The national Association of securities market participants (NAUFOR) has sent to the Bank of Russia the letter in which he criticized the position of the regulator relative to the introduction of new restrictions for private investors trading on the Moscow exchange. As suggested by market participants, increase of requirements to the citizens who buy derivatives and use borrowed money (leverage) for transactions in the market, can lead to negative consequences for the market of collective investments and to limit the influx of liquidity on the Moscow exchange.
“There is a risk that as a result of <…> will sharply decrease the volume of some markets, in particular exchange-traded futures market, which is currently dominated by physical persons”, — it is told in letter NAUFOR. According to the Association, 70% of active investors in this market is the amount of security does not exceed 100 thousand RUB.
NAUFOR is the largest Russian self-regulatory organization that brings together over 400 market participants, including investment and management companies, investment funds and brokers. Market participants believe that the tightening of the minimum requirements for the award of the citizens of the status of a qualified investor to be able to trade a wide range of instruments and use leverage, will lead to a transfer of liquidity of foreign stock exchanges.
“Private investors dominate in several markets, providing liquidity. If they leave, then institutional investors will also start to go to other stock markets”, — said the President of the NAUFOR Alexey Timofeev. He did not rule out that the most wealthy citizens, trading in the market will also look for an opportunity to make transactions on foreign exchanges, where they have no such restrictions.
As previously mentioned , at the end of June, the Bank of Russia proposed to limit unqualified investors the right to buy complex investment instruments, which include derivatives, as well as to forbid them to make unsecured transactions (transactions with borrowed funds broker). To invest in derivatives and other risky instruments, they can only through independent investment Advisor. The regulator proposes to require an Advisor and claim compensation for investor damages if he invested in instruments with unacceptable for that level of risk.
Also, the regulator launched an initiative to increase the requirements for qualified investors and to introduce a new category of “professional investor”. To assign status as a qualified investor citizen will not only have a significant amount of savings (6 million roubles), but also experience active trading in the stock market (from one year) or a qualification certificate. The status of “professional investor” can expect those who are willing to invest between RUB 300 million (with an annual income of 10 million rubles.), or those actively traded on an exchange or held a senior position in finkompany and has assets of 150 million rubles. Professional investors will be released from restrictions on investments.
Now most of the people trading on the Moscow stock exchange an unqualified investors and has the right to trade stocks, derivatives and other instruments using borrowed funds brokers. Private investors trading on the exchange, may obtain the status of qualified at the request of the broker or management company, if possess own property of not less than 6 million rubles, have higher education or a qualification certificate of financial market specialist or have experience in the securities market. If one of these conditions is met, the investor gets the opportunity to work with a broader set of assets, such as foreign shares or units of closed-end mutual Funds and private equity funds.
According to the Moscow exchange, in July the number of active, performing at least one transaction in a month of private investors on the stock market amounted to 81.1 thousand people, on the futures market traded more than 47,5 thousand citizens, and the participants of currency trading was about 19 thousand individuals. However, as stated in the materials exchange in the first half of 2016, the share of investors-individuals in the trading volume was 35% and the derivatives market — 45%. According to the President, Chairman of the Board of “Finam” Vladislav Kochetkova, the proportion of qualified investors does not exceed 10% of all trading on the stock market.
The head of NAUFOR resulted calculations according to which in case of introduction of new requirements of the Central Bank only 2% of active investors can fall into the category of skilled, thereby obtaining the right to work with shoulder. To rely on the status of “professional investor” can and does 0.05% of the citizens who trade on the exchange.
“The position of the Central Bank we understand: there really is a problem with the protection of private investors, with the level of awareness among them about the risks of trading on the exchange. But this is only to solve with the help of restrictions you can not”, — says the managing Director of BKS Oleg Chikhladze. According to him, the volume of investments into stock market instruments from private investors is relatively small, however, in contrast to high-frequency traders, exposing thousands of requests per second, they provide a real flow of money in the stock markets. “The introduction of restrictions for citizens of trading on the stock exchange, is a step back from the point of view of stock market development,” concludes the Manager.