The Investor Protection Programme (IPP) is a comprehensive set of features, safeguards, and measures designed to enhance investor protection and promote market efficiency across the primary and secondary markets of the ANote Music platform.
While investing in music royalties offers unique opportunities, it also carries inherent risks that may not always be immediately evident. Some catalogues may experience limited buy or sell activity, leading to potential delays in order execution or wider price fluctuations. Similarly, certain orders placed at prices significantly outside standard valuation ranges may contribute to heightened volatility. The IPP is designed to address these challenges, ensuring a fair, transparent, and stable market.
Key objectives of the IPP
The IPP is built upon four principles:
- Objectivity: All triggers, such as price deviations and liquidity thresholds, are clearly flagged using pre-defined metrics that are applied uniformly to all participants.
- Market neutrality: The platform does not set prices or guarantee specific outcomes. Instead, it provides tools and alerts that enable investors to make informed decisions.
- Clarity: To promote trust and understanding, the platform informs investors about the rules and rationale behind the IPP mechanisms.
- Investor protection: The IPP ensures a fair and orderly market environment by mitigating extreme risks.
How the IPP Works
The IPP actively monitors liquidity, volatility, yield, and valuation metrics for all catalogues listed on the platform. Key mechanisms include:
1. Liquidity monitoring- Alerts are triggered for catalogues with limited trading activity or wide bid-ask spreads, helping investors understand potential delays or execution risks.
- Investors placing orders in low-liquidity scenarios may be required to manually specify order prices and will receive alerts detailing the liquidity risk
- Dynamic price bands (also referred to as "price collars") safeguard the market from extreme price fluctuations and maintain a stable and orderly market environment.
- Price bands start at ±5% of the previous day’s reference prices and are adjusted dynamically based on catalogue-specific factors such as volume, historical price variance compared to standard valuations of similar catalogues, as well as in the event of recent royalty payments.
- In extraordinary conditions, volatility interruptions may temporarily pause trading to prevent market disruptions.
- The platform calculates and displays the historical yield of a catalogue relative to intended order prices.
- If the trade price would result in a low or negative yield, investors are alerted and given the opportunity to reconsider their pricing decisions.
- Orders that significantly deviate from indicative reference market valuations are flagged.
- Investors receive alerts detailing the deviation and may need to confirm their intent to proceed.
What does this mean for you as an investor?
The IPP is designed to:
- Improve your decision-making: Alerts and dynamic tools provide additional insights to help you better assess risks and returns.
- Enhance the stability of the market: Mechanisms such as volatility interruptions and reference price monitoring contribute to a more balanced market environment.
- Mitigate extreme risks: The IPP highlights scenarios that could involve inflated valuations, limited liquidity, or low yields, empowering you to make more informed choices.
Data sources and transparency
The IPP combines platform-specific insights with external data, including:
- Catalogue-specific data: Observed royalties, historical prices, and trading volumes.
- Industry benchmarks: Standard valuation models and transaction data for comparable catalogues.
Disclaimer
The IPP provides tools to help you assess the historical yield of catalogues relative to your intended order price. If your proposed trade price results in a significantly low or negative yield, the platform will issue an alert with details about how this compares to historical returns or standard valuations of similar catalogues. You may proceed after reviewing this information and confirming your intent. Alerts and safeguards are informational tools designed to guide investors in assessing potential risks. These tools do not constitute investment advice, guarantee specific outcomes or impose mandatory trading restrictions, except where necessary to maintain market integrity. All decisions remain at your discretion, and we encourage that you conduct your own due diligence.
Ongoing Monitoring and Feedback
ANote Music continuously updates the IPP to reflect evolving market conditions. Feedback from the investor community is highly valued and contributes to refining the IPP’s safeguards and alerts.
For further information or assistance, please contact our Support Centre at support@anotemusic.com.