Investor conversion

As it became known to Kommersant, clients of the American Interactive Brokers (IB), popular among domestic investors, are actively switching to Russian brokers. This is largely due to the deconversion of depositary receipts into Russian shares, which can only be traded on the local market. But Kommersant’s sources also talk about additional difficulties and checks by IB. While we are talking about a limited number of brokers and thousands of clients. However, many Russian investors continue to use IB’s services despite heightened risks, including the possibility of increased sanctions.

A Kommersant source in the financial market spoke on the sidelines of the Smartlab conference about the transition of a number of Russian clients of the American Interactive Brokers to domestic brokers. The fact of the transition was confirmed by the interlocutor of Kommersant in a large brokerage company, noting that the process began in August-September and is associated with the deconversion of ADRs of Russian issuers, as well as in Tsifra broker (formerly Freedom Finance) and Oriole Capital. Other brokers not under sanctions did not respond to Kommersant.

Galina Karyakina, Operations Director of Tsifra Broker, specified that up to a thousand IB clients came to the company. “We transferred papers to us at the place of storage in Freedom Finance Europe. We convert ADRs for Russian shares with delivery to clients’ accounts in the Tochka Broker investment company,” said Ms. Karyakina. The company was also contacted by potential clients with Russian shares, as IB refused to withdraw them to depository accounts with NSD. Through a chain of nominal holding, these securities were transferred to the Russian stock exchange, “so that clients could trade them,” Ms. Karyakina explained.

According to Dmitry Alexandrov, Managing Director of Ivolga Capital, IB recommends that clients transfer securities of issuers with Russian assets, in particular depository receipts, to shares in Yandex, VK, Ozon and others.

The US broker has also stepped up checks on some clients, market participants say. According to Natalia Kondratyeva, Head of the Brokerage Services Department at Ingosstrakh-Investments, “IB began to request additional documents from Russians,” who were already experiencing “problems with currency transfers.” As a result, the risks of clients increased, including the possibility of blocking assets on the broker’s accounts. “The broker is American, subject to US law. If there are any restrictions for Russian clients on the part of the United States, then he will be forced to fulfill them promptly,” Ms. Kondratieva explained.

The increased attention of IB touched not only Russian investors. A Kommersant source close to the broker said that his clients are also moving to Kazakh Freedom Finance, as IB closed a number of accounts of the country’s citizens.

However, many Russian investors continue to use IB’s services. According to Mr. Alexandrov, in general, the broker “treats investors from Russia quite calmly, without forcing them to close their accounts en masse.”

“Investment opportunities through foreign brokers are on a completely different quality level: this is a set of available tools without the need for testing, and the geography of investment, in particular, access to more than 60 exchanges, and a variety of support services for consultants and investors,” explained the head Department of Customer Service Development FG “Finam” Dmitry Lesnov.

IB clients who have had to leave for various reasons will have to look for alternative brokers with a similar range of services. Ms. Kondratyeva believes brokers from friendly countries would be one option.

Ksenia Kulikova