“Tinkoff” looked into the auction in the legal entity – Newspaper Kommersant No. 27 (7472) dated 02/14/2023

Tinkoff Group, the largest retail broker, is entering the segment of brokerage services for legal entities. However, this segment is rather narrow, both because of the number of clients and because of the financial instruments they demand. In addition, other brokers have been working on it for a long time, and a number of large corporate clients have direct access to the exchange. The emergence of a new high-tech player may increase competition in the segment.

Tinkoff, one of the largest retail brokers, launched the Investments for Business platform for legal entities to provide services on the stock exchange, the group said. At the same time, legal entities must have settlement and cash service agreements with Tinkoff Bank. It is assumed that business owners, accountants or treasurers will be able to quickly manage the liquidity of companies, setting up tools for placing free cash, attracting financing or currency exchange, they noted.

According to the Moscow Exchange at the beginning of February 2022 (latest available reporting), the total number of retail clients of Tinkoff Bank exceeded 9.26 million people. According to IFRS reporting of TCS Group (the bank’s parent structure), in the first nine months of 2022, the total number of the group’s clients reached 26.3 million people. The group’s website states that 800,000 customers are entrepreneurs and companies.

At the same time, most of the large brokers surveyed by Kommersant – in particular, BCS, Digit Broker, Otkritie Investments, Alfa-Bank – already provide customers with a similar service. Finam has a low share of legal entities among clients, about 5% of the total client base. As investment companies explain, the most popular are currency exchange operations on the stock exchange, in addition, brokers help to place free funds of companies, in particular, through repo operations, and also conduct transactions on the futures market to hedge currency and other risks. A service that is specific for legal entities can be called lending against an existing portfolio of securities, Alfa-Bank notes.

Sergey Mikheev, head of the department for work with corporate clients at BCS Mir Investments, notes that brokerage services for corporate clients remain a relatively “niche” product. One of the issues of corporate treasuries is the effective placement of temporarily free funds, points out Vladimir Kozinets, President of the Association of Corporate Treasurers. “Of course, large corporate clients can conduct some of these transactions directly on the exchange, but there may be restrictions for medium-sized companies, so the opportunity to work through brokers may be especially interesting for them,” he notes.

As experts explain, brokers earn mainly on commissions on transactions, on balances on brokerage accounts, and trust management fees. However, it will not be easy for even a major player to take a significant market share. Tinkoff in this case “will have tough competition with other brokers. In addition, you need to understand that corporations will still analyze their reporting and financial condition,” said Vladimir Kozinets. As Dmitry Alexandrov, managing director of Ivolga Capital, points out, commissions in these markets are usually low. “For a bank, there may be a risk in the small business segment – commissions on the exchange are usually less than bank ones, so current clients can switch to a less profitable brokerage direction. If you keep the commissions high, the question of attracting new customers will arise,” the expert concluded.

Ksenia Kulikova