To the kitchen, to America

Russian investment companies increase trading time

Following the investment company Finam, which figured out how to circumvent the regulator’s requirement to trade on the stock exchange only until six o’clock in the evening, the investment company Brokercreditservice yesterday provided its clients with the opportunity to make transactions after the closure of the RTS and MICEX. And as analysts note, this practice may spread among stock market professionals. Since March 26, Finam Investment Company has provided clients with the opportunity to make transactions from 18 to 24 hours. Using the trading system, the company's clients can set quotes and make transactions with the 12 most liquid securities traded on the MICEX exchange. Of course, clients can only trade with each other. BCS, however, conducts transactions from 17.45 to 19 hours. In addition, both investment companies offer their clients access to international exchanges.

About 10% of the client base, that is, approximately 2,000 people, have already become interested in Finama’s new service. According to the head of the analytics department at Antanta Capital Investment Company, Alexander Potavin, the innovation will not be in demand by a large number of investors, but many professional market participants will be interested in it.

Experts believe that other companies may also take advantage of the extended trading regime. “It is likely that several such alliances may appear before the end of the year,” believes Andrei Ivanov, vice-president of IC BCS.

The reason for the actions of investment companies, as is known, was the requirement of the Federal Financial Markets Service to close trading at six o'clock in the evening (previously, exchanges were open until 18.45). The shortening of the trading day has not yet led to a noticeable drop in market turnover. On the classic RTS market, the trading volume during the week of “reduced” trading amounted to $305 million, which is only $18 million less than the previous seven days. On the exchange market, the trading volume turned out to be even higher than before - $644 million versus $385 million. However, as Mr. Ivanov notes, a week is not a sufficient period to evaluate such a significant innovation. “We haven’t seen any significant decline in activity among BCS clients,” he says. “There is a potentially unrealized volume of client turnover that could take place in the evening, but it is not that large.”

Nevertheless, many market participants were pessimistic about the decision to stop the trading day. The fact is that on March 11, the United States switched to daylight saving time three weeks earlier than usual. This gave the most active investors the opportunity to trade for an hour more, “looking back” at the work of their American colleagues. “For us, America is the kitchen of investment sentiment, and most professionals are guided by it,” Mr. Potavin points out. “Trading in the USA opens at 17.30, if earlier we had the opportunity to trade in parallel with them for 1 hour and 15 minutes, now it’s only 15 minutes.” According to the specialist, a quarter of the market turnover occurred at a time when Russia was trading simultaneously with America. Now, he says, “at the beginning of the day, the picture that emerged the day before in the American markets is played out, and then trading seems to cease to be interesting.”

Nikolay KOCHELYAGIN