The Russian stock Exchange has opened access to the stock markets of the BRICS countries. Why is this important?

The St. Petersburg Stock Exchange returned to the futures market. The platform launched trading in settlement futures contracts and opened access to the stock markets of some BRICS countries — Brazil, India and China, as well as Saudi Arabia. Traders also have the opportunity to trade futures on the bitcoin index. Izvestia investigated why this is important.

Why did the exchange start trading futures again?

• The St. Petersburg Stock Exchange was going to re—enter the futures market in 2023, when the site came under US sanctions and lost the foreign securities market - foreign securities purchased by investors were frozen. At the same time, it was initially trading in futures instruments that the exchange developed since its foundation in the 1990s. However, then there was a reorientation to trading shares of foreign companies.

• On October 7, the St. Petersburg Stock Exchange launched the St. Petersburg Futures futures section. The first instruments were stock futures of funds that follow the indices of Brazil, India, China, and Saudi Arabia. Bitcoin index futures are also now available on the St. Petersburg Stock Exchange.

• Auctions are held daily from 10:00 to 00:00 Moscow time. Transaction fees will not be charged until November 30th.

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What are futures and what is their special feature on the St. Petersburg Stock Exchange?

A futures contract is an agreement that in the future two parties will make a purchase and sale of securities. It records the terms and price of the shares. Most of these transactions are stock speculation based on forecasts of price changes. If the cost changes, one of the parties will earn, and the other will lose money.

• At the same time, the amount is debited from the account or credited to it twice a day — when the exchange stops trading and fixes the share price at that moment. The difference between the price of the asset under the contract and the price fixed by the exchange at the time of the trading stop is called the variation margin.

• Futures on the St. Petersburg Stock Exchange differ from any other existing ones on the Russian market: the variation margin is fixed only for closed positions (when the futures contract has expired), and not on a daily basis. This model is relevant for hedgers and arbitrageurs, they will be able to hold positions without depositing money during market fluctuations.

Why do we need futures contracts?

Futures contracts are often concluded not only for the purpose of speculation, but also for hedging. In the second case, futures are used to insure investments in stocks, currencies, or raw materials against negative fluctuations. For example, if an investor has stocks in his portfolio and expects them to grow, then you can increase your position by buying futures. At the same time, if a decrease in the value of securities is predicted, the bidder can make a profit by opening a short position on futures without selling shares.

• However, experts warn that futures are risky instruments. First of all, they are interesting to speculators who once traded on international exchanges, but then lost this opportunity. That is, futures offer good opportunities, but it is worth calculating the risks carefully.

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What is planned next

• St. Petersburg Stock Exchange intends to expand the range of settlement futures, for example, on shares of companies from friendly jurisdictions. It is also planned to start trading settlement futures for the Ethereum cryptocurrency index. The list of futures on Russian securities will also increase. In addition, there will be perpetual futures contracts with no execution date.

What impact will new tools have on the market?

• The St. Petersburg Stock Exchange will have to compete with the Moscow Stock Exchange — by the end of September, the total volume of transactions on the derivatives market of the Moscow Exchange amounted to 14.1 trillion rubles. More than 200 thousand clients concluded transactions with futures and options on the site, which is the maximum value in the entire history of the futures market.

• Investors reacted positively to the start of futures trading on the St. Petersburg Stock Exchange. Its shares, traded on the Moscow Stock Exchange, jumped by almost 13% to almost 230 rubles.

• According to experts, the launch of new instruments will have an impact not on the country's economy, but on the "economy of exchanges", since it is trading platforms that earn commissions during trading.

• Nevertheless, this is a positive moment for the market. Experts remind that until 2022, Russian investors could trade on international platforms through Russian or international brokers or banks. However, most of them lost this opportunity later. Now the St. Petersburg and Moscow stock exchanges have begun to offer a large number of instruments for various foreign assets. Today, Russians have the opportunity, while in the country, to sell or buy foreign securities for rubles through such derivatives.

During the preparation of the Izvestia material, we talked and took into account the opinion of:

• investment banker Evgeny Kogan;