Clarification of methods for investor categorization to reduce risks and maintain the interest of mass investor in the securities market

Subject. The article discusses the hypothesis that existing mechanisms for investor categorization are not always able to accurately assign an investor to one of two categories. Objectives. The purpose of the study is to implement categorization mechanisms by restricting the access of unqualified market participants to transactions involving investments in complex structured products with high level of risk, as such investments are associated with unpredictable consequences, up to and including the complete loss of capital. Methods. The study draws on methods of logical analysis, theoretical generalization, and systematization. Results. I developed recommendations for introduction of a number of new mechanisms that will enable to categorize investors and create conditions where dubious transactions are only accessible to investors with certain tenure and experience, while less experienced ones will be forced to consider other products for investment. Conclusions. Each category of financial market participants must be informed of all risks. It is crucial to work out a mechanism for transitioning an investor from an unqualified group to a qualified one.