Moscow exchange discusses the fight against anomalous price fluctuations for shares of the third tier

The Moscow Exchange determines measures to combat “non-standard price movements” of third-tier shares. The possibility of discrete auctions for all securities with a significant price deviation, as well as narrower price corridors “for securities with a small free-float” (in free float) are being discussed with trade participants.

“We are discussing with bidders and the regulator additional measures to counter non-standard movements in the prices of third-tier assets. <...> At the moment, there is a discussion, so it’s too early to talk about the timing of implementation, ”said a representative of the Moscow Exchange RBC. He noted that the sites already use some mechanisms to control abnormal changes in quotations, for example, since 2019, a temporary narrowing of the price corridor has been applied with a significant deviation in share prices in the absence of any significant corporate events and news.

The Moscow Exchange also works with issuers. It is aimed at “preventing unreasonable movement of share prices, including through the involvement of market makers”, as well as greater information transparency in working with investors.

The Central Bank announced earlier in March that it was working with the Moscow Exchange on a mechanism that would avoid unreasonable price hikes for low-liquid assets. The Bank of Russia recorded a “short-term explosive growth” in prices for third-tier shares at the beginning of the year. This happened against the backdrop of increased demand from retail investors and the absence of any news from issuers. The regulator fears the formation of bubbles, which, in a negative scenario, could cause a “correction of the entire market.”

More about the problem – in the material “Kommersant FM” “Stock quotes take control”.

Leonid Uvarchev