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Cuentas de valores

What are brokers and securities accounts?

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1.- What are securities accounts?

Anyone who wants to invest ininvestment funds, Actions,ETFs, bonds or other financial assets today you need a securities account. In other countries it is also called a securities deposit and the term deposit comes from the verb to deposit, which means placing assets or valuables in the custody or custody of a natural or legal person who is obliged to answer for them when they are asked A securities account is nothing more than awarehouse or a digital safe where you can store your values or financial assets, such as theActions. In the past, financial assets were printed on paper and kept either in homes or in safe deposit boxes in bank safes. Today financial assets are no longer printed on paper, but are managed digitally and therefore securities accounts are digital.

A securities account is analogous and functions like a checking account. Your checking account stores the money that is deposited in it and manages your payments and collections. Well, a securities account does exactly the same, it is responsible for showing what financial assets you own, at what price and when you bought them and what is their current price. Thanks to securities accounts you can also receivedividendsand go to capital increases, also if financial assets are bought or sold, these will be added or discounted to those you already have.

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2.- What are brokers?

It doesn't make sense to talk about securities accounts without also talking about brokers.Brokers are financial entities that are responsible for buying and selling financial assets through different platforms on the world's stock exchanges.. Brokers are the only entities that are legally authorized to buy and sell financial assets, so all private investors who want to operate on the Stock Market will necessarily have to go through a broker.

Brokers and bankswin moneyin this business usuallythrough commissions. There are custody and administration commissions, which, as the name suggests, are charged for custody of financial assets and transaction commissions that are either fixed amounts for each operation or a percentage of the money we invest.

Almost any bank offers the possibility of opening a securities account. Banks with branches offer the possibility of having a financial adviser personally deal with this task. In online banks, you are in charge of opening and managing your own securities account. Banks in turn hire a broker for the sale of financial assets.Today there are many banks, especially online banks, that have a license to operate as a broker but there are also brokers that integrate the securities account as one of their services, they are called Neo-Broker.Examples of the latter are Robin Hood in the USA or the Trade Republic in Germany and they are revolutionizing the market with very simple and very low rates as they do not need banks to attract private investors.

Between the types of banks and brokers there are many differences in terms of fees and commissions. It is worth taking some time to analyze them. To open a securities account it is usually necessary to fill out an application.

Along with the application to open a securities account, every bank or broker is obliged to ask you a series of questions to find out about your financial situation, your financial objectives, as well as your experience and knowledge of the different classes of financial assets in which What do you want to invest? Based on this information, the bank or broker limits the investment in certain types of financial assets, as well as the amount of the investment. In order to invest in the riskiest assets, a specific form is usually requested. So if you want to trade withderivative productshighly speculative, in general you will have to notify the bank in a specific way, ensuring that you are aware of the risk that this entails. Regardless of such high-risk financial products, you can invest in most financial assets such as stocks,bonds, investment funds or ETFs.

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3.- Security of securities accounts

You've probably heard that there have been stock market crashes in the past, as well as the occasional bank that has failed. That is why, when opening a securities account and starting to invest, one of the most frequent questions we ask ourselves is whether investments in financial products are safe.  Lo The first thing you should know is that thebroker or bank, in which you have your securities account,managesuch financial valueson a fiduciary basis, that is to say,financial investment productssuch as stocks, bonds, mutual funds, as well as ETFsThey are not part of your estate and cannot be used or loaned without your consent.. Therefore,the securities account remains in your name and is not lost in case the bank or broker goes bankrupt. In the event of bankruptcy, you can easily transfer your securities account to another bank or broker. It is as if you have a locker in a bank safe, where you deposit your financial products. Even if the bank goes bankrupt, you can always walk into the bank and empty your locker.

Technically speaking, financial products are not even deposited in the bank or in the broker but in the Clearing House calls, in Spanish, Central Securities Depository. The Clearing House in Spain is called Iberclear and belongs to the BME (Bolsas y Mercados Españoles). To make it easier for you to understand, the Clearing Houses are like the brokers of the brokers, who register, execute the sale, settle and manage the financial securities for the banks or brokers in the different markets. If, for example, you transfer your securities account from one bank or broker to another, your financial assets technically remain on the same platform but with a different record, indicating that those financial assets are now managed by another broker.

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4.- Omnibus accounts

So far we have seen the operation of "normal" brokers with "normal" accounts. There is a type of special accounts, called omnibus accounts or global accounts, which establish an exception to what we have discussed before. An omnibus account consists of asecurities account where all the financial assets of up to a maximum of 15 clients are grouped in the same account and the legal owner of that securities account, the one that appears in the Clearing House register,it is the broker, not its clients. The only one who can use and lend financial securities is their legal owner, but since in this case the securities are in an account in the name of the broker, it is the broker who can use and lend those shares, without their clients knowing find out. Normally nothing happens, because the broker keeps internal records to know what financial assets each of its clients have. But, logically, an internal registry is not the same as an official registry. This way of operating with omnibus accounts lowers costs, and makes brokers able to offer lower commissions to their clients.

If our broker goes bankrupt, what happens then with the financial values deposited in those omnibus accounts or with the cash that we have in the broker even without investing? Thatmoney andsayingsFinancial securities are covered by European Union ordinance up to €100,000 for each client and for each bank or broker. In Spain, the entity in charge of insuring said amount is theDeposit Guarantee Fund (FGD). To add additional security, there are banks that have come together and adhered to the Investment Guarantee Fund, also calledFogain. It is important to mention that neither the Fogain nor the Deposit Guarantee Fund cover the loss of value of the investments, the result of the normal functioning of the markets.

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5.- Advice on securities accounts

As you can see, in the vast majority of financial institutions, securities accounts are well covered and your money is safe. Here are a couple of additional tips to maximize the security of your capital:

  1. Make sure thefinancial institution is authorized and/or registered with the CNMV, since therefore it will be associated with the FGD or Fogain.If you are a foreign entity, make sure it isauthorized by the regulatory body and associated with a fund equivalent to the FGD if it belongs to a country of the European Union. Outside the European Union, it is best to find out about the regulations that protect you.

  2. Make sure thevalue of your securities account plus the money still not invested does not exceed 100,000 eurosper owner in the same entity. If you have more money, it is best to diversify among several brokers.


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