How not to burn a broker
Recently, due to lower interest rates on bank deposits, more and more people are starting to pay attention to alternative sources of additional income – financial instruments such as stocks and bonds. Both those and others are known to be traded on the stock exchange and it is there that one can buy and sell them fairly easily and simply. However, a private investor cannot go directly to the exchange. Direct access to stock trading are only professional participants of the securities market – brokers, dealers and trustees.
If the investor-individual wants to make transactions on the stock exchange, then he needs to contact exchange brokers. If you are going to trade independently, then you need to contact the broker, and if you want to transfer your funds to trust management or buy shares of any mutual funds (mutual funds), then directly to the trustee (this, by the way, is not a separate person , and a specialized legal entity, that is, an organization) or to its agents.
numbering-small.pngWe choose a broker
Step 1: decide on the tools
First you have to decide what tools you will work with. Not all brokers provide access to tools in all markets. Suppose you decide to buy Eurobonds of the Ministry of Finance of the Russian Federation. They are quoted in dollars and euros, and their yield can reach even 5% in foreign currency! After all, it can be a very interesting, profitable and, most importantly, reliable investment! But there are not so many brokers that make it possible to conclude transactions with this instrument in Russia. The majority of brokers specialize in stock markets, a little less than them in the bond market, even less in the stock futures and options market. And only a few dozen that allow their customers to trade and enter into transactions with foreign shares.
Where can I see these brokers? There are a lot of different ratings on the Internet and they are easy to find, but first of all you need to look for them, as they say, “from the original source”, that is, on the Exchange website. If you are going to trade Russian instruments (stocks, bonds, derivatives), then you can go to the Moscow Exchange website moex.com. If you are going to buy yourself good foreign shares, then you will need access to trading on the St. Petersburg Stock Exchange investor.spbexchange.ru. List of brokers who give access to the St. Petersburg Stock Exchange.
2: Choose a broker
Choosing from a list of 3-5 potential brokers who could, in principle, open an account, proceed to the second step. Here you should go through several stages.
First, first look at which of the chosen brokers you work in your city. Not all brokers are represented in every region. Although it is worth making a small reservation: you can now open a brokerage account remotely, without visiting the office, if, for example, you are registered on the website of public services. And yet most often at least once, but you have to go to the office of a broker. By the way, here you can understand how comfortable this office is for you personally, how well and clearly managers communicate with you, etc.
After visiting the offices, the range of potential brokers will narrow even more. And now you can really start choosing. Do not be lazy to go to the website of the broker and see the following things, which must necessarily be available on the site – license and tariffs. In addition, you will need to take into account a couple of other nuances: how easy and fast it is to withdraw funds from a brokerage account and with which legal entity you will enter into an agreement. Now in order.
numbering- small.pngLicensing license
All brokers must be licensed to conduct brokerage activities. Until September 1, 2013, the Federal Service for Financial Markets (FSFM) was engaged in broker licensing, from September 1, 2013, the Bank of Russia (CB RF) does this. Without a license, any operations on Russian stock exchanges with Russian and foreign securities, as well as on the derivatives market are prohibited. A bank that has a license from the Central Bank of the Russian Federation, but does not have a broker’s license, also does not have the right to work with clients on the stock market. That is, it should be a license specifically for brokering in the securities market. Pay attention to the period of validity of this license – in no case should it be expired!
Brokers are obliged to disclose information about tariffs to their clients, it should be available to anyone. If you did not find it, do not be too lazy to clarify where it is located, from the broker’s managers by phone, email or in any other available way.
If there is no information about tariffs and the broker refers to some force majeure circumstances or temporary difficulties, then run away from this broker. In this case, any doubts — whether to do or not to do — are always interpreted in favor of “not doing.”