What documents are required for trading in stocks
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The value of stocks fluctuates. Stock prices don't necessarily move in line with a company's current earnings. The economic development of the company expected by market participants can also be reflected in them, both positively and negatively. The prices of shares also depend on other influences that have little to do with the company itself. For example, the overall economic situation or the political situation in a country can affect the course. In the event of poor corporate or macroeconomic development, the share price can fall. Eventually, if the company goes bankrupt, the stock can become worthless. The money invested would then be lost. It therefore makes sense never to invest all of your assets in the shares of a single company, but rather to invest your money in different securities and thereby spread the risk.
Retail investors shouldn't just check the prices of the past few months before buying a particular stock. Before investing, do as much research as possible on the company. And decide rationally, and not based on supposedly hot tips, where to invest your money and how much.
In order to be able to buy, hold and sell a share, you need a so-called deposit account. A custody account also causes running costs. You can save money here if you find out about the fees and costs of banks beforehand. These fees and costs are listed in the so-called list of prices and services. This also contains information on the so-called transaction costs, i.e. the costs and fees that are generally incurred when buying or selling a share. You should therefore check the price and service specifications carefully and, if necessary, compare different offers.
If you have decided to buy or sell a share, your bank / advisor is obliged to provide you with all costs related to the purchase or sale of your share in good time in advance by means of so-called ex-ante cost information - independently whether you buy or sell the stock without advice or with advice.
Calculate whether there is still anything left of a return. Only the costs are certain, the return is not!
Note: As a buyer, you are responsible for finding out whether the price of a share is justified. This can be difficult for retail investors. Therefore, you should first familiarize yourself with the respective industry and with this form of investment before you decide to invest in stocks.
If you receive advice on a share from a bank, the bank must provide you with a brief and easy-to-understand information sheet. This lists the basic characteristics and risks of a product. For shares that are traded on an organized market at the time of the investment advice, a standardized information sheet can be used instead of this information sheet.
In addition, the advisor must provide you with a so-called suitability statement. In the suitability declaration, the advisor must state why this stock / product suits you, i.e. why it is suitable for you. As a customer, you will also receive another document from your bank, the so-called ex-ante cost information. This shows what costs and ancillary costs arise in connection with the purchase of the product / share. Make sure you insist on receiving these documents!
Often, however, information on a share is also made available on the Internet, for example on the company's website under the heading “Investor Relations”.
For shares that are to be offered to the public or admitted to trading on a regulated market, a securities prospectus approved by BaFin or a securities information sheet ("WIB") approved by BaFin must be published. This is stipulated in Article 3 (1) of Regulation (EU) 2017/1129 for the prospectus and Section 4 of the Securities Prospectus Act, WpPG for short, for the WIB. BaFin checks whether the prospectus is understandable and complete or whether the WIB is complete. It also ensures that the prospectus does not contain any internal contradictions. So it checks its so-called coherence - but not whether the content of the prospectus is correct and whether the company and provider are reputable.
With traditional banks, you usually buy (and sell) your shares in writing, by fax, telephone or the Internet. In contrast, direct banks that operate over the Internet only accept your orders over the Internet or by telephone.
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