St. Petersburg Exchange is charged with positivity – Kommersant FM

St. Petersburg Exchange is positive. For the first time in several days, the site addressed the affected investors. After falling under blocking US sanctions, the company stopped trading and decided to refrain from commenting. In its last message dated November 8, the exchange noted that any statements could negatively affect the course of negotiations with foreign counterparties and harm investors’ assets.

However, on November 10, a three-minute video with the new CEO of the company, Evgeny Serdyukov, appeared on the site’s social networks. He said that the St. Petersburg Exchange plans to carry out settlements on frozen transactions on November 13, and in general there is hope for a positive outcome:

“Market participants tried to sell their securities. Foreign intermediaries from friendly and unfriendly jurisdictions, after the imposition of sanctions, suspended the processing of any instructions for entering into transactions or moving shares and required us to carry out a compliance procedure.

We had to receive comprehensive information about settlements from foreign intermediaries. Due to the current situation, we were able to do this only on November 9th. At this moment, we launched the procedure for delivery and settlements between market participants. At the same time, we have a backlog of several unaccounted days. Because of this, the algorithms work more slowly, and we have to resort to non-standard procedures. According to our calculations, delivery will be completed on November 13th.

We turned to international lawyers in order to develop, together with them, with market participants and the Central Bank, a procedure for investors to obtain securities or sell them. Once agreed upon, this procedure will be published. We see positive prospects.”

Trading foreign shares was the basis of the business model of the St. Petersburg Exchange. After the site fell under sanctions, the head of the Central Bank, Elvira Nabiullina, said that transactions with foreign assets have always been a risk, and now mainly qualified investors have suffered. She estimates that they own about 80% of the frozen assets.

Against this background, her deputy Philip Gabunia said that the regulator sees no grounds for compensation to injured investors. They, in his opinion, were fully aware of the risk. All these statements do not inspire optimism, a client of the St. Petersburg Exchange, a private investor Alexey Potapov, who lost access to Hong Kong securities due to sanctions, shared with Kommersant FM:

“When I saw a comment from the Central Bank that the St. Petersburg Exchange needs to think about how to change its business model in the new reality in order to survive, it did not make me happy. However, to my surprise, for some reason it is not discussed that inclusion in the sanctions list presupposes a certain grace period. Counterparties that interact with a sanctioned entity have until January 31, 2024 to complete those relationships.

It is not clear why some window cannot simply be opened so that investors who want to get rid of such assets can sell them. But there is no final clarity yet. I initially assumed this risk; unfortunately, it came true. I had Hong Kong securities, let’s say, less risky from the point of view of potential sanctions, but it turned out that they too could be affected.

As for compensation, the Central Bank is probably right in its logic. In my case, the broker was initially sanctioned, the St. Petersburg Exchange was not available, so in order to gain access to it, I opened an account with another broker, and there I was not registered as a qualified investor. However, I bought the Hong Kong share immediately after opening the account. That is, it turns out that unqualified investors could buy some securities. Why wasn’t this specifically banned?

If we were talking about some serious means, of course, I would probably be worried, wondering what could be done about it. But still, I’m certainly not ready to forget about them. Let’s still wait for final clarity.”

The Central Bank is also not optimistic. First Deputy Chairman of the Bank of Russia Vladimir Chistyukhin said on November 9 that the exchange, together with the regulator, “cannot reach the foreign securities that were traded on the site.” In his opinion, there are no options yet for resuming trading in them, and transactions with Russian assets are already available throughout the week.

Brokers, including Alfa Capital, paid attention to the general license of the American Ministry of Finance, which allows transactions with the exchange until January 31. In their opinion, this will allow investors to sell assets. The same point of view was expressed by another top manager of the Central Bank, Mikhail Mamuta. However, so far the situation seems too uncertain, says Andrey Kochetkov, leading analyst at Otkritie Investments:

“If we talk about Russian securities, then this issue will be resolved. True, it is not clear why we need two exchanges that will trade identical instruments. As for foreign ones, most likely they will remain frozen, and there is only one solution: unblocking and selling these securities with the corresponding withdrawal of money.

And this is a dubious decision, because all the sanctions that were imposed earlier involved freezing assets, and it was extremely difficult to withdraw them. For example, the story with Euroclear, when long negotiations were held, but it is still not entirely clear how to withdraw money from there. Maybe Hong Kong will shut down again, and I’m afraid it will be the same story. They are afraid of secondary sanctions and, most likely, will also very gently terminate all relations.

For now, we are talking about the fact that trading in all foreign securities is blocked. This is probably not the decision of, for example, counterparties in Hong Kong, and if there are any negotiations on this matter there, it will only be on Russian securities and their transfer to the national depository. For foreign ones, most likely, this will be a temporary unfreezing with subsequent sales. Although there is another option: resolving the geopolitical problem and transition with the subsequent lifting of, well, if not all, then a significant number of sanctions.”

General Director of the St. Petersburg Exchange Evgeny Serdyukov promised to promptly inform investors about any changes, but did not give any deadlines.

Ivan Yakunin