Everything a novice Securities Trader should know

There are more and more active entities on the capital market that have a long-term interest in managing money for their clients themselves, without having to pass it on to other financial institutions. The best way to take care of clients’ money without having to enter into contracts with other financial institutions is to set up your own securities trader (ST).

A securities trader’s license allows you to buy and sell different assets to clients, depending on what products the ST wants to offer himself. Read on to learn how to set up a securities trader, what the legislative and operational requirements are, and what software should the ST work with.

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Establishment of a securities trader

The very establishment of a securities trader consists mainly in obtaining a permit to provide investment services from the National Bank. It is more of a legislative and formal process. It can usually last from nine months to one year.

However, a company that has decided to manage clients’ money itself must meet various operational requirements in addition to legislative requirements. These requirements will have a more fundamental impact on how the client’s assets are managed and what results the securities trader will achieve in managing the assets.

Legislative requirements 

  • The shareholders of a securities trader should be trustworthy persons with a clear and transparent business plan. I.e., what services and for which clients the trader is interested in offering.
  • The credible origin of the assets from which the establishment and start-up of the securities trader will be financed.
  • The persons who will perform key tasks for the securities trader must be professionals with sufficient professional experience.
  • The company’s processes recorded in the internal regulations of the securities trader and the documentation between the trader and their clients must always be in accordance with the latest legislative changes not only of Slovak law, but also of EU law.

 

More detailed information on the legislative requirements for the establishment of a securities trader can be found on the NBS website, or in §54 et seq. Securities Act no. 566/2001 Coll.

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Operational requirements

Setting and applying operational requirements is of practical importance for acquiring assets for administration and achieving the results of a securities trader.

  • What products and to whom will the securities trader decide to offer. Whether these are standard products and forms of asset management, or does the trader want to use modern types of management.
  • What distribution options does the securities trader want to use for their products. Whether a trader wants to use financial agents or state-of-the-art information technology, such as apps, online client contracting with client identification via video, or a combination of distribution via financial agents using modern technology.
  • The securities trader must carefully consider what employees and with what experience and skills they must have in order to be able to offer their products to clients. It depends on whether the clients receive professional services with the expected result.
  • Depending on what products for which clients and how the trader wants to provide, requirements will arise as to what software they will use to perform their business.

 

The information system is currently the most important means of production for a securities trader. It allows them to manage clients’ assets and investments, but above all to have an overview of them and to evaluate them correctly.

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Software requirements

  • The software should be used for more than just data records such as complete client data, contractual documentation of clients’ cash and property accounts and complete records of securities and transactions that the clients carry out with them.
  • The software should be the main source of information for the trader about what services they provide to their clients and in what quality.
  • It can also serve as the main communication channel between the trader and the client and, if necessary, between the financial agent and the client.
  • In accordance with the latest trends, they should be able to conclude a contract with a client online, also with the possibility of adjusting the design according to the requirements of individual financial agents who mediate for the securities trader clients.

Read how our software Stockino – financial information system for securities traders works. The system manages client data, contracts, financial or asset accounts, settles all transactions and reports to the National Bank of Slovakia.

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