Brokers ask not to overload clients

At the NAUFOR conference, brokers spoke out against increasing the property qualification for obtaining the status of a qualified investor. Market participants believe that the reform will have a negative impact on the market, including leading to a decrease in liquidity and migration of clients to other jurisdictions. The Bank of Russia is not yet ready to abandon the changes, but allows a number of relaxations – in particular, an increase in the transition period and the use of annual income as a new criterion.

At the “Ural Conference “Russian Stock Market””, which is held by NAUFOR in Yekaterinburg, brokers spoke out against raising the property qualification for qualifying investors. As follows from a study prepared by NAUFOR, the change in the criterion from the existing 6 million rubles. up to 12 million will make it impossible in the future to obtain status for 42% of investors, an increase to 24 million rubles – for 47% of investors.

By mid-2023, the number of broker clients on the Moscow Exchange was 25.9 million, of which only 617 thousand people had the status of a qualified investor. According to NAUFOR, their share in the total turnover of the stock market is about 60%. Qualifiers play a key role in ensuring the quality of the order book (buy and sell orders.— “Kommersant”)” on the stock market and the derivatives market of the Moscow Exchange, and also make a significant contribution to liquidity in other markets. However, more than two-thirds of their portfolio is invested in instruments available to a wide range of investors.

Experts also criticize the reform of qualification criteria. “Further tightening of obtaining status looks inappropriate and reduces the potential involvement of citizens in investments in the stock market,” says independent financial analyst Andrei Barkhota.

According to Oleg Chikhladze, director of the brokerage business BCS World of Investments, the short-term consequences will be a decrease in liquidity, migration of clients to other jurisdictions, and an increase in the risk premium; medium-term – lack of assets to attract capital, lack of incentives to respect the rights of minority shareholders; long-term – low level of household financial assets in relation to GDP and, as a consequence, a high burden of social expenditures on the budget.

The Bond Owners Association advocates for expanding qualifications based on knowledge rather than property qualifications. “If it is worth assigning a qualification based on the amount of capital, it should take into account the total assets of the investor, including his shares in the business, real estate, etc. The share of assets held in banking and market products should not be decisive,” they say.

In addition, according to Oleg Chikhladze, the reform “does not have predetermined criteria for success,” and the principle of establishing qualifications raises questions: “If we recalculate the size of assets for qualification in developed markets, taking into account the median salary, the threshold would be from 5 million to 9 million rub.”.

Financial authorities are ready to soften their position, but only partially. Thus, the director of the financial policy department of the Ministry of Finance, Ivan Chebeskov, proposed simply postponing the tightening of the qualifications. The head of the consumer rights protection service of the Bank of Russia, Mikhail Mamuta, allowed the qualifications to increase a year after the adoption of the law instead of the previously assumed 180 days. In addition, the possibility of a gradual increase is being considered: first from 6 million to 12 million rubles, and after a year – to 24 million rubles. The Central Bank is also ready to discuss the investor’s income criterion – at the level of 6 million rubles. in year.

At the same time, the regulator intends to adjust the list of financial instruments available to unqualified investors. This may affect structured products with capital protection, shares of some closed-end mutual funds, and a number of collateralized bonds.

The Bank of Russia does not argue that the reform should have a clearly defined goal, for example, in the form of the size of household assets to GDP, but they have not yet outlined it. NAUFOR President Alexey Timofeev believes that the discussion on reforming the criteria for qualified investors is “far from complete,” and the association plans to “continue discussing various initiatives with the Central Bank.”

Ksenia Kulikova