How it works
How does the investor protection mechanism work?
In accordance with Article 3, Part 2, Point 4 of the Investor Protection Law of the Republic of Latvia in case the investment brokerage company cannot fulfill its obligations against the investor, the investor is entitled to compensation in the amount of 90% of the value of irretrievably lost financial instruments or losses caused by an unexecuted investment service, but not more than EUR 20,000. This does not apply to cases where investors have suffered losses due to changes in the prices of financial instruments or financial instruments have become illiquid.
Latvijas Banka determines the procedures and time limits for the disbursement of compensation. The compensation shall be disbursed to those investors who have applied for the compensation for outstanding liabilities. An application for compensation must be submitted within one year after the investor has become aware of the failure of the investment service provider to meet its liabilities, but not later than five years from the date of fulfilment of the liabilities. The disbursement of compensation shall be carried out in three months after the date of the decision on recognition of an application as justified.
The compensation shall be disbursed for:
financial instruments according to the market price of the financial instruments owned by investors on the date of establishing a failure of the investment service provider to meet its obligations;
funds not qualifying for the guaranteed compensation under the Deposit Guarantee Law.
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