Bank of Russia sums up results of first year of non-qualified investors’ testing
In total, 6.13 million investors took part in the testing from its beginning until September 2022. As many as 1.92 million people completed the tasks. Some of them passed tests on several financial instruments. Overall, 4.68 million tests were passed, with 55% of the investors being successful in their first attempts. However, some investors made four and even more attempts to pass a significant part (24%) of the tests.
These are the results of the monitoring commissioned by the Bank of Russia and conducted by the National Association of Securities Market Participants (NAUFOR) and the National Finance Association (NFA). The monitoring is based on a survey of the largest brokers.
Questions about the specific features and risks of Russian unlisted stocks, foreign stocks and leveraged transactions turned out to be the most difficult ones. Most often the tests were taken on these instruments.
The share of failed and incomplete attempts to pass the tests increased from 48% in 2022 Q1 to 78% in 2022 Q3. This may be due to the fact that more experienced investors were apparently tested in the first months after the testing was launched. Besides, since September it has become more difficult to pass the test by simply going through possible answers.
Notably, investors who failed to pass the test, as a rule, refused to purchase complex financial instruments and hardly used the right ‘to have the last word’, that is the opportunity to make the desired transaction for a limited amount. The monitoring results also show that the number of those who used the so-called ‘grandfather clause’, which gives the right to buy a complex instrument without testing, if the investor already dealt with it before 1 October 2022, has steadily decreased.
The testing is aimed at helping unqualified investors assess their knowledge and possible risks, and make informed investment decisions. Its procedure is determined by the basic standard for protecting the rights and interest of brokers’ clients.