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  2. Protection of Investors’ Interests

Protection of Investors’ Interests

Protection of Investors’ Interests is ensured in accordance with the Financial Instruments Market Law, the Financial Instruments Market Directive MiFID II (2014/65/EU) and the Financial Instruments Market Regulation MiFIR (600/2014).

Since 1 January 2002, the Investor Protection Law (available in Latvian) has been in force in Latvia. It guarantees investors compensation of 90% of the irrevocably lost value of financial instruments or losses resulting from the non-performance of investment services, up to a maximum of EUR 20,000, if a licensed investment company is unable to meet its obligations towards the investor. Under this law, each investor is entitled to compensation for irrevocably lost financial instruments or losses caused by the non-performance of investment services.

A non-performed investment service is an investment service that an investment company has accepted for execution but has partially or fully failed to perform, resulting in financial losses to the investor or irrevocable loss of financial instruments due to actions, omissions, or criminal activity of the investment company. If necessary, Latvijas Banka organises and supervises payments of compensations, reviews the validity of compensation claims, and ensures the payout of compensation.

Compensation is not paid for transactions related to money laundering, nor in cases of contracts with special conditions where performance has caused deterioration of the investment company’s financial position. The Law does not provide compensation when financial losses are caused by changes in the market value of financial instruments or a lack of liquidity. More detailed information about the Law and its specifics is available on the LB website.

MiFID II

MiFID II aims to make financial markets more efficient, resilient, and transparent, while ensuring the highest level of investor protection in transactions involving financial instruments. MiFID requirements are incorporated into the Financial Instruments Market Law.

MiFIR

MiFIR is binding for all European Union member states and sets rules and guidelines for transaction execution and transparency in trading financial instruments.

Use of MiFID II and MiFIR includes:

  • establishing pre-trade and post-trade transparency requirements for transactions with financial instruments
  • client categorisation (retail client, professional client, eligible counterparty)
  • prevention of conflicts of interest
  • ensuring best execution, i.e., achieving the best possible result for clients in financial instrument transactions

Before making any decisions regarding the use of financial services, please carefully review and assess the main risks associated with trading financial instruments. Trading certain financial instruments may result in a loss greater than your initial investment.