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Retail Investors as Stock Market Drivers
6 June 2019
11:00—12:15
KEY CONCLUSIONS
Russia is witnessing an active inflow of retail investors to financial markets

We have achieved a new record – we open 100,000 new accounts for our clients per month. <…> We expect that by the end of this year we will have three million clients or more. <…> In shares, retail turnover reaches 35%. This is a lot. It creates support when the market is sinking <…> The quality of the market has changed — Yuriy Denisov, Chairman of the Management Board, Moscow Exchange.

We have nine million clients. Half a million of them came for investments <…> We have 100,000 active users daily <…> Almost half of those new 700,000 retail investors that opened brokerage accounts at the Moscow Exchange were ours. <…> We believe that this trend is going to become stronger, it is just the beginning. <…> It significantly contributes to the capital market development in Russia — Oliver Hughes, Chairman of the Management Board at Tinkoff Bank.

We see retail investors as drivers of stock market development — Elliott Gotkine, Journalist, TV Presenter.

There are favourable conditions for individuals coming to the markets

Laws related to financial consulting have been adopted. Now robotic approaches to financial consulting are developing. At the same time institutes are being created that boost the trust on this market. <…> Individuals who are going beyond their ‘safety bag’ in their savings are very rationally looking for a right profitability, and it can be found on the capital market — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

The first reason is that we opened digital sales channels. 70% of accounts are opened digitally. <…> The second reason is that the legislation has improved, there are now many different benefits for investors. Especially I would like to highlight individual investment accounts. For the moment we have 800,000 such accounts. We hope that by the end of the year this number will reach 1 billion. The third reason is the key interest that has been decreasing for five years already — Yuriy Denisov, Chairman of the Management Board, Moscow Exchange.

There is a common trend of deposit rate decline, increasing literacy [of the population], there are some regulatory changes; however, the main, revolutionary, factor is the emergence of technological platforms that democratize access to financial instruments — Oliver Hughes, Chairman of the Management Board at Tinkoff Bank.

Further growth of retail investment is expected

It is a trend, and retail clients are already influencing the market. <…> The population has 28 trillion roubles. <…> this trend will continue, and some sum will come to the stock market — Yuriy Denisov, Chairman of the Management Board, Moscow Exchange.

Over the last three years we started actively working with retail investors, and we can see that much more people are coming to the market. <…> We believe that this is an exploding market that will grow exponentially in the upcoming years — Andrey Shemetov, Vice President, Head of Global Markets Department, Sberbank CIB.

ISSUES
Distrust of investors towards financial institutions

A weak intermediary creates problems for an investor. Marketing buzz gets not only to investors of a particular financial intermediary who had gone bankrupt or stolen money; it gets to the reputation of the whole market — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

Twenty years ago, when open-end funds appeared in Russia, financial experts undermined the trust of the population, and these funds never began functioning properly in our country <...> That is why we bear huge social responsibility. We have not yet entered mass-scale channels <…> because we think that the client should be ready, and there should be a proper presentation of a product — Andrey Shemetov, Vice President, Head of Global Markets Department, Sberbank CIB.

Low financial literacy of the population

Our investment traditions are very short, because before 1991 Russia had no stock market <…> Our citizens are not really able to tell good from bad on the financial market — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

Underdevelopment of collective investment

Today our collective investment market is expensive. Commissions for Russian so-called exchange-traded funds are higher than for ETFs; trust management costs much more than in other countries; there is lack of competition and trust to these institutions — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

Excessively heavy market regulation

Sometimes, when we tighten the screws, I am not sure we do the right thing — Andrey Shemetov, Vice President, Head of Global Markets Department, Sberbank CIB.

Overregulation of the market has a negative impact on smaller players, in the first place. Small business becomes unprofitable. It is turning into the game dominated by major players — Dror Efrat, Chief Executive Officer, Founder, Investing.com.

SOLUTIONS
Creation of an investor protection system

We are now implementing two very important initiatives that, based on the situation with the financial literacy, protect people who have small savings and small experience of being present on the stock market from imposed complex financial instruments. Now the so-called “Law on qualified and unqualified investors” is being discussed in the State Duma <…> We are creating a system of investor protection <…> Standards of self-regulation are being adopted — Sergey Shvetsov, First Deputy Governor, Bank of Russia .

We focus on promoting not active trading, but such simple instruments as bonds, with capital protection so that the client does not lose their investment core <…> We are gradually moving in this direction — Andrey Shemetov, Vice President, Head of Global Markets Department, Sberbank CIB.

Simplified access to the market with digital technologies

Today we are announcing the launch of Tinkoff Capital. It is a management company. By the end of the year we will launch easy, transparent and very advanced solutions for the Tinkoff Capital management company. They will allow to buy exchange-traded funds at any moment, monitor them in the mobile app, use the card to buy them or send [funds] to the card — Oliver Hughes, Chairman of the Management Board at Tinkoff Bank.

There is trend of going online — Remy Briand, Head of ESG, MSCI.

Creation of infrastructure for collective investment

We need to make something like Morning Star that does ratings and can give clients allocations in robo-advisers. Behind each portfolio there is a history, a personified manager that is responsible. We do not have this yet, we are going to create it — Andrey Shemetov, Vice President, Head of Global Markets Department, Sberbank CIB.

The material was prepared by the Russian news agency TASS