Investment services types
Inecobank CJSC is a dealer in the short-term bonds market issued by the RA Ministry of Finance and Economy and Central Bank of Armenia. Inecobank CJSC offers intermediary and custodian services in the RA state and corporate bonds market. Inecobank CJSC offers the following services within the scope of investment services.
1. Brokerage services
- acceptance of instructions from the customers on executing transactions by securities;
- execution of transactions by securities in its name or on behalf of the customer;
- execution of transactions by securities on its behalf or in its name;
2. Securities custody services
- Registration of rights and liabilities against the Customer;
- Acting as a nominee of Customer’s securities;
- Opening and administering separate depo account for the Customer;
- Miscellaneous services in terms of custody of securities and envisaged by law.
Conditions, methods and terms of payments execution by the Customer
The Bank charges commission fee from the customer against the services rendered by the Bank according to the “Tariffs of rendering securities transactions execution services”. Fees envisaged by Tariffs are charged by the Bank from the outstanding amount of the customer’s bank account via which the corresponding transaction is executed. Commission fees for rendered services are charged from the account of the customer upon completion of the transaction.
In the event of absence of necessary amount of money on AMD account, the due amount is charged from the foreign currency account of the Customer at an average exchange rate formed in the financial market announced by the Central Bank of Armenia.
Procedure and terms of contacting Customers
Information exchange between the Bank and the Customer is performed in paper, telephone and electronic way via fax or e-mail. Information exchange is performed through representative having corresponding authorities. Messages are sent by the address agreed between parties.
Duly infilled instruction (hereinafter referred to as the application) submitted by the customer with the aim of concluding transactions by securities is handed to the Bank in writing in 2 (two) copies by the customer or its authorized representative personally. In order to participate in the primary allocation auction the application is submitted no later than 1 day before the auction until 16:00. In order to participate in the stock exchange trade purchase and/or selling instruction is submitted to the bank no later than before 10:00 of brokerage session.
Agreement effective period
“Brokerage services rendering agreement” is an unlimited agreement. It cannot be terminated before completion of mutual calculations. The issue of agreement termination is settled through bilateral negotiations in cases and procedures defined by the agreement.
Procedure of returning the funds of the Customer upon agreement termination
Upon agreement termination the outstanding amount available on the Customer’s depo account is transferred to a depo account registered with another sub-custodian of the Customer on the basis of instruction by the Customer before close of operational day, while depo account is closed.
Types of securities in which Customers funds can be invested
The Bank renders acquisition and realization services of State (Treasury) short-term bonds and CBA bonds in the primary and secondary market (including through brokerage trade) on behalf of the customer and/or its applications as well as renders Investment services in the secondary market (including through brokerage trade) in terms of State mid-term and long-term, corporate bonds.
State bonds are issued by the RA Ministry of Finance and Economy and Central Bank of Armenia in the name of the Republic of Armenia and are secured by the whole state property. Short-term, mid-term and long-term bonds are issued by the RA Ministry of Finance and Economy. The repayment period for issued short-term bonds are up to 12 months, for mid-term bonds is 15 months up to 5 years and for long-term bonds it is 6 years up to 30 years. Bonds can be acquired by legal and physical entities.
Bonds differ in following types:
- Zero coupon bonds or discount bonds which assume one payment in any future date/repayment day. The amount of that payment is called nominal cost. Those are considered to be the RA State Short-term Bonds.
- Coupon bonds which assume coupons payments in proportion equal to nominal cost set for the bond in equal time periods before the repayment of the bond. Those are considered to be the RA State Mid-term and State Long-term Bonds.
Risk in connection with the transaction execution in the securities market
Any investment made in the securities assumes risk in its nature. Upon making transactions in the securities market the investor comes across to the following risks:
- Risk of financial tools prices change
Securities market prices and their changes are not under the control of the Broker. For mentioned reason upon investing in securities Customer’s portfolio value reduction is possible.
This risk is connected with the decrease of interest of other participants towards this tool. The liquidity of the financial tool depends on corporate actions of issuers, their financial-economic activity, and general market status, internal rules of stock exchange and trade platforms which can influence negatively on the price of that particular financial tool consequently on the portfolio value of the Customer as well.
This risk is connected with the actions by the state authorities and bodies regulating the markets as a result of which the Customer can be exposed to some losses.
This risk is connected with the activities of depositaries, stock exchanges, settlement-clearing organizations, as stoppages in those bodies can bring to the change of value of Customer’s assets (value of both funds and securities).
- Risks connected with the usage of electronic trade systems
Those risks are connected with the occurrence of problems with computer equipment, software failure, power supply, problems with regard to internet providers, connection interruptions and etc., which can generate change in the volume of Customer’s assets.
Procedure of transactions execution, orders and instructions acceptance and performance
Duly written instruction (hereinafter referred to as the Application) is submitted to the Bank by the customer or its authorized party in 2 copies for the purpose of concluding transactions by securities. Upon submission of the Application, customer considered to be a physical entity submits its passport, while customer considered to be a legal entity submits only the Application and the authorized party submits the identification document and the letter of attorney. In the event the Application is accepted by the Bank, one copy of the Application is returned to the Customer with the signature of corresponding employee of the Bank and “Application is accepted” notice on it.
Upon declining the Application, its one copy, with the signature of corresponding employee of the Bank and “Application is declined” notice as well as notice substantiating the declination on it, is returned to the customer. Applications are executed by their submission sequence unless otherwise is defined by the “Agreement on rendering brokerage services” concluded with the customer.
Classification of Applications by the Customers
- Market order – order on immediate execution of securities purchase/selling at market price.
- Limit order – order on execution of securities purchase/selling at a price defined in the application (at more “favourable” than the market price). Upon purchase at a price fixed in the application or at a cheaper price, upon selling at a price fixed in the application or at a higher price.
- Stop order – order on execution of securities purchase/selling as a market price and after immediately the moment when the market price will reach the activation price fixed in the Application (“worse” price than the market price).
- Conventional application – activation of any unconventional application and execution under corresponding conditions after immediately the moment when other application designed for initial execution fixed in the conventional application will be executed or other conditions determined in the conventional application will occur.
- Classification of applications according to the execution terms: before particular date or within particular period, before execution or before recall.
Transactions execution location
Transactions and operations by securities are executed in the primary and secondary market (by stock exchange trade as well).
Policy aimed at prevention of conflict of interests
Upon execution of instructions by the Customer the Bank acts based on the impartiality, punctuality principles and principles of mandatory informing on the transactions performed by the customers’ securities and funds. For the purpose of preventing the interests of the Customer, the Bank employees are obliged:
- to consider the Customer’s interests prevailing against the Bank’s and personal interests while concluding transactions according to the order by the Customer in the event of occurrence of possible events of conflict of interests,
- not to execute transactions contradicting the Customer’s interests the final goal of which is the enhancement of volumes of commissions fees and other payments charged from that particular Customer,
- to perform transactions executed based on the instructions by the Customers at professionally high level,
- to avoid concluding such transactions which can have negative influence on the Customer,
- not to perform personal transactions of the Bank, order of the Bank employees, of the Bank-related parties or any Customer, having been submitted under the same essential conditions, earlier than another Customer’s order with the exception of cases when the execution of this transaction is based on the Customer’s interests and does not interfere the execution of the order,
- unconditionally follow the maintenance of service information, information exchange between the divisions in compliance with the requirements envisaged by the RA legislation and internal procedures of the Bank,
- not to consult the Customer on concluding any transaction in the securities market if its final goal is the establishment of favourable conditions to conclude transactions in accordance with the interests of the Bank or which contradicts the requirements under the RA legislation regulating the activity of parties rendering investment services,
- to comply with the requirements under the RA legislation and internal legal acts of the Bank regulating this field.
List of required documents to use the rendered services
- Documents for opening an account,
- ‘Questionnaire on evaluating the willingness and competence level of facing investment risks by the Customer ՚
Upon execution of transactions in compliance with the requirements under the agreement concluded between the Bank and the customer THE RISK WITH REGARD TO TRANSACTIONS ASSUMES THE CUSTOMER. The Bank SHALL NOT REIMBURSE losses carried by the customer if those weren’t caused as a result of unfair behaviour of the company.