Broker Freedom Finance

Broker “Freedom Finance” and the St. Petersburg Stock Exchange: what do we know about the deal?

The broker “Freedom Finance” has officially announced its intention to acquire a large stake in the St. Petersburg Stock Exchange. This trading floor is used to conduct transactions with securities of foreign companies, including Apple and Google.
The exchange will direct the proceeds from the sale of shares to meet the requirements of the Central Bank.
Earlier, the St. Petersburg Stock Exchange announced an agreement with the broker company Freedom-Finance to repurchase the additional issue, the share of which is 65%. The broker is a major player in the market and is among the top ten in terms of assets. Apart from Freedom Finance, this includes Finam, ITI Capital, BKS, Zerich Capital Management and others.
Officially, Freedom Finance has not commented on the news. The only thing we managed to find out from the broker’s representative that such an offer came from the exchange, and it is under consideration.
The main shareholder of the St. Petersburg trading platform is the NP RTS Association, which owns 41% of the securities. Best Efforts Bank owns 19% of the shares, while other shareholders own no more than 5% of the securities.
The St. Petersburg Exchange conducts transactions with more than 180 shares of foreign companies, including the S&P 500 index corporations – Apple, Starbucks, Facebook, Visa and others. On average, operations worth more than $77 million are performed on the trading floor per day. The number of the exchange’s clients is 52 thousand.

According to the financial statements for the first six months of 2019, the exchange incurred losses, although the negative dynamics has become less compared with the previous period – from 30.3 million to 6.5 million rubles.
The work of the exchange is complicated by the bill from the Central Bank. According to the document on the categorization of investors, unqualified professionals are forbidden to purchase shares of foreign companies. This means that domestic investors, who have no special certification for transactions in the market and capital of more than 1.4 million rubles, will not be able to buy shares.
In order to stabilize the financial situation and meet the requirements of the Central Bank, the St. Petersburg Stock Exchange decided to increase its share capital by about 1 billion rubles. For this purpose, it intends to place an additional issue of its securities. The Board of Directors approved the cost of the additional issue – one share to pay 1777 rubles. The stock exchange plans to place about 563 thousand pieces. If we focus on this price, now the site capitalization is 3.7 billion rubles, and the additional issue of shares will attract another 20% of this amount.
The interest of Freedom Finance broker in buying stock exchange securities is not fully clear, as the company operates in Russia, Ukraine and several other CIS countries. Perhaps the acquisition of the stock exchange will help the broker to enter the U.S. market and develop in this direction.