Stock Petersburg – Newspaper Kommersant No. 172 (7373) of 09/19/2022

The St. Petersburg Currency Exchange (SPVB) is negotiating the connection of brokers, Kommersant sources say. The platform intends to trade OFZs, conduct an IPO and “pull off some of the functionality of the Moscow Exchange.” However, experts do not see any practical sense in the development of the same directions on the two Russian stock exchanges in conditions of limited capital movement. In their opinion, SPCE could specialize in a narrower topic, such as digital financial assets (DFA).

According to two Kommersant sources in the financial market, SPCE is actively negotiating with professional participants in the securities market to connect them to the site. Negotiations, according to one of Kommersant’s interlocutors, are being conducted with sanctioned banks – Alfa-Bank, FC Otkritie, Sberbank. The second source of Kommersant clarifies that VTB and PSB have already connected to SPVB. According to Kommersant’s interlocutors, the exchange plans to trade OFZs, conduct an IPO and gradually transfer securities of sanctioned issuers from the Moscow Exchange.

SPCE confirmed that “active work is underway to connect professional market participants: banks, brokerage companies, etc.” The site also plans to place OFZs and other securities, including corporate shares, bonds, sovereign loans of friendly countries.

To do this, the SPCE “completely replaced the technological, hardware and software parts and, after comprehensive testing by trading participants and the Central Bank, launched the stock section.” At the end of March, the exchange entered into a contract for the purchase of computing power for $3.5 million (see Kommersant dated May 19).

VTB declined to comment, Otkritie said they had “not heard of such plans.” PSB, Alfa-Bank and Sberbank did not respond to requests from Kommersant. The consent of the largest participants in exchange trading will depend “on the tariff policy of the SPCE and a realistic plan for the development of its own infrastructure,” says Anna Avakimyan, chief analyst at Regblok.

However, Kommersant’s sources in the market view SPVB’s plans with caution. They note that since 2019, the exchange has already changed its leadership three times (in January it was headed by Boris Yaryshevsky, ex-head of the strategy and development projects department at PSB). One of Kommersant’s interlocutors is convinced that a year ago such “Napoleonic plans” would not have appeared on the agenda at all, “under the new conditions, the exchange and its new management decided to take the opportunity and intercept some of the functionality in demand from the Moscow Exchange.”

Experts question the obvious benefits of SPCE for investors and brokers. The transfer of assets and the movement of trading participants from one platform to another does not look like a solution to the problem if, for example, OFAC decides to prevent the interaction of Russian exchanges with Asian ones, says Ekaterina Makeeva, head of the sanctions practice at A-Pro. Although SPVB has connected players, the market participant explains, they are not yet ready to give access to end customers.

The Moscow Exchange emphasized that “the listing institution does not provide for the procedure for transferring securities from one exchange to another.” Georgy Okromchedlishvili, a senior analyst at ITS WM’s multi-family office, also doubts the benefits of cross-flows: “If large Russian issuers start listing on the SPCE, and capital outflow bans continue, would it even make sense to have several large exchanges in such a closed capital market?”

According to Dmitry Alexandrov, Managing Director of Ivolga Capital, listing on several sites makes sense if it gives access to different investors or makes it possible to trade 24 hours a day due to different time zones. Last year, he notes, there were already “not very successful attempts by SPB Exchange to take part of the turnover in ruble instruments from the Moscow Exchange and there are no prerequisites for a different result from SPCE”. This exchange, according to Mr. Alexandrov, would be expedient to concentrate on a relatively narrow specialization, such as CFA.

Ksenia Kulikova