Issuers leaving MICEX-RTS in fear of the new law on insider trading

Source:telegraph.co.uk

Companies are massively leaving MICEX-RTS: “Power Machines”, two subsidiaries of “Bashneft”, “Elsib”, “Tula Engineering Plant” are already our, “Red October” is getting ready to follow. Companies want to economize on repurchasing of shares from their minority shareholders and are also very afraid of the new law on insider trading which is in effect since the beginning of the year.

The press-service of “Bashneft” explained to RBC-Daily that the decision of its subsidiaries to delist was related to their willingness to optimize expenses for IFRS accountancy. An unannounced source close to MICEX explained that the “exodus” may continue because many companies are scared of the new requirements of the law on insider trading.

Private traders are not particularly restrained when it comes to criticism of MICEX-RTS. There are some certain examples of almost dishonorable behavior of the stock exchange’s governance in respect to participants. A private trader remembers how “Power Machines” made a decision to delist from the stock exchange on 27 December 2011. The same day (one hour before closing!) the stock exchange posted an announcement, informing that shares of “Power Machines” (and seven other companies) wouldn’t be traded tomorrow (December 28 – GAAP-IFRS.COM). The private trader we’re talking about told RBC-Daily that he had learned about that from his good acquaintance. He knew that he had purchased their shares. First, he thought it was some kind of a joke.

So there is indeed a big problem here. First, this announcement should be noticed on time. Secondly, as it was the case we’ve described earlier, it is very hard to get rid of a shares package, especially if it is not big enough: brokers won’t be able to resell the package on the over-the-counter market. The stock exchange should inform on delisting in advance! – says Andrey Aletdinov, the manager of BSK.

Representatives of MICEX-RTS already promised to introduce a required time delay between a decision  to delist and actual suspension of trade – similarly to the way it is done in other countries. GAAP-IFRS.COM wonders whether this should have been done from the very beginning, especially considering the public image made by the government for the united MICEX-RTS as a future trade ground for the international financial center to be created in Moscow.

Source: RBC-Daily