Timur Khromaev,
Chairman of the National Securities and Stock Market Commission
A real professional will be interested in your financial situation before offering something. He is like a doctor who needs to understand your level of financial health, your shortcomings or what you are complaining about.
The search for an investment intermediary should start with the official website of the National Securities and Stock Market Commission nssmc.gov.ua and official information databases such as Smida.gov.ua. and in addition, in professional financial publications that have sufficient information about various intermediaries. Resources such as Bloomberg or Reuters are global publications, so information about local markets will be harder to find there.
In order to check whether an intermediary is licensed or not, you need to use the official website of the NSSMC, but not only the register of licensees, but to ask about its reputation, to find out what violations were, what is its history, who is behind this intermediary, who are its owners, what its financial position is. Then you should find out their professional activities: what they do, what services they offer, whether they have mobile solutions for you, and so on. Will they provide you with the information and analytical support you need for your investment decisions? Do they have some kind of conflict of interest? Asking the intermediary, as they say “on the forehead”, about their interest in selling certain instruments, you will understand what to sell. Try to make your intermediary interested in your financial situation and understand the level of risk you are willing to take.
All these are parts of the picture that you need to form about the intermediary to work confidently in the financial market for years, not weeks, months. This is important because due to the effects of crises and economic upsurges, investment activity must be calculated over years.
What are the signs of a professional intermediary?
If your potential investment adviser does not request information about you – this is a very alarming first call. The requirements of professional activity in the market are based on the fact that intermediaries must examine you. Examine your financial situation, your level of risk, your level of awareness, so as not to sell you very complex financial instruments that you may not need at all. For example, these are some financial instruments that are offered by forex dealers, as well as binary options, futures contracts. They sound very tempting to someone, but don’t rush to imagine yourself as a super dealer or a “wolf from Wall Street.” You need to be more conservative, ask for more information to understand each other, and provide precision and clarity of your own positions, goals, and ways to achieve them.
And what about the problems with the intermediary?
If there is a problem or you believe that your rights have been violated – you can always contact the NSSMC, make an information request or file a complaint. All your information requests and complaints will be processed by the regulator, appropriate research will be conducted and steps will be taken to find out if there have been violations of your rights, how complex these violations are, and, in any case, you will receive an assessment of the mediator’s actions.
Possible actions of the NSSMC: warnings, caution, fines, which, by the way, are very high and this is fully consistent with European practice. An intermediary may even be deprived of a license.
However, the regulator still has limited rights to criminalize more powerful enforcement against intermediaries if they deprive you of money by selling you some poor quality financial products. So unfortunately in Ukraine we will not be able to return your money as regulators in other countries can. Unfortunately, the law enforcement agencies will also not be able to provide effective and quick justice against those who deprived you of money. But we are doing a lot to change the legislation and bring it in line with European norms and standards. Mediators should not treat your money with their own money. This is one of the basic principles – ensuring the so-called segregation of money, your money from intermediaries. And so that the regulator can find your money anywhere in the world and return it or at least reduce the damage that have been caused to you through illegal actions.
But keep in mind that investors suffer the most not from illegal actions, but from poor quality recommendations, from very risky activities and poor investment decisions
What are the signs of fraud?
Today, Ukraine is in fact a world-class magnet for swindlers. How to avoid fraud:
A true professional intermediary will be interested in your financial situation before offering something. He is like a doctor who needs to understand your financial health, what your shortcomings are or what you are complaining about.
Taking into account that the level of development of the Ukrainian financial market is quite low, the number of financial instruments can be counted on the fingers of one hand. But it’s probably good for beginners. Do not rush to be interested in exoticism – invest in something very simple, for example, government bonds.
And remember the three basic tips:
Source of information: CFA Society Ukraine
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