Mintos is pleased to announce that Notes will be launching via the platform on 25 May 2022.
In anticipation of the upcoming launch, Mintos has put together “some key information regarding the transition from the current set-up to investing in Notes.”
As a licensed investment firm, Mintos created the financial instruments Notes, “which allow investors to invest in loans in a fully regulated environment.”
Key benefits for investors reportedly “include the safeguarding of investor assets, investor protection scheme, a suitable and appropriate product offering, and increased transparency.”
On 25 May, the first Notes will “launch on Mintos, marking the beginning of the transition period.”
Up until 30 June, investors will be able “to purchase both claims via assignment agreements (the current set-up) and Notes.”
Then from 1 July, Mintos says it “will switch to Notes only.”
As explained in a blog post, the way investors will invest on Mintos will “remain largely unchanged, except for a few details.” As noted in the announcement, this will help with “paving the way for investing in loans in a regulated environment.”
Last year, Mintos became “a licensed investment firm, and we created Notes as regulated financial instruments.”
Notes allow investors “to invest in loans in a fully regulated environment with increased investor protection and transparency.”
Mintos been working on submitting multiple base prospectuses for the Financial and Capital Market Commission’s (FCMC) approval, and “now that the first are approved, Notes are ready to be launched.”
If you’d like to find out more about Notes in general, the team at Mintos suggests reviewing their previous Overview of Notes or the FAQs on Notes.
At present, investors can “only invest in loans on Mintos by purchasing claims via assignment agreements.”
Whereas with Notes, investors will be able “to purchase loan-backed securities – bringing investments in loans up to the standard of mainstream financial markets.”
From 25 May, the first Notes will “become available on Mintos – marking the beginning of the transition period where the purchasing of claims will be phased out step by step.”
Up until 30 June, investors will be able “to purchase both claims and Notes. Then from 1 July, investors will only be able to invest in Notes.”
Mintos also mentioned that “all investments made by acquiring claims before 30 June will remain unaffected and run as usual until the respective loans are repaid.”
Key benefits for investors on Mintos
Once the platform introduces Notes, “the most significant change for investors will be the additional layers of investor protection and transparency that come into effect.”
As explained in the update, Mintos is “required to hold all Notes and investor funds separately from its own funds, subject to the requirements of MiFID II.”
These requirements “safeguard investors by ensuring Mintos keeps accurate records and accounts that distinguish all Notes and investor funds from any assets owned by Mintos.”
As part of this, Mintos “reconciles its internal records and accounts regularly and takes steps to ensure it has adequate organizational requirements to minimize the risk of loss for investors.”
As an authorized investment firm, Mintos is “a member of the national investor compensation scheme.”
Established under Directive 97/9/EC, the scheme “protects investors by providing compensation if Mintos fails to return financial instruments (in this case, Notes) or investor funds to investors.”
The scheme “covers situations that typically arise from operational errors, for example, if Mintos is involved in fraud or administrative malpractice or if Mintos goes out of business.”
The maximum compensation an investor “can claim under the investor compensation scheme is 90% of their net loss, up to a maximum of €20 000.”
Importantly, the scheme “does not protect against investment risk, for example, poor performance of underlying loans, borrower default, or lending company default.”
As part of being regulated, Mintos must “ask all investors to complete an assessment that deems how suitable and appropriate the investment offerings on Mintos are for them.”
When Notes launch on 25 May, they were “required to offer ways of investing deemed suitable and appropriate for an individual investor, based on their answers to the assessment.”
This ensures investors “don’t take on excessive risk – as investing on Mintos isn’t risk-free. So for investors wanting only to preserve capital, for example, our offering wouldn’t be considered suitable.”
In addition, the responsible investing requirement also “comes into effect.”
Based on an investor’s circumstances, they’ll be able “to invest using automated investing strategies up to a particular investment amount to protect them from excessive risk.”
If you find that your circumstances have changed since you last completed the assessment, you can “update your answers at any time in the Suitability & Appropriateness section of your account profile.”
Investors will have access “to in-depth prospectuses and “Final Terms” documents covering information about Notes.”
Prepared under Prospectus Regulation and approved by the FCMC, a Mintos Notes base prospectus aims “to help investors make well-informed investment decisions.”
It provides details “about the risk factors, general information about the underlying loans, the lending company, Mintos, and general transactional information.”
Details that aren’t included in the Mintos Notes base prospectus but “are required by Prospectus Regulation are in the Final Terms, such as details about the underlying loans (for example, currency and loan terms).”
Also included in the Final Terms is “a unique International Securities Identification Number (ISIN), provided by Nasdaq CSD SE’s regional central securities depository.”
ISIN codes are “the most popular global securities identifier, which help create clarity and accuracy when trading, clearing, and settling investments in securities.”
The currently approved base prospectuses are already available for viewing via the FCMC website.
For more details on this update, check here.