Moscow’s retail investing renaissance

By: Igor Marich, Managing Director for Sales and Business Development, Moscow Exchange Aug 2021

For the Moscow Exchange, 2020 was the year of the retail investor. The number of individuals with brokerage accounts on the bourse rose by almost five million to an all-time high of 8.8 million. The rapid growth of interest among individuals in exchange-traded instruments is the result of a united effort by market players to popularise investing, as well as the introduction of advanced digital technologies. Moscow Exchange has implemented projects that has significantly expanded opportunities for retail investors and boosted financial literacy, resulting in a series of headline statistics for 2020:

  • The number of opened individual investment accounts on Moscow Exchange doubled, reaching 3.45 million by the end of 2020.
  • Retail investors accounted for 41 percent of stock-trading volume in 2020, compared with 34 percent in 2019.
  • Retail investors were the most active participants in after-hours trading, generating 69 percent of total volume.
  • The share of individuals in corporate bond placements, not including short-term bonds and large non-market issues, was 18.1 percent, compared with 12.7 percent in 2019 (rising to 37 percent in the first quarter of 2021).
  • Retail investors accounted for 12.5 percent of secondary trading in corporate bonds, compared with 10.6 percent in 2019.
  • The total number of retail investors who traded bonds in 2020 increased to 817,000, double the 2019 figure.
  • A total of 2.3 million individuals traded on the equity market, and more than 200,000 investors traded on a daily basis, three times more than in 2019.

Clearly, retail investors are now one of the most important customer groups for Moscow Exchange, and the bourse will continue to expand its product range, develop new services and promote financial literacy to encourage greater participation.

World's largest trading competition

To further the goal of financial literacy and broaden knowledge of the principles of the exchange and traded instruments, Moscow Exchange holds specialised events, like training seminars, competitions, and the Ring the Bell for Financial Literacy ceremony, which was initiated by the World Federation of Exchanges (WFE).

About 300 training webinars a year are held on the Moscow Exchange School online platform, enabling retail investors to gain knowledge and skills in managing their personal finances. More than 80,000 people participated in these events in the previous year alone.

The exchange also organises annual competitions for private investors to demonstrate the opportunities and potential profitability of trading on MOEX. The ‘Best Private Investor’ contest has been held since 2003, and has become the world’s largest exchange competition for traders. In 2020, a record 16,600 investors participated, their total trade turnover amounted to 1.7 trillion rubles (US$23 billion). The total prize money awarded was 8.7 million rubles (US$117,700).

Since 2015, the Invest Trial competition for beginners has also been held, enabling participants to gain investment experience using demo platforms (without risking their own funds) and getting a real cash prize. More than 12,000 investors took part in the previous round, and more than 700 were awarded prizes. Total prize money awarded was 8 million rubles (US$108,230).

Moscow Exchange also launched a number of new online projects for a wide range of retail investors:

  • “Investing Without Panic” is a series of online meetings with financial market experts covering the most relevant topics for retail investors. The events are organised in two streams, for novice and experienced traders.
  • The “Money makes Money” podcast for retail investors is a new educational programme format that combines education with entertainment. The aim of the project is to increase the financial literacy of individuals interested in investment. Topics include the basics of investing, defining a risk profile, the structure of the securities market, key stock market instruments and how to work with them.
  • Broadcast channels for anyone interested in investing. The official MOEX-Moscow Exchange channel is dedicated to the main news, market snapshots and relevant data on developments in the stock market and investment industry. The channel of the Moscow Exchange School educational project is intended for novice investors and anyone who wants to understand the nuances of exchange trading, strategies and the specifics of various financial instruments.

Moscow Exchange will continue to make significant efforts to meet these expectations and create the necessary conditions for informed investment decisions and the transparent operation of markets.

Expanding access to products and services

Last year, in addition to the main trading session, the Exchange launched evening trading on the MOEX equity market from 19:00 to 23:50. In March 2021, the Exchange launched the morning trading session for the FX and derivatives markets from 7:00. Total daily trading time on the market increased by three hours from 14 to 17 hours.

The evening and morning sessions improved the accessibility of the Russian financial market for all groups of investors and laid the groundwork for attracting new investors. One out of every five retail investors trades equities during the evening session. The extension of the trading period in the FX and derivatives markets makes exchange services more accessible to clients from the Russian Far East, as well as from Asian countries.

Recently, Moscow Exchange introduced the personal finance platform, where citizens can buy and manage financial products online. Currently, enables citizens to remotely open deposits in Russian banks and purchase OSAGO insurance from companies represented on the platform. Finuslugi will continue to be developed, with the long-term goal of developing it into a personal finance management centre for all Russian residents. In the future, the platform will carry government bonds for households (OFZ-n), loans and other products from banks, asset managers, and insurance companies.

Since last year, Moscow Exchange Group has successfully offered foreign share trading. The highly liquid shares of about 200 large international companies are traded on the exchange, and that number should expand to 500 by the end of 2021. Foreign shares are traded and settled in Russian rubles, while dividends on the shares are distributed in the original currency (in USD for U.S. securities, for example).

Moscow Exchange lists the most reliable and highly capitalised issuers, and all listed foreign shares can be purchased by unqualified investors. Foreign shares are available both during the main and evening sessions.

New USD/RUB and EUR/RUB instruments with a one-cent lot were launched in the first quarter, allowing clients to make conversion transactions of up to US$1,000 or EUR1,000. The service is designed to expand the opportunities for individuals to make foreign currency transactions, develop conversion within the framework of individual investment accounts and transactions in foreign securities, i.e. receipt of coupon payments and dividends.

In future, the exchange will increase the number of international stocks admitted to trading, and improving retail investors’ access to a variety of instruments and portfolio diversification opportunities. The list of securities is being expanded to reflect demand from banks, brokerage and asset management companies and their clients.