Director of Equity Financing, FINAM Investment Company, Moscow
The new IXSP stock exchange is coming to St. Petersburg - but when will it start trading?
In April 2007 (“NASDAQ Entering Russian Stock Market?”) I wrote about the OMX Group's (STO:OMX) plans to establish IXSP – a new Russian stock exchange that is targeted towards small to medium sized enterprises (SMEs). It seems that this process is accelerating. Now the IXSP has its own web-site – a very nice but simple one, listing major ideas that the promoters are planning to execute.
Screens displaying quotes on the NASDAQ
Speaking of the institutions promoting the new exchange, they are:
The Saint-Petersburg Stock Exchange (SPBEX), the third largest stock exchange in Russia, and OMX, which has created the RX consortium of international investors focused on Russia.
As the first visible step, last week the IXSP started mailing proposals out to Russian brokers to sign what is called a “Preliminary Agreement”. This document is required by Russia’s Federal Financial Market Services (FFMS) for the license IXSP's license application. The letter claimed that OMX is already “a member of NASDAQ Group” – but I think that this statement is premature, as there is currently no any official NASDAQ-OMX Group link between the respective websites.
I believe that there has also been some delay in registering the new exchange - IXSP officials announced a few months ago that they expected to get FFMS approval by the end of July. The letter now asks Russian broker-dealers planning to enter the new exchange to reply by August 7th. Another delay may be the result of difficulties in finding a suitable clearing company. This month the Russia's Finance Magazine reported that the Russian Trading System (RTS) turned down a request from IXSP to act as its clearing entity.
The OMX-RX web-site says, among other things, that it will help issuers “prepare for an IPО on IXSP in a fast and cost effective manner - unlike on foreign exchanges”. This is interesting language and I feel that the idea of “fast and cost effective manner” might not lead to good results.
Generally speaking the IXSP effort is positive and will serve the Russian stock market exceptionally well. But all these “preliminary” activities need to be done in a very cautious way. It has only been about four months since the registration of the St. Petersburg Stock Exchange as a joint stock company (JSC). In my view, it is a really difficult job to administer all of these regulatory and organizational issues in such a short time frame. Of course OMX and NASDAQ may bring a lot of experience to the table, but what about their listing agents and nominated advisors (NOMADs)? Will Western investors accept this idea of transactions being done in a “fast and cost effective manner - unlike on the foreign exchanges”?
At any rate, everyone here in Moscow is watching these developments carefully, and we all hope that they will work out for the better.
You can read the original post at Vladimir Kuznetsov's blog, Equity Financing in Russia. The views expressed in this post and on his blog are the personal opinions of Vladimir Kuznetsov, and are reproduced here solely for educational purposes. To read more Russia Blog posts about Russian capital markets, click on the finance section or type www.russiablog.org/finance in your web browser.
