It is essential that you are aware that all investments involve some degree of risk. Starting to invest on the VIAINVEST platform for a better and more safe experience, we advise you to evaluate your financial knowledge, aimed goals and take a close look at risk factors that are shortlisted below.
VIAINVEST has precociously taken all reasonable risk management steps designed to ensure the necessary investor protection.
Investor Protection
Products suitability
At VIAINVEST we really care about the Investors welfare, therefore we ask you to provide information about your investing knowledge and experience to make it possible for us to evaluate if the products and services are appropriate for you. We encourage you to respond to the questions, after that you will get information about your Investor’s category and products suitability from us.
Investor category
VIAINVEST will attribute investor’s category to each Investor. The investment firm license requires us to assign investors one of three MiFID II status categories (retail client, professional client, or eligible counterparty) to make sure they receive the appropriate protection and support for the level of experience and knowledge. If you don’t agree with the category assigned to you, please apply for a category change by contacting the Customer Support team.
Investors Protection Mechanism
The funds of investors will be kept in a VIAINVEST segregated bank account, ensuring the safety of these funds and separating VIAINVEST own funds from investors’ money.
As from the investment brokerage licence day investor protection mechanism applies which is imposed by the state prescribing the compensation of up to EUR 20,000 for each individual investor according to the requirements of EU Directive 97/9/EC. Please take into consideration that the investor protection mechanism applies only to investments in securities. The protection mechanisms and benefits do not apply to existing investments in claim rights or loans, but all investments made in claim rights or loans will remain active in investors’ portfolios until they reach their due date.
Risk factors and mitigation
However, risks can coincide with other events under certain circumstances, such as economic downturn, geopolitical and global issues, or financial crises etc. In that case, a stronger impact might affect the investor’s finances. Therefore we very kindly ask you to read all associated risks carefully and evaluate if you are in a position to bear these risks without undue difficulty. If required, seek advice from our support or an independent and professional consultant before deciding to invest.
Liquidity risk
The cash flow for the investments in claim rights or securities is mirrored with the cash flow of the consumer loans. The borrower can fail to make scheduled payment, and then Investor will not get the investment repaid on scheduled time.
The loan originator shall undertake to perform payments in case of a delay in the borrower’s payment schedule according to the assignment agreement/loan agreement or according to the provisions of the Base Prospectus. If the loan originator does not fulfill its obligations, investors can face a liquidity gap, especially if they rely only on payments from investing in claim rights or securities.
In case of the loan originator’s insolvency, investors have the same right to receive their investment as other creditors of the relevant group following applicable regulatory enactments.
How to decrease the risk?
- Investors should consider investing in claim rights or securities with the Buyback Guarantee or additional guarantee.
- Investors should diversify the investment portfolio by investing in claim rights or securities backed with different loans and across different loan originators.
Income level is not guaranteed
The Borrower may repay the principal amount at any time or the consumer loan agreement might be canceled by parties that ensure early repayment of the claim rights or early redemption of the securities. If prevailing rates are lower at the time of the repayment, an investor may not be able to reinvest the proceeds in comparable claim rights or securities at an effective interest rate as high as the interest rate in the previous period, and the real return on the investments could be lower than the initially planned return.
How to decrease the risk?
- The investor should configure their Auto-invest functionality to invest in claim rights or securities that match its investment goals.
Risks related to Loan Originator
Although loan originators as part of risk management have implemented creditworthiness assessment and scoring procedures that are used when assessing granting the consumer loans, the loan can still not be repaid on time by the borrower.
For investments in claim rights and asset-backed securities published on the platform, there is a loan originator's buyback obligation. For investments in claim rights only, if the loan originator becomes insolvent or cannot ensure buyback, JSC "VIA SMS Group" will undertake its liabilities against the investors. In case either loan originator or JSC "VIA SMS Group" faces difficulties in performing its obligations under the buyback or guarantee obligation, investors may suffer losses and not receive invested funds in entire or part.
How to decrease the risk?
- The investor should always get acquainted with information about the loan originator and guarantor - JSC "VIA SMS Group", including a Base Prospectus for the securities offered, financial reports, or any other financial information available. VIAINVEST recommends subscribing to the investors newsletter, where all significant events and information appears as soon it becomes relevant.
Risks related to third-party providers
VIAINVEST cooperates with several service providers such as banks, consulting companies, marketing agencies, premises owners, issuers, etc. Any inability to maintain existing business relationships with third-party providers might affect performance. Also, third-party's failure to maintain the quality of their services or otherwise provide their services to VIAINVEST may have a material adverse effect on its business, financial condition, results of operations or cash flows.
How to decrease the risk?
- VIAINVEST selects the cooperation partners with utmost responsibility and constantly monitors the quality of received services as well as the overall service provider’s performance.
Currency exchange risk
Investments are performed in EUR currency. If investors measure their investment returns by reference to a currency other than EUR, an investment will entail foreign exchange-related risks. Among other factors, the possible significant changes in the value of the EUR relative to the currency by reference to which investors measure the return on their investments. VIAINVEST has no control over economic, political, and other factors. Furthermore, depreciation of the EUR against the currency by reference to which investors measure the return on their investments could cause a decrease in the effective yield of the relevant investment below their stated interest rates. It could result in a loss to investors when the return on such investment is transferred into the currency by reference to which the investors measure the return on their investments.
How to decrease the risk?
- At the moment, investments on VIAINVEST are available only in EUR. Therefore, investors should measure their return only in EUR currency. However, VIAINVEST is looking for opportunities to add other currencies in the future.
Operational risks
IT risks
Our IT strategy is based on utilizing the most sophisticated technologies and solutions available on the market. Therefore, VIAINVEST intends to continue making substantial contributions into IT systems and to adapt its operations and software to support current and future growth. VIAINVEST is required to continually upgrade its global IT system, and any failure to carry out such upgrades efficiently may result in the loss or impairment of its ability to do business or in additional remedial expense. In addition, there can be no assurance that VIAINVEST or loan originators will be able to keep up to date with the most recent technological developments due to financial or technical limitations. Any inability to successfully develop or complete planned upgrades of IT systems and infrastructure or to adapt its operations and software may have a material adverse effect on VIAINVEST business, financial condition, results of operations or cash flows.
How to decrease the risk?
- We are devoting significant time and resources to protect our systems from breach or failure to ensure VIAINVEST platform is working in order.
Human error risks
In performance of its rendered services, VIAINVEST relies, among others, on its employees, and this may increase the chances of losses due to human errors.
How to decrease the risk?
- VIAINVEST ensures updated procedures and regular training for employees. Access to the resources and IT systems are strictly limited, also, VIAINVEST regularly provides security measures evaluation and takes necessary actions to prevent costly accidents.
Regulatory and compliance risks
There is a risk that any change related to laws and regulations may have a negative effect on VIAINVEST or loan originator, because both are subject to laws and regulations in countries they operate in. Therefore, the ability to carry out its business might be affected – for example, a regulatory change could restrict the products and services the companies can offer in the future.
How to decrease the risk?
- VIAINVEST carefully evaluates every loan originator before adding it to VIAINVEST platform by performing due diligence check.
- VIAINVEST became a licensed investment brokerage firm supervised by the Latvijas Banka the central bank of Latvia. During the transition period, VIAINVEST will gradually shift from selling claim rights to listing asset-backed securities. A successful transition will provide a state-guaranteed investor protection system.
Tax related risks
The tax legislation of the investor’s country of residence and/or of the loan originator’s or Issuer’s country of residence may have an impact on the income received from the investments in claim rights or securities. Therefore, it is advised for the investor to assess the tax liabilities arising from the investments in claim rights and acquisition, ownership and sale of the securities.
How to decrease the risk?
- We highly recommend seeking independent and professional tax advice to evaluate tax-related risks, as possible solutions and risk management for each investor may vary.
Risk management
As investment platform professionals, we provide our investors with secure and fast access to the marketplace where claim rights are sold which will be replaced with the asset backed securities in the nearest future.
VIAINVEST is a licensed investment brokerage company
This means VIAINVEST has to comply with regulatory requirements and it is supervised by the Latvijas Banka the central bank of Latvia.
VIAINVEST has put significant efforts into increasing the quality of investment services and improvement of business processes to develop IT systems in accordance with growing market demand.
Skin in the game and Buyback Obligation
Loan originators have a "skin in the game", meaning they always keep at least 5 of each loan, so investors will never be fully committed to a particular loan backing the asset-backed securities.
We care about the transparency and assurance of our investors therefore all asset-backed securities on the platform are covered with Buyback Obligation, while the claim rights sold on the platform are covered with Buyback Guarantee.
Auto-invest
Auto-invest permits an investor to set rules for the platform to be used as the basis for all automated future investments. After setting preferred rules, our system will automatically make investments in loan contracts/securities matching rule sets once they become available for investments. Auto-invest settings can be easily changed or stopped at any time by accessing the investor profile. Auto-invest allows to save time and make the investment process more effective but does not exclude an opportunity to make manual investments in parallel. Investors can also diversify investments by creating several auto-invest portfolios.