SPB Exchange is looking for opportunities to work in new conditions
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On November 6, the St. Petersburg Exchange launched trading in only a portion of Russian shares. The platform explains that the suspension of trading in foreign securities is necessary for compliance procedures; consultations will last at least seven days. Brokers have already begun to introduce restrictions for clients on working with the exchange. Analysts believe that the impact of American sanctions can be estimated at 1–1.5 billion rubles. shortfall in operating income per year, and we are not sure that the platform, which until now has specialized in trading foreign securities, will be able to exist in its previous format.
The St. Petersburg Exchange (came under US sanctions, see Kommersant on November 3) on Monday, November 6, began trading only in some Russian securities – for 28 positions. Earlier, on November 2, the exchange announced that it plans to begin exchange trading on November 6, without specifying that we are talking only about domestic securities. More than 60 Russian securities are listed on the site, as well as over 2 thousand shares and depositary receipts of foreign companies and ETF securities.
On the day the St. Petersburg Exchange was included in the American sanctions list, trading in foreign and Russian shares was suspended at 18:00. At the same time, OFAC issued a license to exit the securities of the St. Petersburg Exchange until January 31, 2024. The exchange itself claims that the imposed sanctions will not affect client assets. On that day, shares of the St. Petersburg Exchange fell by 19% during trading on the Moscow Exchange.
On Monday, the exchange said it was taking all possible actions to provide access to assets, taking into account the restrictions imposed. As explained, trading in foreign securities has been suspended in order to carry out compliance procedures: the St. Petersburg Exchange is interacting with Russian and foreign counterparties to establish a procedure for action in the current conditions: “We expect that consultations will take at least seven working days.” At the same time, according to a Kommersant source, on Friday, November 3, a meeting was held at the St. Petersburg Exchange with professional participants in the securities market, where they were told that the site would need three weeks to find a way out of the current situation.
Meanwhile, brokers began to introduce restrictions in connection with sanctions against the St. Petersburg Exchange. Digital Broker will allow clients to independently close margin positions on foreign securities on the St. Petersburg Exchange until November 7. BCS increased the risk rate on American securities. Finam said that at the moment they do not plan to limit trading in securities on the St. Petersburg Exchange and transactions can be made until the end of January 2024. Freedom Finance, according to Frank Media, has stopped clients’ access to the Kazakh ITS trading platform. St. Petersburg Exchange owns a share in its capital.
According to a Kommersant source at a large brokerage company, on the day the sanctions were imposed, an option was mentioned to transfer large clients to the Bank of New York (BONY) and close them there. BONY is one of the key depositories and settlement counterparties for the St. Petersburg exchange.
Managing Director of Ivolga Capital Dmitry Alexandrov believes that in the current situation it is necessary to appoint market makers who will themselves buy assets from retail investors and then transfer them to higher depositories for sale at international auctions. In terms of compliance procedures, according to Mr. Alexandrov, they are necessary to separate client money from the money of the exchange itself.
In general, falling under sanctions calls into question the possibility of trading American shares on the St. Petersburg Exchange, the turnover of which is the main source of income for the trading platform, points out Igor Dodonov, an analyst at Finam Financial Group. Over the past year, the St. Petersburg Exchange has made active efforts to diversify its business by launching trading in instruments of friendly countries, and this situation will be another incentive to accelerate this process, he believes.
If the exchange cannot find an opportunity to continue trading American shares, it will be very difficult to quickly replace potentially lost income, Mr. Dodonov believes. According to independent analyst Andrei Barhota, the financial impact of American sanctions can currently be estimated at 1–1.5 billion rubles. lost operating income per year. In terms of strategic development of the St. Petersburg Exchange, it is likely that the Exchange will reorient itself towards transactions with ruble instruments, corporate clients and settlements with friendly countries, he believes.
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