The proposal of the Bank of Russia to ban ordinary Russians from trading in foreign financial assets collapsed the shares of the St. Petersburg Stock Exchange (SPB), for which trading in securities of foreign issuers is the main business. During trading, the shares of the trading platform fell by 25.2%, reaching an absolute minimum in history - $ 1.78, or 89.9 rubles per share.
Fee and commission income from the trading of foreign shares is the main source of income for the SPB. The report for 2020 (according to the results of 2021, there are no reports on the site yet) states that bidding services brought the company 98% of revenue, or 796 out of 825 million rubles of revenue. At the end of 2020, 1,560 securities were traded on the stock exchange, of which only 36 positions belonged to Russian issuers. Thus, the business of the trading platform directly depends on the volume of trading in foreign securities.
SPB held a rather high-profile IPO (initial public offering on the stock exchange) in the fall of 2021. Against the background of the rapid growth of retail investment and interest in the securities of foreign issuers, the company was called one of the most interesting on the Russian market. Moreover, SPB planned to conduct a listing on foreign exchanges in 2022 in order to attract additional funding, but the war and the subsequent sanctions disrupted the plans of the trading floor. At its post-IPO peak, the company's shares were worth $14.33 per share, so the company lost 87% of its capitalization in less than a year.
The Central Bank has already sent out an order to brokers with a recommendation to introduce a technical ban on transactions with securities of foreign issuers for unqualified investors. The regulator explains this requirement by "reducing risks for investors." If the regulator is able to push through new requirements for bidders, then most Russians will lose the opportunity to earn extra money through the stock market. For example, only Netflix shares during trading on July 19 soared in price by 7%, now such investments will be closed for Russians.
On Wednesday, July 20, the Bank of Russia held a presentation in which it proposed to radically change the current investment landscape. The regulator wants to sharply tighten the requirements for qualified and unqualified investors. For the former, it is planned to tighten the criteria for obtaining the status, in particular, to raise the minimum asset threshold from 6 to 30 million rubles. For non-quals, it is proposed to introduce bans on investments in foreign securities. The Central Bank does not disclose the terms of the proposed bans, hiding behind the vague wording "until the situation on the market improves."
