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What Are The Rules For Placing Orders And Pricing

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Execution principles and instructions

Banks, savings banks and financial services institutions must take sufficient precautions when executing their orders in order to generally achieve the best possible result for you (best execution). The criteria for the best possible execution are above all costs, speed and probability of order execution and processing.

At which trading venues and according to which criteria your bank basically executes the securities orders, you can see their execution principles. Depending on the trading venue, you have the option of adding special instructions to your order. For example, you can specify a maximum purchase price and stipulate that your securities are only sold above a certain minimum price. In addition, you can hedge against declines to some extent by setting a stop-loss level. The sale is automatically triggered when the price reaches or falls below the set mark. Talk to your advisor if you are not yet familiar with these order additions. Direct banks in particular will expect you to determine for yourself at which trading venue your securities order will be executed. However, you will then receive information on the relevant trading venues that will make this decision easier for you.

Partial executions

Depending on the trading venue and the size of your securities order, your order may not be executed in one go. Your bank has no influence on this. Therefore, before placing an order, check whether your bank charges the (minimum) fee for the execution of the order for each individual partial execution or only once in such cases.

Pricing for certificates and warrants

To improve the tradability of warrants and certificates, market makers often place bid and ask bids. These offers can be made in on-exchange and over-the-counter trading. There is no legal requirement to set the prices of the offers according to a certain financial mathematical model. The pricing on the stock exchanges is based on the orders or quotes available there, taking into account the relevant stock exchange rules. The trading surveillance offices monitor proper pricing on the exchanges. You can contact them if you suspect irregularities. Depending on the trading venue, transactions that were concluded at a price that was not in line with the market can be subsequently canceled under certain conditions.

Cut-off times for mutual funds

If you do not purchase your fund units on the stock exchange, the cut-off times are important to you. These indicate by when you must place your buy or sell order so that your order can still be executed at the next issue or redemption price. The cut-off times set by the capital management companies can be found in the fund’s sales prospectus.

Be careful if …

  • You are recommended to buy securities or derivatives in a screaming manner – no matter by whom.
  • the market price of a share is low – even that price is not necessarily worth it.
  • you are recommended to buy securities without substantiating this recommendation with comprehensible facts.
  • You receive an unsolicited call and the caller urges you to buy securities or you receive faxes or e – mails from strangers about supposed bargains.
  • the profits that are promised you are extremely high. There are high profits only with high risks, in the worst case you risk total loss!
  • When buying options, participation certificates and other bonds, always keep in mind that you are initially only given one promise for your money – unlike with shares, with which you acquire a valued company share.

Before you buy, take action yourself by …

  • Check that the source from which the recommendation to buy securities comes is reputable and that a real business address is given.
  • Check what other known reputable sources are saying about the security.
  • check whether the numbers and statements are plausible or hot air.
  • Pay attention to the conflicts of interest in the fine print of the recommendation.
  • inform yourself about the recommended company, its solidity and its business policy. Ask for a securities prospectus or securities information sheet, an investment sales prospectus or investment information sheet or – in the case of packaged investment products – a key information sheet. Serious providers will usually be able to meet your request. If you cannot find sufficient information or do not understand what is being explained to you about the investment on offer, leave it alone.

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