Investing and associated risks

It is extremely important to us that investors on the TWINO platform are well-informed about the investments they can make, and risks associated with it, to make confident investment decisions and get the best out of their experience with TWINO. While the below description highlights the nature and risks related to investing on the TWINO platform, we urge you to carefully consider whether such investments are suitable for your knowledge and experience in the financial markets, your financial situation, and your investment objectives.

Available type of investments

Asset-backed securities

The securities are formed by combining 10 or more loans into a single pool of loans. The underlying loans within the same pool might have different start dates, maturity and nominal values, yet they will always have similar characteristics such as loan type (i.e. consumer), interest rate, and type of guarantee. With this investment model the investment is proportionally divided between all loans in the pool, financing the whole loan pool or a part of it.

Loan pools flow

Claim against the Borrower

With this investment model, investors can invest in each loan separately by financing the whole loan or a part of it. Please note that claims against the borrower do not fall into the category of financial instruments and are therefore not subject to investor protection mechanisms.

Assignment flow

Consider risks before deciding to invest

Investing always involves undertaking risks. Investors should carefully consider the risks related both to the Securities and claim rights described below and the other information contained in the Base Prospectus of the specific loan originator before deciding to invest. Even though TWINO strives to do the best possible risk management, investors should be aware that the value of their investments could decline due to any of these risks, and Investors may lose (a part of) their investment.

Investors should, among other things, consider the Risks related to the Securities and trading market:

Risks associated with investing

Repayment risk

Securities and claim rights are backed by the underlying loan portfolio. In addition to that, there are two types of guarantees - the BuyBack Guarantee and the Payment Guarantee - that provide an investor protection mechanism to prevent loss of capital should the borrower fail to make repayments. By investing in Securities or claim rights that do not offer the guarantees, the investor is subject to the risk of credit default which may result in full or partial loss of the invested principal amount. Should the loan originator become insolvent, the investors have the right to receive the payment of the outstanding principal amount of the Securities or claim rights and the interest accrued according to the relevant laws governing the insolvency process.

Liquidity risk

TWINO does not guarantee the minimum liquidity of the invested amount prior to the initially agreed term has expired. Investors should take into account that there may be difficulties in selling Securities or claim rights in the secondary market, which might lead to selling at a discount to liquidate the funds. Discount rate and premium are capped to a maximum of 20% change from the nominal value.

Price risk

Investments are repaid for their nominal value, yet the fair value of the Security or claim rights might significantly differ from its nominal value as the price of the investment in the secondary market may fluctuate in the range of 20% from its nominal value.

Tax risk

Tax rates and tax payment procedures applicable at the moment of purchase of Securities or claim rights to the tax residents, non-residents of Latvia, and residents of other countries may change. TWINO does not compensate for the increase in taxes to investors.

Loan originator risk

The main risk factors that influence the Loan Originator are related with macroeconomics risk, market risk, credit risk and operational risk, including legal and information technology risk. Multiple risk factors should be considered in particular in relation to each Loan Originator’s business and industry that are described in more detail in each specific Base Prospectus.

Currency risk

Investments with Currency Exposure functionality come with currency risk and allow investments in loans that are pegged to the loan issuing country’s local currency. As a result, clients get exposure to the foreign exchange rate fluctuations and any failure to manage the foreign exchange risk may have a material adverse effect on the investment.

Geographical and regulatory risk

The Loan Originator’s operations are subject to regulation by a variety of consumer protection, financial services and other state authorities, including, but not limited to, laws and regulations relating to the provision of payment services, consumer crediting and consumer rights protection, debt collection, and personal data processing. Failure to comply with existing laws and regulations applicable to the Loan Originator’s operations, or to obtain and comply with all authorizations and permits required for its operations, or adverse findings of governmental inspections, may result in the imposition of material fines or penalties or more severe sanctions, including preventing the Loan Originator from continuing substantial parts of its business activities, suspension or revocation of the licenses, or in criminal penalties being imposed on the officers.

Issuer and other intermediary risk

The main risk factors related with the Issuer are operational risks related with dependency on services provided by third parties, dependency on information technology systems, cyber security risks and security breaches and legal risks that should be considered in particular in relation to each Issuer’s business that is described in more detail in each specific Base Prospectus.

Operational risk

TWINO faces and manages operational risk which summarizes the uncertainties that day-to-day business activities bring. This risk can result from breakdowns in internal procedures, people and systems. Operational risk is managed with help of well-developed internal processes and procedures ensuring the risk is managed accordingly in a timely manner, including risk identification, measuring and evaluation, risk monitoring, and control, risk reporting as well as actions taken for risk mitigation, avoidance, or acceptance. The main risk factors are dependency on third-party providers and information technology systems as well as legal risks that should be considered in particular.

Risk Management

Risk Management is an integral part of the overall management processes at TWINO. The main objective of risk management is to ensure effective overall risk mitigation. TWINO Risk management strategy is consistent with all TWINO's business activities. For more detailed information on the financial instrument and risks associated with investing, as well as how TWINO manages the risks, please see the Base Prospectus of the respective loan originator.

TWINO is a licensed investment brokerage company

This means that we must be compliant with very stringent regulatory requirements and are monitored by the local regulator, the Financial and Capital Market Commission (FCMC) of Latvia.

Strong and experienced team that does the risk management for you

TWINO has been in the lending business for over 10 years and has developed highly efficient risk management and credit scoring algorithms, which combined with our team’s outstanding know-how lets us make the best decisions regarding business partners, lending markets, and clients.

Automatized investment tools

Diversification is one of the key techniques to reduce risk by allocating investments across various instruments. And what better way is to do so than by letting our Auto-Invest tool spread your funds into various investments.

The Suitability and Appropriateness Assessment

You must partake in the assessment so that we can identify which of our offered products correspond to your professional and investment experience with various financial instruments, your financial situation as well as an investment strategy, and risk appetite.

Warnings and limitations

If some of the services and products do not match your investment goals or the risk is higher than preferred, we will occasionally show you warning messages, and/or you will not have access to some of the products that have been identified as not appropriate or suitable for you.