Moscow Exchange launches autofollow – Kommersant FM

Moscow Exchange (MOEX: MOEX) plans to launch an autofollowing service. This service will allow the client to repeat transactions of an experienced strategic investor, which will be duplicated automatically. Vedomosti writes that the platform is working on launching such a project, citing its sources in large brokerage companies.

Brokers themselves have been using a similar mechanism for a long time; it is called mirror trading. It is aimed at novice investors, explained Vladislav Kochetkov, president of the Finam investment holding: “There is an experienced trader who has an account to which a number of other accounts can be connected. They will automatically repeat exactly the same transactions that are carried out on the master account. The biggest service there is is Comon. In fact, Finam has been providing an autofollowing service for more than ten years. Tinkoff, RBKS, and the ALOR broker have similar tools.

That is, this is a fairly popular option among novice investors who are not yet confident in their own abilities and want to implement some moderately active strategies.

There is a subscription model, when the owner of the master account is paid a percentage of the users’ assets, and there is an option when he receives a share of the brokerage commission. Most often, they pay from assets, so as not to artificially encourage the trader to make a large number of transactions in order to increase their commission income.”

Analysts note that for an inexperienced player, the likelihood of making money using autofollowing is higher than with independent trading. However, the leading investor’s strategy can misfire at any moment, warned the chief analyst of the Banki.ru service, Bogdan Zvarich: “A private investor does not make transactions on his own, but uses the experience of the person who forms this portfolio to which he connects. For the player, this is an opportunity to relieve himself of the need to constantly monitor the market, devote a large amount of time to this, but at the same time his funds will be invested according to certain strategies.

If we talk about the main risks, it is worth noting that portfolios with this option will most likely be selected by private investors based on the historical returns that they have shown over some time. But it is worth remembering that it does not guarantee profitability in the future. The investor’s expectations may not be met.

Plus, for a private investor, the strategy to which he joins can not only bring profit, but also losses.

And the third, in my opinion, risk here is the inclusion of low-liquid instruments in such portfolios, which are followed by investors. It may happen that such an asset is purchased on the base portfolio, followed by transactions with those investors who follow it. Accordingly, there will be quite a lot of slippage, and the portfolio that follows the main one will be purchased at worse prices.”

Analysts at large brokerage companies believe that the development of an auto-following service is one of the first steps of the Moscow Exchange to provide investors with direct access to the site, Vedomosti writes. Previously “Kommersant” wrotethat the exchange plans to build a scheme in which there will be no such intermediary link as a broker. Now, according to the law on the securities market, only a professional participant can provide access to the exchange – this is a management or brokerage company with a license from the Central Bank. Moscow Exchange does not have such a document.

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Svetlana Belova