January 31, 2019 / 10:53 AM / 9 months ago

Retail investors in Russia could nearly double in 2019, lobbying firm says

MOSCOW, Jan 31 (Reuters) - The number of retail investors on the Russian stock market could nearly double this year, reaching a record high, as banks develop their own trading platforms to draw clients, the head of a stock market lobbying firm said.

More than 540,000 private individuals became clients of the Moscow Exchange in 2018. Russia’s financial market was on track to beat that this year, Alexey Timofeev, the head of the lobbying group NAUFOR, told Reuters.

“I’m certain that by the end of 2019, we will see a more significant increase in the number of retail investors on the market than we saw in 2018,” Timofeev said.

Russia’s financial markets are relatively new, dating back to the 1990s, after the fall of the Soviet Union. In recent years, markets began to get state support as part of the Kremlin’s efforts to make Moscow a major financial hub.

But reform efforts by the Bank of Russia, the central bank and state regulator, have cut down on brokerage activity and limited competition among brokers. The void has increasingly been filled by large banks.

“This is a challenge we will have to respond to,” Timofeev said. “I think regulators could allow companies of various sizes and different business models to exist on the market.”

Russian banking is dominated by large, state-owned companies, which make up almost 70 percent of Russian bank assets. Five large banks control 60 percent of the assets, according to the World Bank.

Timofeev stressed that the Russian central bank would have to gauge the risk of major banks competing not only among themselves, but also against other market players.

“Thanks to major banks, we are seeing millions of retail clients on the stock market,” he said. “This is good, but they can also force the remaining players out, depriving the market of liquidity while imposing their ideas about the product range.” (Reporting by Elena Fabrichnaya and Rinat Sagdiyev; writing by Gabrielle Tétrault-Farber; editing by Larry King)

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