Issue link: https://maltatoday.uberflip.com/i/1297549
maltatoday | SUNDAY • 11 OCTOBER 2020 12 COMMERCIAL MFSA's new investor awareness campaign: What do you need to know before investing? THE Malta Financial Services Authority's role is not limited to the Authorisation and Su- pervision of financial services providers. One of its key stra- tegic objectives is to empower consumers through education, allowing them to make informed decisions when purchasing fi- nancial products and servic- es Consumer education and consumer protection are inter- twined, given that an educated consumer is one who is empow- ered to take an informed deci- sion. In order to continuously ed- ucate consumers of financial services, the Authority has just launched an Investor Aware- ness Campaign targeting con- sumers of financial services and retail investors, which will provide current and future in- vestors with all the necessary information that will enable them to invest safely and avoid potential pitfalls. The main thrust of this infor- mational campaign is to pro- vide clarity on the differences between regulated markets and non-regulated markets, which is a crucial distinction for those who may just be starting out in the investing world. Regulated markets, such as in the case of the Malta Stock Exchange, have to be licensed and authorised by a financial services Authority, which, in Malta's case, is the MFSA. This means that any enti- ty that wishes to be listed on this market has to apply with a designated board, known as the Listing Authority, and go through a vetting process be- fore being allowed to trade on this market. If it is accepted, all the relevant information about the entity will be made pub- lic, and it will then be given a unique identifier known as an ISIN, which means that con- sumers will have no problem differentiating the entity from any others that may have sim- ilar names. In the case of non-regulated markets, on the other hand, there is no independent body providing any form of over- sight. Non-regulated markets, such as in the case of a Mul- tilateral Trading Facility, can be self-regulated, which means that, although buyers and sell- ers have to abide by the rules of that particular market, en- tities can just apply to join the market without having to go through any form of assess- ment process that would In- crease the risk element. With regulated markets like the Malta Stock Exchange, the Listing Authority also vets the applicant's prospectus, which is a formal document that in- cludes all the details about the investment, including any risks that are associated with it. On the other hand, the absence of a vetting stage in unregulated markets means that it may be impossible for one to be certain that all required information has been disclosed in the pro- spectus. Ultimately, the decision of where to invest is made by the prospective investors but it is important to ensure that they are doing so in an informed manner, and not out of a lack of adequate knowledge or aware- ness. It is through campaigns such as this that the MFSA is providing investors with the opportunity to obtain all the information required to make an informed decision. Malta Today reached out to the MFSA's Front End Rela- tionship Manager, Anthony Tomaselli Chetcuti, who list- ed a number of criteria that all consumers of financial servic- es should keep in mind before committing to any investment: Research It is vital that you find out all there is to know about a prod- uct or entity before investing in it. Deep, thorough research prior to investment is essential to ensure that you don't end up with any unpleasant surprises at a later stage. Read the fine print Take a close look at all the details and ask any questions you feel might be necessary to make sure that there are no hidden charges or fees that you may have been unaware of. Watch out for celebrity en- dorsements Do not make the mistake of confusing celebrity endorse- ment with investment advice. An endorsement by a celebrity or public personality does not necessarily mean that any par- ticular product provides a solid investment opportunity. Al- ways take the time to carry out your own research and investi- gate all the facts before moving on with an investment. Inform yourself It is crucial to make sure that all decisions taken are informed ones, which means that they are backed up by an awareness of all the relevant facts and de- tails. This is the motive behind educational programmes like the MFSA's Investor Aware- ness Campaign, because un- informed decision-making can lead to unpleasant conse- quences. Take the time to in- form yourself before starting your investing journey. Education The more educated and in- formed an investor is, the more they can decide where and how to invest. If certain aspects or potential risk factors seem too complex to understand, you should seek advice from a li- censed investment firm or ad- visor so as to better understand whether to move on with the investment or not. Be aware of the risks Ultimately, all forms of in- vestment carry some degree of risk. Do not try to ignore this, but rather, take steps to under- stand the risks involved, and whether they are acceptable to you. Diversify It is always better to spread out the risk by investing in multiple products rather than risking all your funds in one product. Diversification is a key component of investing since if one of your investments fails, there will still be others to fall back on. The world of investing is an exciting realm that no one should feel excluded from. At the end of the day, the impor- tant thing is to make certain that any forays into this field are informed ones, accompa- nied by research and facts. For more information visit www.mfsa.mt/investoraware- ness or contact the MFSA on the Freephone 8007 4924.