FFMS concerned about issuer outflow - Pankin
MOSCOW. Nov 16 (Interfax) - Russia's Federal Financial Markets Service (FFMS) is concerned about the current situation with IPOs by companies registered abroad but with Russian assets, though it is not planning to set up additional barriers, FFMS chief Dmitry Pankin said during a Russia 24 broadcast.
The peak of Russian company IPOs was reached in 2007, with the placement of more than $30 billion, with around $17 billion of that being placed on the domestic market, Pankin said. Placement has contracted significantly by now, and this year is unlikely to see more than $6 billion. Of that, more than half - almost $4 billion - will be placed abroad by foreign companies with Russian assets, the FFMS chief said.
"There is a departure from Russian jurisdiction. A special legal entity is registered somewhere in Holland, on Cyprus, that legal entity has Russian assets - metallurgy, oil, chemicals, and then again this company issues shares, bonds, that are placed in London, in Frankfurt. That is, our domestic financial market here is actually not involved," Pankin said.
"Erecting additional barriers is not an option now," he said, and if the FFMS establishes some kind of dam, "the market will find a way to get around that dam." "It's important to create more favorable conditions, to interest the issuer, so that he places here, so it's simpler and more convenient to place, cheaper - that's the main thing," Pankin said.
One important issue here is the process of moving Russian issuing standards closer to international standards, simplifying them, eliminating superfluous requirements. The FFMS already has full market agreement on several counts, such as the admission of securities to trading immediately after placement, "let them trade right away," Pankin said.
"There is discussion on other issues, he said. There is, for example a proposal that non-publicly held companies will be guaranteed registration upon application, and then securities may be issued upon notification. "On the one hand, it would seem to be a good measure, significantly simplifying procedures and cutting red tape. On the other, there are concerns that there would appear a large number of swindlers that will show purely empty, fictitious capital. So he we would want to initiate a discussion with market players and put these questions up for discussion," he said.