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Pre Listing Information (Draft)

Key Financial Information Forecast



Aimondo Group  2020 (EN)

Aimondo Group  2021 (EN)

Video Call  for Shareholders Jour Fix 

Wednesday         15. Mai 18.00 h,

Thursday            16. Mai 18.00 h und

Friday                 17. Mai 18.00 h.

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1 Aimondo AG 2022 – Financial Statements Audited (short)

IFRS Abschluss 2023 Aimondo AG

Aimondo AG Listing Application* (not released for download anymore)

*(Listing Version 0.993 EN. This document is the version provided to the Certified Advisor for the listing application. Changes may be required and incorporated due to legal reasons or statutory requirements of the Exchange. The valid version is the version that forms the basis of a listing. Contact information of the certified adviser blanked out for legal reasons)

Fire letter from investors to the investigating authority

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Risk Warning

Whoever decides always takes a risk. Acting can have undesirable future consequences.

Failure to do so, on the other hand, can mean foregoing possible advantages.

Seizing opportunities corresponds to achieving a desired state, which is to be achieved in the future.

These three statements always refer to something in the future. Future is however in principle unknown.

Influencing factors can be weighted in order to obtain a certain degree of decision security. There are known facts; there are facts that we know we know. We also know that there are known unknowns: In other words, we know that there are things that we do not know.

But there are also unknown unknowns – things of which we do not know that we do not know.

Risks, omissions and opportunities determine our lives – as do our business activities. With the introduction of artificial intelligence and machine learning techniques, Aimondo enters new levels in decision-critical areas of eCommerce. The exponential growth of eCommerce can be assumed to be safe – as can the fact that the Internet is the soil in which eCommerce thrives. We also know that the ideal price, i.e. the price of a good or service “in connection”, is a decisive criterion for success in the sale of goods and in commerce. Aimondo has a leading technology to examine the existing market on a daily basis. The intelligent systems enable a significantly higher information density and precision in information procurement. From this abundance of data, manageable data are generated which serve to determine this “ideal price”. Flexibly adjustable algorithms generate from this mixture the price positions that Aimondo customers strive for in order to achieve high turnover, sales and the best possible margins.

Through a leading position as a supplier of price intelligence for B2C online commerce, a potential is addressed that lies in the nine-digit euro or dollar range and, through its structure as a SaaS service on cloud infrastructure, provides enormous margins after reaching break even. The additional costs of growth then lie predominantly in the cost-of-sale dependent calculation area.

This is the core statement that represents Aimondo’s opportunities.

The risks that can lead to the failure to exploit opportunities can be found in environmental influences, technical and personnel factors, economic development, legal or political restrictions, competition, technical processing or scheduling problems. From today’s point of view, they are “future” and thus in principle unknown.

Important risks are pointed out below

1. Introduction to the Risk Warnings

An investment is the use of financial resources to increase assets through income. The present case concerns the investment in a company in the form of shares and/or participation certificates by investing in these securities.

Risks are an integral part of every capital investment. Before making an investment, it is essential to develop a basic understanding of the risks associated with investments, investment products and financial services. The information in this document is intended to give the investor such an understanding.

1.1 Objective

The aim of capital investment is to maintain or increase assets. The main difference between investments in capital markets and classic forms of savings such as savings books, call money or fixed-term deposit accounts is the targeted taking of risks in order to take advantage of opportunities for returns. With classic forms of savings, the amount paid in (nominal) is guaranteed, but the return is limited to the agreed interest rate.

The classical saving ranks among the most popular forms of the investment. Here the assets are mainly built up nominally, i.e. through regular payments and interest income. The saved amount is not subject to fluctuations. However, this supposed security may only exist in the short or medium term. This is because assets can be gradually devalued by inflation. If the savings interest rate is lower than inflation, the investor must accept a loss of purchasing power and thus a financial loss. The longer the investment period, the greater the negative impact of inflation on wealth.

The investment in the capital markets is to protect by the achievement of a net yield lying over the inflation level against this creeping asset loss. However, the investor must be prepared to bear the risks of the various asset classes.

1.2 Interaction of Yield, Security and Liquidity

When selecting an investment strategy and the corresponding investment instruments, it is important to be aware of the importance of the three pillars of capital investment, namely return, security and liquidity:

– Return is the measure of the economic success of an investment, which is measured in profits or losses. This includes, among other things, positive price developments and distributions such as dividends or interest payments.

– Security is geared to the preservation of the invested assets. The security of an investment depends on the risks to which it is exposed.

– Liquidity describes the availability of the invested assets, i.e. in which period and at which costs the invested assets can be sold.

The objectives of return, security and liquidity interact with each other. An investment with high liquidity and high security usually does not offer high profitability. An investment with high profitability and relatively high security is usually not liquid. An investment with high profitability and high liquidity usually has little security.

An investor must weigh up these goals according to his individual preferences as well as financial and personal circumstances. Investors should be aware with this consideration that a fortune investment, which places the realization of all three goals in prospect, is usually too good, in order to be true .

1.3 Risk Diversification

It is particularly important for capital investments not only to know and consider the risks of individual investments or asset classes, but also to understand the interaction of the various individual risks in the portfolio context.

Taking into account the desired return, the portfolio risk should be optimally reduced by a suitable combination of investment instruments. This principle, i.e. the reduction of investor risk through an appropriate portfolio composition, is referred to as risk diversification. The principle of diversification follows the principle of not putting everything on one card. Whoever distributes his capital investment among too few investments exposes himself to a higher risk, but if he makes the right decision he also gains disproportionately. By suitable diversification, the risk of a portfolio can be reduced not only to the average of the individual risks of the portfolio components, but usually also below them. The degree of risk reduction depends on how independently the prices of the portfolio components develop from one another.

The correlation expresses the degree to which the price development of the individual portfolio components depends on each other. In order to reduce the overall risk of the portfolio, investors should allocate their funds to investments with the lowest possible or negative correlation to each other. For this purpose, investments can be spread across regions, sectors and asset classes. In this way, losses on individual investments can be partially offset by gains on other investments.

2 General Investment Risks

In addition to the special risks of individual asset classes, investment instruments and financial services, there are general risks associated with capital investments. Some of these risks are described below.

2.1 Business Cycle Risk

The overall economic development of an economy typically takes the form of wave movements, the phases of which can be subdivided into upswing, high phase, downturn and low phase. These economic cycles and the interventions of governments and central banks often associated with them can last for several years or decades and have a significant impact on the performance of various asset classes. Thus, economically unfavorable phases can have a long-term impact on an investment.

2.2 Inflation Risk

The inflation risk describes the danger of suffering a pecuniary loss through currency devaluation. If inflation – the positive change in the price of goods and services – is higher than the nominal return on an investment, this results in a loss of purchasing power equal to the difference. In this case one speaks of negative real interest rates.

The real interest rate can serve as a benchmark for a possible loss of purchasing power. If the nominal interest rate of a capital investment over a certain period is 4 % and the inflation over this period is 2 %, the real interest rate is +2 % per year. In the case of an inflation rate of 5 %, the real rate of return would only be -1 %, which would correspond to a loss of purchasing power of 1 % per year.

2.3 Country Risk

A foreign state can influence the movement of capital and the transferability of its currency. If, for this reason, a debtor resident in such a state is unable to fulfil an obligation (in due time) despite his own solvency, this is referred to as a country or transfer risk. An investor may suffer financial loss as a result.

Reasons for exerting influence on the financial markets and/or transfer restrictions despite sufficient creditworthiness can be e.g. lack of foreign exchange, political and social events such as changes of government, strikes or foreign policy conflicts.

2.4 Currency risk

In the case of investments in a currency other than the investor’s home currency, the return achieved does not depend exclusively on the nominal return of the investment in the foreign currency. It is also influenced by the development of the exchange rate between the foreign currency and the home currency. A financial loss can occur if the foreign currency in which the investment was made depreciates against the domestic currency. Conversely, a devaluation of the domestic currency can result in an advantage for the investor. A currency risk exists not only for cash investments in foreign currencies, but also for investments in equities, bonds and other financial products that are listed in a foreign currency or make distributions in a foreign currency.

2.5 Liquidity Risk

Investments that can usually be bought and sold at short notice and whose buying and selling prices are closely related are classified as liquid investments. These investments generally have a sufficient number of buyers and sellers to ensure continuous and smooth trading. However, in the case of illiquid investments or in market phases in which there is insufficient liquidity, there is no guarantee that the sale of an investment will be possible in the short term and at too low a discount. This can lead to asset losses if, for example, an investment can only be sold at a loss.

2.6 Cost Risk

Costs are often neglected as a risk factor in capital investments. However, open and hidden costs are crucial to investment success. For a long-term investment success it is indispensable to pay attention with great care to the costs of a capital investment.

Credit institutions and other financial service providers usually pass on transaction costs for the purchase and sale of securities to their customers and can also charge a commission for the execution of the order. In addition banks, fund offerers or other Finanzdienstleister or mediators compute usually so-called subsequent costs, as for instance costs of the custody account guidance, management fees, issue surcharges or pay commissions, which are not evident for the customer without further. These accruing costs should be included in the economic overall view: The higher the costs, the lower the effectively achievable return for the investor.

2.7 Tax Risks

As a rule, investors are subject to tax and/or levies on income from capital investments. Changes in the tax framework for investment income can lead to a change in the tax burden. In the case of investments abroad, double taxation may also occur. Taxes and levies thus reduce the investor’s effective yield. In addition, tax policy decisions can have a positive or negative effect on the overall price development of the capital markets.

2.8 Risk of Credit-Financed Investments

Investors may be able to obtain additional funds for the investment by borrowing or lending their securities with the aim of increasing the investment amount. This procedure has a leverage effect on the capital invested and can lead to a significant increase in risk. In the event of a falling portfolio value, it may no longer be possible to service additional funding obligations of the loan or interest and redemption claims of the loan and the investor is forced to (partially) sell the portfolio. Credit-financed investments are therefore not advisable in principle. Investors should only use freely available capital for the investment which is not required for the current lifestyle and coverage of current liabilities.

2.9 Risk of Incorrect Information

Accurate information forms the basis for successful investment decisions. Wrong decisions can be made due to missing, incomplete or incorrect information as well as incorrect or delayed transmission of information. For this reason, it may be appropriate not to rely on a single source of information but to obtain further information.

2.10. Risk of Self-Custody

The self-custody of securities opens up the risk of loss of the documents. The procurement of new securities certificates embodying the investor’s rights can be time-consuming and cost-intensive. Self custodians also risk missing important deadlines and dates, so that certain rights can only be asserted belatedly or not at all.

2.11. Risk of Safe Custody Abroad

Securities acquired abroad are usually held abroad by a third party selected by the custodian bank. This can lead to increased costs, longer delivery periods and imponderables with regard to foreign legal systems. In particular, in the event of insolvency proceedings or other enforcement measures against the foreign custodian, access to the securities may be restricted or even excluded.3. the functioning and risks of different asset classes

3.1. Shares, Preference shares and Participation Certificates

3.1.1. General Information

Shares Preference shares and participation certificates are securities issued by companies for the purpose of raising equity and representing a right to a company’s equity. A shareholder is therefore not a creditor as in the case of a bond, but a co-owner of the company. The shareholder participates in the economic success and failure of the company and participates in it through profit distributions, so-called dividends, and through the development of the share price.

There are different types of shares with different rights. The most important types are ordinary shares, preference shares (referred to in Switzerland as participation certificates), bearer shares and registered shares. Ordinary shares carry voting rights and are the most common type of share in Germany. In contrast, preference shares and participation certificates do not carry voting rights. As compensation, shareholders receive preferential treatment, e.g. in the distribution of dividends. In the case of a bearer share, no entry of the shareholder in a share register is necessary. Shareholders can also exercise their rights without registration. Bearer shares are therefore easier to transfer, which typically improves tradability. In the case of registered shares, the name of the shareholder is entered in a share register. Without this entry, the rights arising from the ownership of the share cannot be asserted.

In the past, equities have shown higher long-term returns or risk premiums compared to other asset classes. It should be noted, however, that the historical performance of individual shares or share indices does not allow conclusions to be drawn about future developments. The American share index S&P 500, which comprises the shares of the 500 largest listed US companies, achieved an average annual return of 9.6% between 1928 and 2014. Over the same period, an investment in 10-year US government bonds yielded 5.0%. An investment in the Aktienin-dex thus yielded an investor an excess return or risk premium of 4.6% p.a. However, this also entailed a comparatively higher risk: Stock yields of the S&P 500 showed an average annual fluctuation margin of just under 20 %. Yields on US government bonds fluctuated only about 8 % over the same period. In the 86 years of observation, the maximum loss on an investment in the broadly diversified S&P 500 equity index was -44%; the maximum loss on an investment in American government bonds was -11.12%.

3.1.2 Special Risks

– Price risk: Shares can be traded on the stock exchange, but also off-exchange. The price of a share is determined by supply and demand. There is no calculation formula for the “correct” or “fair” price of a share. Models for calculating share prices are always subject to subjective assumptions. Price formation and price fixing depend to a large extent on the different interpretations of the information available to market participants. Numerous empirical studies show that share prices cannot be systematically forecast. Share prices are influenced by many factors. The associated risk of a negative price development can be roughly divided into company-specific risk and general market risk. The company-specific risk depends on the economic development of the company. If the company develops worse than expected in economic terms, negative share price developments may occur. In the worst case, i.e. if the company becomes insolvent and subsequently becomes insolvent, the investor may suffer a total loss of his invested capital. However, it can also happen that the price of a share moves due to the change in the overall market, without this price change being based on company-specific circumstances. Price changes that are more likely to result from general trends in the stock market and are independent of the economic situation of the individual company are referred to as general market risk.

– Insolvency risk: Since shareholders are only serviced in the event of insolvency once all other creditor claims have been serviced, equities are to be regarded as a relatively high-risk asset class.

– Dividend risk: The participation of shareholders in the company’s profits through monetary distributions is known as dividends. Just like the future profits of a company, future dividends cannot be predicted. If a company generates a lower profit than planned or no profit at all and has not formed any reserves, the dividend can be reduced or completely suspended. However, a stock investor is not entitled to a dividend even if a profit is achieved. If provisions are deemed necessary, e.g. due to expected future costs (lawsuits, restructuring, etc.) on the part of the company, it may be possible for the company to suspend the dividend despite having achieved a profit.

– Interest rate risk: In the course of rising interest rates, share prices may decline, since, for example, the company’s credit costs may increase or future profits may be discounted at a higher interest rate and thus valued lower at the present time.

– Liquidity risk: Usually, buy and sell prices are quoted on an ongoing basis for exchange-traded equities, especially for companies with a high enterprise value that are part of an important stock index such as the DAX. If for various reasons there are no tradable prices on the market, the shareholder is temporarily unable to sell his share position, which can have a negative effect on his investment. Securities that are not traded on a regulated market can generally only be traded directly between two parties or through an intermediary. This off-exchange trading, also known as direct trading, telephone trading or OTC trading, refers to financial transactions between market participants that are not carried out via the stock exchange. The term telephone trading is still in use today, even if trading is carried out electronically. OTC” stands for “over the counter” and can be translated as “over the counter”.

There are three different forms of direct trade:

– OTC trading in listed securities. These transactions are carried out as OTC transactions if the partners involved do not wish to make the transaction public. This happens in a strongly increasing degree and in high volume in dark pools. (A dark pool is a bank or exchange-internal trading platform for anonymous trading in financial products that is concluded outside the open securities trading of the exchanges. Dark pools include areas such as Forex and CFD.)

– OTC trading in financial derivatives without standardised specifications (e.g. exotic options, OTC options).

– OTC trading in securities that are not, no longer or not yet admitted to exchange trading.

Stock exchanges only offer standardised products which, however, often do not meet the hedging requirements of the trading partners. If, for example, a company wishes to hedge the interest rate risks of an investment, it will only find a suitable instrument on the stock exchanges in exceptional cases. For some of the products traded on the financial market, OTC trading is therefore more important than exchange trading, e.g. certificates, bonds, (partial) bonds, loans and participatory loans.

Online brokers also enable private investors to trade directly with an issuer or broker. In this case, the investor submits an enquiry to his online broker via the Internet about the price of the specified financial product. The issuer then announces the binding purchase and sale price for the specified quantity. The investor must then decide whether he wishes to conclude this transaction on these terms or not.


– Saving the exchange fees that would be due if the trade were carried out on the exchange.

– Individual modification of the traded product

– Speed through direct trade between both trading partners

– Bid-ask spread offers attractive margins or room for negotiation

– High flexibility enables fast product innovations


– Less control and supervision

– Possibly missing reference markets

– Only partial disclosure options for limit orders (only relevant for private investors)

– No possibility to view an order book, therefore there is only less market transparency

– Liquidity partly lower than in stock exchange trading

– Counterparty risk arises, but it can be limited by netting agreements and collateral and by clearing via central counterparties (particularly relevant for OTC derivatives).

3.2 Bonds and Notes

3.2.1. General Information

Bonds denote a wide range of interest-bearing securities, also known as bonds. In addition to “classic” bonds, these also include index bonds, Pfandbriefe and structured bonds. The basic functionality is common to all bond types. In contrast to shares, bonds are issued both by companies and by public institutions and states (so-called issuers). They do not grant the holder any share rights. By issuing bonds, an issuer raises debt capital. Securitised bonds are generally tradable securities with a nominal amount (amount of debt), an interest rate (coupon) and a fixed maturity.

As with a loan, the issuer undertakes to pay the investor a corresponding interest rate. Interest payments can be made either at regular intervals during the term or cumulatively at the end of the term. At the end of the term, the investor also receives the nominal amount. The interest rate to be paid depends on various factors. The most important parameters for the interest rate level are usually the creditworthiness of the issuer, the maturity of the bond, the underlying currency and the general market interest rate level.

Depending on the method of interest payment, bonds can be divided into different groups. If the interest rate is fixed from the outset over the entire term, this is referred to as “straight bonds”. Bonds in which the interest rate is linked to a variable reference interest rate and whose interest rate may change during the term of the bond are known as floaters. A possible company-specific premium or discount on the respective reference interest rate is usually based on the credit risk of the issuer. A higher interest rate generally means a higher credit risk. Just like shares, bonds can be traded on stock exchanges or over the counter.

The income that investors can generate by investing in bonds results from the interest paid on the nominal amount of the bond and from any difference between the buying and selling price. Empirical research has shown that the average return on bonds over a longer period of time has been higher in the past than in fixed-term deposits, but lower than in equities.

Special forms of bonds are typical forms of these largely form-free design possibilities. These include

o Bonds with fixed interest and/or bonus (participating bonds)

o Mortgage bond and

o covered bonds, or

o Convertible bonds and convertible bonds (bonds with warrants).

3.2.2 Special Risks

– Issuer/credit risk: An obvious risk when investing in bonds is the issuer’s default risk. If the issuer is unable to fulfil its obligation to the investor, the investor is at risk of a total loss. In contrast to equity investors, however, an investor in bonds is better off in the event of insolvency, as he makes debt capital available to the issuer and his claim can be serviced (in part if necessary) from any insolvency assets that may arise. The creditworthiness of many issuers is assessed at regular intervals by rating agencies and divided into Ri-siko classes. As a rule, an issuer with a low credit rating has to pay a higher interest rate to the buyers of the bonds as compensation for the credit risk than an issuer with an excellent credit rating. In the case of covered bonds, the creditworthiness depends primarily on the extent and quality of the collateral (cover pool) and not exclusively on the creditworthiness of the issuer.

– Inflation risk: Inflation risk is defined as the change in the purchasing power of the final repayment and/or the interest income from an investment. If the inflation changes during the term of a bond in such a way that it exceeds the interest rate of the bond, the effective purchasing power of the investor decreases (negative real interest rates).

– Interest rate risk and price risk: The key interest rate level determined by the central bank has a significant influence on the value of a bond. When interest rates rise, for example, the interest rate on a bond with a fixed interest rate becomes relatively unattractive and the price of the bond falls. A rise in market interest rates is therefore usually accompanied by falling bond prices. Even if an issuer pays all interest and the nominal amount at the end of the term, a bond investor may therefore incur a loss if, for example, he sells at a price below the issue or purchase price of the bond before the end of the term.

4. Foreign Currencies

4.4.1 General Information

Investments in foreign currencies offer investors an opportunity to diversify their portfolios. Furthermore, investments in the previously mentioned asset classes are often associated with foreign currency risks. If, for example, a German investor invests directly or indirectly (e.g. via a fund or ETF) in American equities, his investment is not only subject to equity risks, but also to the exchange rate risk between the euro and the US dollar, which can have a positive or negative effect on the value of his investment.

4.4.2 Special Risks

– Exchange rate risk: Exchange rates of different currencies may change over time and significant exchange rate fluctuations may occur. If, for example, a German investor invests in US dollars or in a share quoted in US dollars, a depreciation of the US dollar against the euro (i.e. an appreciation of the euro) has a negative effect on his investment. Under certain circumstances, the weakening of the US dollar can even more than compensate for a positive share price development.

– Interest rate risk: If interest rates change in the home market or in the foreign currency market, this can have a significant impact on the exchange rate, as changes in interest rate levels can sometimes trigger large cross-border capital movements.

– Regulatory risks: Central banks play a crucial role in pricing exchange rates. In addition to money supply and interest rates, some central banks also control exchange rates. They intervene in the markets as soon as certain thresholds are reached by selling or buying their own currency or by coupling all or part of the exchange rate to a foreign currency. If these strategies are changed or abolished, this can lead to significant distortions in the relevant currency markets. This was observed, for example, when in January 2015 the Swiss National Bank abandoned the determination of the minimum exchange rate of the Swiss franc against the euro of 1.20 EUR/CHF and the exchange rate fell from 1.20 EUR/CHF to 0.97 EUR/CHF on the same day.

5. Functioning and Risks of Securities Trading

5.1 Execution Principles, Selection Principles and Conflicts of Interest

Buy and sell orders are executed by the custodian bank in accordance with its special terms and conditions for securities transactions and its execution principles. If the orders are placed by an asset manager, the latter’s selection or execution principles must also be observed. In addition, the respective conditions governing the handling of conflicts of interest (“Conflict of Interest Policies”) may contain relevant provisions. In most cases, orders can also be issued directly to the custodian banks. The client’s orders may be combined with orders from other clients.

5.2 Commission and Fixed Price

Dispositions of securities made by the Bank on behalf of the customer may be effected by means of fixed-price or commission business. As part of a fixed-price transaction, the Bank sells or buys the corresponding securities directly to or from the customer at an agreed price. As part of a commission transaction, the Bank buys or sells the corresponding securities for the account of the customer so that the conditions agreed with the third party are economically attributable to the customer.

5.3 Stock Exchange and Over-The-Counter Trading

Client orders may be executed on stock exchanges or off-exchange trading venues, such as interbank trading or multilateral trading systems, and directly between the acquirer and the seller. Stock exchanges are organized and regulated markets for shares, other securities and commodities. The different types of exchanges can be differentiated according to their regulatory density (regulated market or over-the-counter market) and the type of trading (floor trading or electronic trading system).

5.4 Price Fixing

In floor trading, the so-called lead broker determines the corresponding price either within the framework of variable trading or according to a unit price. The most-execution principle applies when determining the unit price. This means that the price determined as the execution price is the price at which the largest turnover is achieved with the smallest overhang. In electronic trading, prices are determined by electronic systems according to certain rules and usually also in accordance with the most-execution principle.

A special feature of securities that are not listed on the regulated market is the Regular Price Determination Switzerland (IKR), in which OTC prices are quoted. Orders can be placed directly via the issuer, securities holder, broker or the publishing institutions in their capacity as brokers. Prices are not regularly quoted for securities available for regulated trading. OTC-listed companies are separated according to banks, mountain railways, investment companies, energy, index, industry, food and beverages, OTC-X (early stage), tourism|leisure|other and transport|transport|logistics.

5.5 Directives and Limits

Buy and sell orders are executed by the custodian bank in accordance with its Special Conditions for Securities Transactions and its Execution Principles. However, the customer’s instructions take precedence. These instructions may specify price and time limits (limits, validity periods or limit supplements). In this way, the customer can “fine-tune” the respective order.

5.6 Special Risks

– Transmission risk: If the customer does not issue clear orders, there is a risk of errors in order execution.

– Lack of market liquidity: In the absence of market liquidity, the customer’s order cannot be executed, can only be partially executed or can only be executed late.

– Price risk: A certain period of time may elapse between the order being placed and its execution. This can lead to the stock exchange price changing in the meantime.

– Suspension of trading and other protective measures: Trading may be suspended if orderly trading is temporarily jeopardized or if this appears necessary to protect investors or the issuer. In addition, trading may be interrupted due to increased volatility of stock exchange prices.

– Collective orders: They can have a negative effect on the pricing on the market or lead to a reduced allocation for the individual customer due to too large an order volume. In the latter case, the principles of order allocation of the custodian bank, the broker, the issuer and, if applicable, the asset manager apply, in which the proper allocation of combined orders and transactions is regulated, taking into account the influence of volume and price on the allocation and partial execution of orders.

6 Functioning and Risks of Financial Services

Various financial services are offered for capital investments. Before clients decide on an offer, it is very important to understand the differences and the associated typical risks and conflicts of interest.

6.1 Pure Execution Business

In the case of pure execution only, the custodian bank only acts at the customer’s instigation when executing securities orders. There is no consultation or review of appropriateness. Due to legal regulations, pure execution transactions may only be carried out for non-complex financial instruments (e.g. shares, money market instruments, bonds or mutual funds). Upon execution, the customer receives a securities settlement containing the essential execution data (in particular the type of order, the securities’ names, the number / nominal amount, the countervalue of the transaction, the place and time of execution, the execution price and the settlement date).

6.2 Non-Consulting Transaction

A transaction that does not require advice is one in which the customer makes an investment decision without first having received an investment recommendation from a qualified party. The exploration obligation of the bank, for example, is considerably reduced compared to investment advice or financial portfolio management. In contrast to the pure execution business, however, there is at least a limited exploration obligation.

6.3 Investment and Acquisition Brokerage

In the case of investment and contract brokerage, the client is not advised. Only a financial product is brokered to the customer. An examination of the suitability of the financial investment for the customer is not necessary and therefore does not take place or only takes place to a limited extent. Typically, the financial product to be procured is advertised exclusively or predominantly. The customer may erroneously get the impression that this is investment advice. The remuneration for an investment and contract brokerage usually takes place via a refund from the provider or issuer of the financial product directly to the broker, for example via a brokerage commission contained in the financial product or a premium to be paid by the customer.

6.4 Investment Advice

When providing investment advice, a professional investment advisor recommends certain securities to the client for purchase or sale. This advisor is obliged to check the suitability of the recommended capital investment for the client, taking into account the investment objectives, financial situation, risk appetite and his knowledge and experience, and to record this in an advisory report. However, the decision to implement the advisor’s recommendation must be made by the client himself. The client must act for each transaction himself and may seek further advice. The advisor is under no obligation to continuously review the investment recommendation or the client’s custody account.

There are basically two remuneration models: fee and commission consulting. The remuneration of both types of investment advice holds a potential for conflict. With the fee consultation the advisory service is charged to the customer usually on time basis directly. Thereby exists for the advisor the incentive as many consulting hours as possible to account for. With the commission consultation the service is not charged directly to the customer, because the advisor receives a commission from its employer or from the offerer of the investment product (e.g. from the fund company or the emitter of a certificate). This entails the risk that the customer is not offered the most suitable security for him, but the most lucrative one for the advisor.

6.5 Financial Portfolio Management

Financial portfolio management (also known as asset management) is fundamentally different from the financial services described above. The asset manager is empowered by the client to make investment decisions at his own discretion if they are deemed appropriate for the management of the client’s assets.

A separate custody account and clearing account is opened for the client. The client is the holder of the custody account and account and is the only person entitled to make transfers and withdrawals. The asset manager shall be given a power of attorney to dispose of securities, which entitles him to effect securities transactions in the name and for the account of the client. In principle, however, he may not acquire ownership of the client’s assets or transfer them to deposits or accounts not belonging to the client. When making investment decisions, the asset manager does not have to obtain any instructions from the client, but is bound by the previously agreed investment guidelines, which regulate his powers and the nature and scope of the service. The powers of the asset manager go hand in hand with extensive duties. The asset manager not only undertakes securities transactions for the client, but is also responsible for monitoring the portfolio.

Asset management is typically a service aimed at long-term asset accumulation or preservation. The client should therefore have a long-term investment horizon, as this increases the probability that the portfolio can recover in the event of negative performance. It is advisable to only use assets for asset management that are not required to cover the short and medium term lifestyle or to meet other liabilities.

Asset management is also associated with a number of risks for the client’s asset situation. Although the asset manager is obliged to always act in the best interest of the client, wrong decisions and even misconduct can occur. The asset manager cannot guarantee success or the avoidance of losses. Even without intent or negligence, the agreed investment guidelines can be violated by market conduct.

Asset management requires the permission of the Federal Financial Supervisory Authority ([BaFin] Germany) or the Swiss Financial Market Supervisory Authority ([finma] Switzerland) or the Austrian Financial Market Authority ([FMA Austria). In the permit application, they examine, among other things, the suitability of the management, but they expressly do not approve or approve the services or products offered.

Aimondo AG | CH 01/2019 


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