Rada Capital ◦ Our Comments ◦ The volume of deals with securities has decreased for the first time
The volume of deals with securities has decreased for the first time
The total volume of securities trading in Ukraine last year amounted to UAH 1.69 trillion, said Maxim Libanov, director of the department for analysis, strategy and development of legislation of the National Securities and Stock Market Commission of Ukraine (NSSMC). This is almost two times less than a year earlier. In 2013, for the first time, trading in the entire history of the stock market has declined.
Until 2013, securities only gained popularity. Over the previous five years, the amount of transactions in securities has increased almost three times: from 883 billion UAH in 2008 to its historical maximum of 2.53 trillion UAH in 2012.
OTC market
The main reason for the decline in trading is a two-fold drop in the over-the-counter market. The volume of transactions in this sector last year amounted to 1.2 trillion UAH, whereas a year earlier – 2.3 trillion UAH. Contributed to the excise tax on securities transactions in the unorganized market. From January 1, 2013, over-the-counter transactions in corporate securities (except for investment certificates) began to be taxed at a rate of 1.5% of the transaction amount. “The main goals that were pursued when entering the excise tax were to reduce the number of tax evasion schemes, increase revenues to the budget, and increase the level of regulation and control in the sphere of securities turnover,” as the managing partner of Rada Capital investment company Volodymyr Kundzich said
During the first 9 months of 2013, only about 50 million UAH was transferred to the state budget from the tax on securities transactions. According to Anatoly Amelin, a member of the National Securities and Stock Market Commission, this amount does not compensate for the negative effects of excise on the stock market as a whole, he noted. If it were not for the introduction of an excise tax on over-the-counter transactions with certain securities, the volume of the unorganized market would have been greater, says Igor Andrusik, head of the strategic development department of the rating agency IBI-Rating.
Exchange Syndrome
The volume of transactions on the stock exchanges almost doubled to UAH 474.63 billion. As a result, the share of the organized market in the total trading volume reached 28%, whereas a year earlier it was only 10%. More than others from the introduction of excise tax won Exchange Perspective, since 82% of transactions from the over-the-counter market went to this site, said Volodymyr Kundzich. As a result, the exchange increased its trading volume from UAH 146 billion to UAH 319 billion. Thanks to the new conditions in the securities market, the trading volume of PFTS also increased from 90 billion UAH to 113 billion UAH. The Pridniprovsk Stock Exchange received the largest gain compared to 2012, the volume of trading of which increased more than 20 times and reached UAH 13 billion.
The main tools of over-the-counter transactions today are government bonds and investment certificates. They are not subject to excise, and the cost of their service is lower than, for example, for shares. When carrying out over-the-counter transactions, the prime cost of the transaction also plays an important role, analysts confirm. “The bidders decide that it is more profitable for them to pay excise or exchange commissions,” said Anatoliy Guli, chairman of the board of the Ukrainian Interbank Currency Exchange. “There are not very active brokers who carry out trading operations (in their own or client interests) not enough to recoup the costs of obtaining membership and paying for the services of the exchange,” Sergei Antonov, chairman of the board of the Ukrainian Stock Traders Association, told Capital. . “A number of market participants avoid transactions on stock exchanges, despite the need to pay excise, as their prices can differ greatly from market prices.” It is unrealistic to transfer securities trading to stock exchanges by introducing excise only. According to Pavel Ilyashenko, asset manager of Kinto AMC, for those who use over-the-counter transactions for their own purposes, the excise tax is just a slight appreciation of the scheme.
