About us / Project Groups

Project Group №2 →

Corporate law and governance, financial transaction taxes

Project Group №1

Financial infrastructure and financial market regulation


Back to Media

Russian Market Liquidity May Move Abroad

22.07.2011 16:57 / Vedomosti

On Thursday, the Federal Service for Financial Markets published a draft regulation which allows most of the Russian issuers to place shares entirely on foreign exchanges. Today, this opportunity is limited to the quarter of the total volume. Generally, it is undoubtedly a very positive decision, which escalated long ago. There is no point in keeping the door closed, if everyone climbs in through a window, says a high-ranking official who is close to the government, who reminds that there are lot of ways to circumvent restrictions. "I do not believe in administrative barriers, I beleive in advantages, which we need to create", Central Bank Deputy President Sergey Shvetsov agrees. Preserving restrictions cannot be a long-term strategic goal, as this makes the business structure companies and use holdings outside of Russia, and this is the worst that may happen, he adds.

At the same time, we know where good intentions lead. This is where the Russian market liquidity may go, if the officials are unable to create the advantages in time. "We have no chance to compete for the volumes of the Russian companies placing without Centralized Depositary and foreign nominee", Shvetsov admits. As a result, it looks like the perspectives to create the International Financial Centre, which President Dmitry Medvedev promotes actively, can be buried by his order to lift the restrictions mentioned above. It is very difficult to convince the Russian companies to place shares here without showing them the distinct advantages. For now, the advantage is with Western trading floors: it`s the infrastructure, the wide pool of investors and the developed legislative base.

The hope remains that with the President`s will and the efforts of the concerned institutions the long suffering of the Central Depositary will be finished, and the Stock Exchanges will not cause a delay with their unification. If the Federal Service for Financial Markets proposals are accepted and take effect, there will be little time left for the Russian market infrastructure to improve. Otherwise, the issuers will form a joyful queue to the foreign trading floors, taking their shares along with hopes for the International Financial Centre, for the Russian market development and the future of a unified Stock Exchange.

Anton Trifonov

Project Group №1Sergei Shvetsov