Key conditions of brokerage servicing to be clarified to investors by brokers
The Bank of Russia recommends that all brokers develop a brief summary for clients that contains key contract terms written in plain language. Brokerage agreements typically represent very lengthy documents, where it is difficult to find the essence.
Investors need to know what operations can be performed on their instructions and at their expense on stock exchanges, as well as in the OTC market, and also, whether brokers are entitled to use clients’ assets in their interest. It is important that people planning to earn money in the stock market are aware of the fact that they will need to obtain the status of a qualified investor or pass tests in order to make transactions with certain instruments. Besides, the broker’s resume should specify service fees and terms of leveraged transactions. Clients should be notified about the procedure for, and timeframes of, terminating a brokerage agreement and settling disputes. An address for submitting complaints and appeals should also be indicated.
The broker should focus clients’ attention on the absence of any guaranteed profitability of investing and on the risk of losing all money and getting into debt.
This information may be included in the application for adhering to the agreement or presented as a separate document. The Bank of Russia recommends that all brokers obtain signed confirmations from their investors to the effect that they are familiar with this information.