The Central Bank does not consider the calculation of commissions charged to investors during an IPO to be fair

The Central Bank (CB) of Russia drew attention to the mechanism for calculating commissions charged to investors during the initial public offering (IPO). The Central Bank does not consider this a “super-conscientious practice,” said First Deputy Chairman Vladimir Chistyukhin.

He explained that when collecting applications on brokerage accounts, “part of the assets relative to the application that the potential investor made” is immobilized. Because of this, “for a week, or even more,” these funds remain in the accounts of banks and brokers, no income is paid to them, “and they are actually frozen,” Mr. Chistyukhin emphasized. As a result, potential investors “are in an uncomfortable situation,” he noted.

“Some brokers take commissions not from the securities that the investor ultimately received, but from the total amount of his order that is placed. And in some cases, it practically turns out that the commission can reach 5% relative to the cost of the securities that he will actually receive, taking into account his investments. This is very high and reduces the profitability of transactions within investments in IPOs and SPOs,” said Vladimir Chistyukhin at the Russian Financial Market Forum (quoted from RIA Novosti).

The first deputy chairman of the regulator believes that “it’s more about using the hype for high-quality financial instruments.” “Of course, it makes sense for us, together with the professional community, to take a serious look at this situation and try to find some additional solutions,” he added.

According to the Central Bank, over two years of using testing of unqualified investors before purchasing complex financial instruments, more than 9 million people passed it. Professional participants complain about the lack of a single database of past investors, which may limit the arrival of active clients to the market. The share of brokerage clients passing the test is being eroded by the growing number of small retail investors who are not interested in complex transactions.

Details – in the material “Kommersant” “Testing passed”.

Laura Keffer