List of candidates admitted to the examination for professional qualification of insurance brokers, to be held on 27.11.2021.

After checking all submitted applications and accompanying documents, the Deputy Chairperson of the FSC, head of the Insurance Supervision Department, decided to admit the following candidates to the exam:

Reference number          Decision No.

РГ-14-159-1/15.10.2021               791-ЗБ/28.10.2021         admitted

РГ-14-160-1/19.10.2021               793-ЗБ/01.11.2021         admitted

РГ-14-161-1/20.10.2021               792-ЗБ/01.11.2021         admitted

РГ-14-162-1/01.11.2021               801-ЗБ/02.11.2021          admitted

РГ-14-163-1/01.11.2021               802-ЗБ/02.11.2021         admitted

РГ-14-164-1/02.11.2021               810-ЗБ/09.11.2021         admitted

РГ-14-165-1/04.11.2021               807-ЗБ/05.11.2021         admitted

The examination will be conducted in accordance with all adopted anti-epidemic measures. In connection with Order No. РД-01-856 of 19.10.2021, supplemented on 21.10.2021, of the Minister of Health (MH) and in particular with item 2 and item 31, the admitted candidates should meet the requirement to be vaccinated or have recovered from COVID-19 or have a negative test result, certified by valid documents for vaccination, recovery or testing within the meaning of Order No. РД-01-733 of 27.08.2021 of the Ministry of Health.

Joint Supervisory Action 2022 on the valuation of assets in UCITS and AIF portfolios

The European Securities and Markets Authority (ESMA) has launched a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on the valuation of UCITS and open-ended Alternative Investment Funds (AIFs) throughout the European Union.

 The common supervisory action will take place in 2022. The aim is to establish whether the organizational rules and legal framework on the principles and methodologies for valuing financial assets held by UCITS and AIFs are complied with, with a view to carrying out a fair and equitable valuation as in normal and under stressful market conditions, in particular with regard to the valuation of investments in illiquid assets.

 The full ESMA communication can be found at: https://www.esma.europa.eu/press-news/esma-news/esma-launches-common-supervisory-action-ncas-valuation-ucits-and-open-ended

Integration of new communication software in the FSC

In pursuance of the objectives set before the Financial Supervision Commission, Mr. Boyko Atanasov presented a communication on the successfully completed process of integrating new communication software in the Commission.

“The changes are part of the Commission’s strategy to improve online services and channels for its communication with supervisors, consumers of non-banking financial services and society at large. Our ultimate goal is timely communication and information,” said Boyko Atanasov.

Information in connection with Council of Ministers Decision No. 441 of 04.06.2021

Pursuant to Council of Ministers Decision No. 441 of 04.06.2021 and published list of persons who fall or could fall within the scope of sanctions imposed by the Office of Foreign Assets Control (OFAC) by the United States Department of the Treasury, the Financial Supervision Commission informs that:

 has no relations with persons included in the list under item 1 of Decision of the Council of Ministers No. 441 of 04.06.2021

 in accordance with its legal powers and the current regulatory requirements it observes and is ready to assist the competent authorities under item 1 of Decision of the Council of Ministers No. 441 of 04.06.2021 on the persons included in the scope of inspections.

The FSC emphasizes that in its supervisory practice it will continue to take all legally regulated and necessary measures to preserve the stability of the capital market and the non-banking financial sector as a whole, prevention of illegal practices leading to damage to the confidence of the investment community.

In response to the intensifying process of digitalization in insurance, the FSC adopted guidelines on the application of Ordinance No. 71 of 22.07.2021 on the requirements for the governance system of insurers and reinsurers

Ordinance No. 71 on the requirements for the governance system of insurers and reinsurers, adopted by the FSC on 22.07.2021, was promulgated in SG 64 / 2021 and is effective. In accordance with the delegations provided for in it for issuing guidelines on its implementation, at its meeting on 09.09.2021 the FSC adopted the following instructions:

 Instructions regarding the application of Art. 75, para. 1 of Ordinance No. 71 in connection with the observance of the Guidelines for Outsourcing to Cloud Service Providers issued by the European Insurance and Occupational Pensions Authority (EIOPA-BoS-20-002);

 Instructions regarding the application of Art. 102, para. 1 of Ordinance No. 71 in connection with the observance of the Guidelines on Information and Communication Technology Security and Governance issued by the European Insurance and Occupational Pensions Authority (EIOPA-BoS-20/600).

 These guidelines were adopted by the FSC in response to the intensifying process of digitalization in insurance. Through them, the FSC aims to facilitate the application of the specific requirements for the award of activities to could service providers (services provided through data processing in the so-called. “Cloud space”), which are a source of new risks for insurers and reinsurers and require a higher standard of information security in their activities. With these guidelines the FSC aims to establish additional guarantees to ensure compliance with the confidentiality, integrity and availability of information and information systems, with a view to limit the operational risk to which insurers and reinsurers are additionally exposed as a result of the use of high technologies for storage, processing and access to data.

 The adoption of these guidelines completes the national legal framework for the governance system of insurers and reinsurers in accordance with the Insurance Code and the guidelines of the European Insurance and Occupational Pensions Authority. In this manner conditions are created for better management of the new risks faced by insurers and reinsurers, and the guarantees for protection of the interests of the users of insurance services in the environment of a digitized insurance market in the Republic of Bulgaria are strengthened.

FSC with specific steps for 2022 for the development of the fintech ecosystem in Bulgaria

As a continuation of the consistent policy pursued by the Financial Supervision Commission with regard to innovation through the new Financial Innovation Monitoring Strategy for the period 2021-2024, the FSC has started an active partnership with the Bulgarian Fintech Association (BFA) and representatives of business organizations with expressed interest in stimulating the development of financial innovations in the non-banking sector.

At a special meeting initiated by the Commission, the main lines of action were outlined and concrete steps were set out to support the development of innovative solutions in the non-banking financial sector in Bulgaria:

 Development of financial literacy of consumers of financial services and investors through the participation of experts from the Commission in master’s programs and training innovation camps with students.

 Participation of regulator representatives in local and international webinars of BFA.

 Regular meetings with fintech companies to provide feedback on the assessment of potential risks to both the market and consumers, as well as potential actions and measures to minimize the risks and maximize the benefits of growing interest in innovative financial products and / or technologies, while in compliance with regulatory requirements.

 Promoting and encouraging the use of the already operational Innovation Hub, which provides quick and easy access to information for start-ups and on issues and cases of a regulatory and legal nature.

 Research and preparation for the introduction of a regulatory Sandbox for the non-banking financial sector which will allow FinTech companies to test their products in a real and secure environment, and the supervisor to monitor this process to optimally adapt regulations to digital finance.

 Joint discussion and adaptation of the new regulatory framework for crowdfunding, which is considered as an established form of alternative financing for start-ups and SMEs. This task will be related to the supervision of a digital platform designed to connect or facilitate the connection of potential investors or lenders with companies seeking financing.

In pursuance of the Financial Innovation Monitoring Strategy for the period 2021-2024, the Financial Supervision Commission, at the invitation of the Bulgarian National Bank, took part in an organized online event by the National Bank of Lithuania on “Regulatory sandbox”. The meeting focused on sharing good practices in building innovative financial products. In order to minimize the risks and build well-functioning services in a real business environment, through the much-needed reliable and secure support from the relevant national supervisory authority.

The FSC continues to build on what has been achieved so far in terms of creating an innovation-friendly business environment, with an emphasis on the need for collaboration between regulators and business to create a developed fintech ecosystem.

The event program for 2022 builds on the achievements of the Financial Supervision Commission so far in support of fintech solutions and their entry into everyday life.

FSC with a warning about investments in financial instruments issued by issuers related to the Russian Federation, which are subject to restrictive measures and sanctions in connection with the situation in Ukraine

The Financial Supervision Commission makes recommendations to the participants in the capital market for increased vigilance and the implementation of an enhanced risk management policy before proceeding with investments in financial instruments issued by issuers related to the Russian Federation. The scope of the warnings also includes issuers and counterparties whose production, supply chains and end markets are strongly linked to the Russian Federation.

The actions taken by the FSC are in the context of the complicated international situation and the imposition of sanctions and restrictions by the EU, USA, Canada, UK and other countries on the Russian Federation, the Russian Central Bank, credit institutions and companies and individuals.

The international tensions that have led to sanctions and restrictions on the Russian Federation are another challenge for international financial markets. However, the Financial Supervision Commission is confident that all companies in the capital market will be able to successfully deal with the situation, respecting the interests of their customers and working to maintain the stability of the capital market in Bulgaria.

FSC Warns of Crypto Company Hijacking

The Financial Supervision Commission (FSC) warns of a dangerous practice in the crypto sector about so-called “crypto company hijacking.” These cases involve the registration of company managers in the Commercial Register without the knowledge of the actual owners, through the use of forged documents.

This is stated by Desislava Laskova, Director of the “Regulatory Regimes of Investment Activity – Investment Intermediaries and Crypto-Asset Service Providers” Directorate at the FSC, in an interview with Darik Radio. According to her, such fraud schemes pose serious risks both to the licensing of the companies concerned and to unlawful actions carried out in their name, including the taking out of loans.

The interview is conducted at a moment when the period for CASPs applications is ending and is established a significant difference between the regulated financial sector and parts of the crypto business, which until now have operated in a largely unregulated environment. At the same time, we also see growing commitment on the part of companies to bring their activities into line with the new rules, which is an important step towards building a more mature, transparent and sustainable crypto-asset market.

Against this background, the FSC is already applying the European MiCA Regulation, which introduces a single legal framework for crypto-assets in the European Union. A transitional period applies until 1 July 2026, after which providers operating without a license will no longer be allowed to operate on the market.

The FSC is the competent authority for the supervision of crypto-assets in Bulgaria, with the exception of electronic money tokens, which fall under the supervision of the Bulgarian National Bank.

Out of eight license applications submitted:

  • one company has already been licensed (investment intermediary);
  • three applications are currently under review;
  • four companies have been refused at the completeness check stage due to the absence of a substantial portion of the required documentation and communication issues.

“Through a circular letter, we invited companies to meetings, which is an established communication practice of the Financial Supervision Commission. Our aim is to maintain an open dialogue with the sector and to provide concrete guidance to companies on how to prepare their licensing documentation so that it fully complies with the requirements of the MiCA Regulation and the national regulatory framework,” Laskova notes.

The FSC reminds market participants that the licensing procedure takes between 4 and 6 months. Therefore, companies wishing to continue operating legally after the end of the transitional period should submit their documents no later than 16 February.

The full interview is available here.

More information on the crypto-asset market and the regulatory activities of the Financial Supervision Commission can be found in the dedicated crypto-assets section on the FSC’s official website:
https://www.fsc.bg/kriptoaktivi/