Securities Transactions What You Should Consider As An Investor

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Basically: First, think about the goals you are pursuing with your securities investment and whether these are in line with your financial needs. What is the value of the security, profitability and liquidity of the investment to you? These considerations should always play a role in your decisions, especially if you want to invest in securities as part of asset protection and not speculate. Before making an investment, check your investment strategy critically and find out more about the contractual partner and the capital investment offered.



Would you like to invest your money in securities – for example in stocks, bonds, certificates or investment fund shares? Then you have to open a custody account, for example at your house bank. If you want to invest in mutual funds without exception, then in many cases you also have the option of opening your custody account directly with the capital management company. You can also buy shares in the investment funds of other companies from individual management companies.


You don’t just rely on the recommendations of your advisor and prefer to choose your securities yourself? Then it is important that you clarify which securities you can buy in which markets before opening a portfolio. For example, ask your institute whether you can also buy units in investment funds on the stock exchange and what the fees are.


Note: Nobody is obliged to conduct securities transactions for you free of charge. This also applies to the safekeeping of your securities. You should therefore carefully read the cost information that you receive from your institute. It could be helpful to read the price list. Compare different offers, for example reputable consumer magazines that regularly publish price comparisons can help you.

Deposit transfer

Are you no longer satisfied with your bank? Then you can have your securities transferred to another bank. Note that such a deposit transfer takes a little longer than a money transfer. But ask if not all securities have been transferred after three to four weeks.

Depot protection

Are you wondering what your rights would be if your custodian bank went bankrupt? The securities that your bank holds in custody for you generally remain your property or in an equivalent legal position. If the custodian bank becomes insolvent, you have the right to segregation under the insolvency regulations. You are therefore entitled to the surrender of the securities. You must register this claim in writing with the insolvency administrator.

The same applies if you have invested your assets in investment funds and have the investment units held in custody by the capital management company. If the capital management company becomes insolvent, the investment units held for you in your fund custody account do not fall into the company’s insolvency estate, but must be returned to you.

What (information) obligations apply to securities transactions?

The obligations of companies in the securities business – for example with regard to questions of information – are not uniformly regulated. That is why it is crucial for you to know who you are dealing with.

Investment services company

If it is an investment services company – this includes banks, savings banks and financial services institutions – the following applies: Your partner must provide you a broad variety of details to make an educated investing decision. This includes, for example, information about the functionality and the risks of the various types of financial instruments, i.e. above all securities or investments (e.g. limited partnerships, profit participation rights), but also information about costs. You must be informed of all the costs incurred by your investment and their effects on the return. Donations that are paid by third parties must also be disclosed. The investment services enterprise must also break down the costs for you according to the individual items, if you request this.

Speak openly if you are inexperienced or do not understand something. Check the costs and sales commissions and consider what sales interest your counterpart has in doing business with you. This is especially important when you want to decide whether you want to take advantage of commission-based investment advice or independent fee-based investment advice.

In the case of commission-based investment advice, the investment advisor may only accept benefits from the provider or issuer for a recommended financial product if the benefit is designed to improve the quality of your service, it does not conflict with the proper provision of the service in your best interests and it is unambiguous to you is disclosed.

In contrast, with independent fee-based investment advice, only you as the customer pay the investment advisor. If, nonetheless, the advisor receives inductions from vendors and issuers, the advisor must pay you full charge. It is imperative that you provide detailed details on all compensation details to reduce hidden expenses and to figure out what is the most cost-efficient solution to your job. Investment Management firms can only propose to you shares that satisfy your investment targets and are designed to take the risks and appreciate them with your experience. Your financial adviser will ask you a couple of questions to determine which shares are appropriate for you:In good time before entering into a transaction, your investment advisor must provide you with a brief and easy-to-understand information sheet about the financial instruments he recommends for you to buy. When it comes to shares in investment funds, the investment services company must instead provide you with the key investor information. In the case of packaged investment products, such as certificates and structured bonds, you have to be provided with a basic information sheet; in the case of investments, for example limited partnerships and profit participation rights, an investment information sheet. All of these information sheets summarize the main features and risks of the product.

Investment services companies must also provide you with a declaration of suitability for any investment advice – whether in a branch, on the phone or at your home. This declaration must be made available to you either in paper form or electronically. This statement explains how the advice has been tailored to your preferences, investment objectives and other characteristics. This should give you an overview of the recommendations made. These must correspond to your investment purpose, your investment horizon, your risk tolerance, your financial circumstances and your knowledge and experience. In order to rule out discrepancies right from the start, you should read the suitability declaration carefully upon receipt. Think again carefully about the recommended investment.


Public offering of securities or investments

For securities offered publicly or admitted to stock exchange trading (e.g. shares, bonds, certificates) and investments (e.g. limited partner participation, profit participation rights), companies must publish a prospectus and / or information sheet (securities information sheet, asset investment information sheet or key information sheet). This includes more detailed information on investments, the underlying business model and the associated risks.

The issuer of an investment must also send you the most recently published annual financial statements and management report on request, also in paper form if you wish. However, there are also exceptions to this obligation, for example if no more than 20 units of an investment are offered.

Investment assets

Are you considering buying a mutual fund share? Then the provider has to observe numerous information obligations towards you – before the purchase. Before concluding the contract, you must at least provide you with the latest key investor information for each fund managed, but sometimes also the sales prospectus and the most recently published annual or semi-annual report. In any case, ask for the most recently published annual or semi-annual report and for the sales prospectus with the investment conditions and, if applicable, the articles of association or partnership agreement. If a trust limited partner is involved, ask for the trust agreement. These documents must also be made available to you free of charge. Most of them can also be found on the company’s website.

The key investor information and the sales prospectus must contain all the information necessary to be able to properly assess the investment and the associated risks. The key investor information contains – in a summarized and simplified form – the most important information from the sales prospectus, especially with regard to the management company, the depositary, the investment objectives and investment policy, the risk and return profile and the costs and fees of the investment. The sales prospectus is more detailed than the key investor information and contains a range of additional information. It also contains the investment conditions and, if applicable, the articles of association or partnership agreement of the investment fund and – if a trust limited partner is involved – the trust agreement or a reference to where you can obtain it free of charge.

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