and experts from the FSC. The purpose of the working visit of the representatives of one of the four European Supervisory Authorities was to acquaint the audience with the framework, mandate, organization, subgroups, activities and the results that are being expected of the EIOPA IT and Data Committee, including EIOPA IT and Data Strategy Specifications and Implementation Plan.
In the first part of the meeting, the employees of the Information Departments of the insurance companies, committed to the processing and submission of data to the FSC, who were present were introduced by the European experts to the new format, XBRL, in which the information for supervisory purposes will be presented after the entry into force of Solvency II Directive. The second part of the presentation was aimed at the FSC’s staff exercising supervisory activities in connection with the alignment of EIOPA IT & Data Implementation Plan with the National Supervisory Authority’s objectives and the Bulgarian FSC’s involvement in the works of ITDC.
The one-day visit of the European experts contributed greatly to raising the awareness and the competence of the Bulgarian specialists from the insurance industry and the Financial Supervision Commission in connection with the higher criteria and the forthcoming implementation of Solvency II Directive.