Over the past 6 years, the number of participants in the Russian financial market has halved. People not used to living illusions must understand: after the final approval by the legislative bodies of the proposals of the Central Bank on the graduation of investors and their access to trading floors the Russian market will finally cease to exist, having never really been born in 25 years.
Accordingly, the most pressing issue today: where to go from the ashes? Before answering this question, let me somehow motivate my position and quote the text that I wrote, which is being said, in hot pursuit.
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July 10 media excited about the wronga law that mercilessly lobbies the Central Bank. We are talking about the demarche of Ms. Nabiullina against the domestic stock market: the prohibition of non-professionals to participate in trading in shares of foreign companies.
Personally, I am well aware of the confusionsuch news arouse in the minds of the inhabitants, showing at least some interest in this topic. I also have a good idea of the share of these inhabitants from the total population. More than 20 years ago, I established the first online school of trading and investing in the Russian-speaking Internet, and since then daily communication with people interested in the exchange has been part of my professional duties.
Relations of Russian citizens with the valuable marketSecurities are regulated by Federal Law No. 39-ФЗ dated 04/22/1996. In general, it is a solid and more than adequate law created by the American standard. It is remarkable that the American legislative regulation of the stock market was taken as the model, because it is the most progressive in the world and can not be compared with the legislation of the European Union.
European exchanges are initially focused oninstitutional investor, the entry bar for starting capital requirements is deliberately overstated, and the interfaces and working conditions are unfriendly just as much as is necessary to discourage ordinary citizens from the slightest desire to participate directly in trading and investing. They do not participate: the popularity of local exchanges in the EU among ordinary people is slightly more than none.
For contrast, I will cite only two figures from American realities:
- 48.8% of American households are direct or indirect (through investment funds) holders of securities;
- In the United States, 49 million (!) Private investors trade on the exchange.
I was always shocked to what extentordinary Americans are involved in exchange realities. Waiters in Las Vegas, taxi drivers in Seattle, and even a tanker at a godforsaken gas station in Texas told me what stocks to buy. One can’t even talk about the ticker ticker on every computer in Silicon Valley: the exchange is not just a part of American mass culture, but a key aspect of public relations.
The difference between the US and Europe in terms of engagementordinary citizens in financial trading and investing are primarily due to sociocultural reasons. An ordinary American almost with his mother’s milk absorbs the duty and need to take care of himself and his material well-being on his own. The notorious spirit of American entrepreneurship is the flip side of the lack of a tradition of statism and paternalism in American society.
The Americans themselves form their retirement account,they themselves determine its specificity and the instruments into which savings are invested (of course, with the help of a huge army of consultants and experts), they themselves take care of health insurance.
Nothing remotely resembling an Americanthere is no model of the relationship of ordinary citizens with the stock market either in Europe or in Russia. For various reasons, however. In Europe, the issues of preserving and increasing cash savings are delegated either to the corporations responsible for their employees or to the state. The latter tendency is especially vividly realized in the models of “Scandinavian paternalism”. In Russia, for almost the entire 20th century, citizens did not have any direct interaction with the stock market (it simply did not exist under the Soviet regime), and the state took care of preserving and increasing the monetary savings of the population.
So it was until recently, when it becameit is obvious that the new Russian state has embarked on the accelerated folding of the paternalistic model. And in Russia today there is a paradoxical situation. On the one hand, there is a pension reform, the forms of concrete implementation of which seem to elude even its organizers. But the intention is transparent: remove as many dependents as possible from the neck of the state. On the other hand, there is a reform of the securities market, however, in the direction opposite to pension reform. In the sense that the innovations that the Central Bank is lobbying in the State Duma are not that they do not increase the activity of ordinary citizens in the securities market, but they also put insurmountable obstacles in the way of this activity.
Suspect sympathy for paternalism in the Central Bank of the Russian Federationwill not turn around, therefore, the antagonism between pension reform and securities market reform is most likely an optical illusion. What then does the Central Bank seek?
Before answering this question, let'slet's restore the context of events. Talk about radical changes in Russian legislation governing the participation of private citizens in stock trading and investing began at least four years ago. In a professional - trader and brokerage - environment, all the spears bent even before the state’s intention was cast into a specific legal demarche.
In 2016, the Central Bank of the Russian Federation, “having analyzed and partially taking into account the proposals of market participants,” proposed to divide investors in the stock market into three categories:
Professionals are those who have a certificate of international standard, or assets in excess of 50 million rubles. No comment here.
Watershed between skilled andunqualified investors passed in the amount of 1.4 million rubles. If the brokerage account has less than 400 thousand money, it will be allowed to trade only in shares, bonds and mutual funds, as well as in currency and precious metals. If there is more than 400 thousand money, they will give the right to trade with leverage. If you have more than 1.4 million rubles and you pass an exam (or 10 million without an exam), they will be allowed to enter the derivatives market (futures and options). Then, in 2016, the Central Bank promised to prepare a “road map”, and then, in the long term, the law itself. Bill No. 618877-7, amending the Federal Law "On the Securities Market" in terms of introducing regulation of categories of investors - individuals, was submitted to the Duma on December 28, 2018.
In the bill, the categories of investors changed in form, but not in content. Investors decided to finally divide into four types:
- unskilled especially protectedwith less than 400 thousand rubles on a brokerage account and there is nothing more than the desire to get rich. This category will receive the right to trade liquid stocks, mutual funds, currency and precious metals. For the amount of less than 50 thousand rubles you can trade with any instruments (in practice, only options for low-cost Russian shares fit into this amount);
- unskilled simplewith more than 400 thousand rubles in the account, or they successfully pass the exam on the official website of the exchange. This category gets an additional opportunity to trade corporate bonds, derivatives market securities, can use leverage and sell "short" (that is, sell those securities that they do not have, but they lent them from a broker);
- skilled simple have 10 million rubles in the account and can conduct any transactions, however, the broker is obliged to periodically remind them of the risks;
- qualified professional they have 50 million rubles and, in fact, are celestials, because no one has the right to forbid them to buy or sell on the stock market.
On May 29, 2019, the bill passed its first reading in the Duma. Minor amendments have been made, and everything suggests that the law will soon become a reality.
What disturbed the public in early July? The Central Bank held a consultative meeting with participants in the stock market, who proposed a number of amendments to the bill, namely:
- reduce the divide between the protected andordinary unskilled investors from 400 to 160 thousand rubles on the grounds that it is on this amount that the behavior of exchange players undergoes a qualitative change;
- allow the specially protected to trade not only Russian liquid securities, but also Western ones, among those that can be purchased on the St. Petersburg stock exchange, because these securities are more reliable;
- to revoke the right to make any transactions up to 50 thousand rubles, since they just push to excessive risk;
- to supplement the list of instruments available to unskilled investors with repurchase agreements, collateral, exchange, etc., as this contributes to the development of the market;
- allow everyone to trade with any type of financial instrument, after passing through a broker a knowledge test;
- remove all restrictions by category if the investor hires a trustee or investment adviser.
According to rumors, the Central Bank carefully listened to the wishesNational Association of Stock Market Participants (NAUFOR) and politely refused, doubting their appropriateness. The official statement of the Central Bank: the meeting was held "in a constructive manner." Be that as it may, the mainstream media poured this newsletter into headlines such as “The head of the Central Bank refused to allow everyone to buy shares in Apple and Google.”
We will try to objectively assess the situation. As I said, it is difficult to suspect the Central Bank of paternalism, so I personally have no doubt that the main motive for the upcoming legislative changes is the desire to discourage ordinary citizens from independent access to the stock market. This is not my speculation, but an objective conclusion that arises from the high entrance bar - 400 thousand rubles. This amount is completely inaccessible to the vast majority of Russian residents, given that its purpose is risky exchange operations.
I base my conclusions not on some public statistics (it does not exist), but on my personal 20-year experience of daily communication with people who have a specific interest in trading and investing.
The vast majority of ordinary citizens for the purpose of exchange speculation with a strong strain on the family budget has 50-100 thousand rubles. Best case scenario.
Everyone wants to start with even smaller amounts. The comfort zone is 30-50 thousand and this, by the way, is the amount that the Central Bank calls acceptable for the first exchange experience.
It is necessary to soberly assess the situation, notidealize the parties involved, but do not deceive ourselves. Central Bank of Russia - Well, of course! - represents the interests of the state, on the one hand, and the banking system, on the other. As a representative of the state, the Central Bank is not interested in lobbying for securities of foreign companies, therefore, it does not feel any enthusiasm for the shares of Google, Apple, Amazon and Tesla in the portfolio of Russians of the Central Bank of the Russian Federation.
As a representative of the banking system of the Central BankHe is interested in potential investors transferring their money to banks, and not to the exchange. Each bank has a long list of dreary “financial instruments” and deposits that, although they do not cover inflation with the devaluation of the national currency, are at least insured by the state against complete disappearance. Which, incidentally, can not be said about brokerage accounts. This is in the United States, each brokerage account is insured by a government agency (SIPC) for up to half a million dollars. In Russia, brokerage accounts are not protected to this day.
The interests of NAUFOR can also be understood. Stock market makers are interested in attracting as many participants as possible precisely to their own “network” - to the domestic exchange, to domestic brokers. It's not just about commissions. They sincerely want that, 25 years after the creation of the stock market in Russia, it at least a centimeter out of the embryonic state.
The main problem, however, is not in the Central Bank, not in the Duma and notin NAUFOR, and in the last sentence of the previous paragraph. I will not frighten the reader with numbers, I will simply show a picture in which the capitalization of securities of public companies is distributed by country:
You need to be a great patriot to make out our state on the map.
To match the stock market and involvement in itordinary investors: in Russia, it makes up about 1 percent of the total population. At the same time, the size of “empty” individual investment accounts (that is, open, but not fond) at the end of 2018 amounted to 54.5% (in 2016 - 75%, in 2017 - 72%). The picture is certainly sad.
You can blame as much as you likethe state of affairs, and the Central Bank, and the Duma, and brokers, and the exchange itself, but it seems to me that this is a meaningless exercise. In the end, in the European Union, the participation of the population in exchange trading is also almost two times lower than in the United States. It is not a matter of social structures, but of mentality and traditions.
For centuries, history has discouraged Russian people from taking risks and trusting, especially in matters related to personal savings.
The last century became especially scary in this respect, when the “voluntary” state loans of the Soviet government were replaced by the apocalypse of a group kid:
first population put on the headstock the native state, destroying all savings in banks, and then devaluing the national currency three times from 10 rubles per dollar in 1991 to 63,000 rubles today (taking into account the denomination).
Following the state, private "businessmen" pulled themselves together, who had corroded all the desire to "invest" somewhere with red-hot iron emmems, haprov and Russian gold.
In the circumstances, it is wild to blame the Central Bank forthe fact that it prevents the population from gaining happiness in the field of exchange wonders. If only because these numbers - that is 400 thousand, that 160 thousand rubles of start-up investments - have nothing to do with the real intentions of this very population somewhere to carry somewhere, especially to the stock exchange.
In view of the foregoing, it seems to me that the positionThe Central Bank, which seeks to maximally protect fellow citizens, deceived in the past countless times, from additional risks, is much closer to historical justice than the position of “professional market participants” whose corporate interests lie on the surface.
There remains one category of citizens that weignored the discussion - this is a caste of ludomania - people obsessed with gambling. I hasten to reassure them: the Duma bill has nothing to do with them. The number of gambling establishments, Forex kitchens and foreign exchanges not controlled by the Russian state on the Internet is measured in the thousands. Given that opening an account there takes no more than three mouse clicks and 10 minutes of time spent, there is no doubt that the amendments to the securities law will not change anything here.
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I return now to the urgent issue of the moment: where to go from the ashes? The first thing that comes to mind is the American market. However, the problem is that the American market is far more distant than ever for an ordinary Russian person - because of completely spoiled relations with the Russian authorities. Moreover, the prospects from any angle look worse than the prevailing reality.
Accordingly, the only fullThe alternative to trading and investing that I see on the horizon today is the cryptocurrency market. The problem, however, is that the number of skeletons in the closet of this new player is amazing.
When a person familiar only with traditionalfor the first time on the cryptocurrency exchange, he does not believe his eyes: it seems that all the assets on them live according to their own laws and do not obey the usual laws of technical and fundamental analysis.
Personally, I needed all 25 years of experience onAmerican and Russian exchanges, plus long hours of additional research and experimentation to somehow combine traditional knowledge with the unique new reality of cryptoeconomics. Out of all this, a desire was born to do a good deed and share thoughts, experiences and best practices. I will try to do this as part of an open meeting of our investment and trading club VBTT. We are going to gather on November 7 at 19-00 at the Zoom venue. Admission is free, participation is free, but the number of places is limited (platform). Who cares, registration by link.