vlad.tribnet.com / Issue #149 / Business / Reading article...

A second stock market is opening soon in Vladivostok which, its planners say, will unite eight cities across Russia on one electronic network.

The new trading entity, run by the Asia-Pacific Interbank Currency Exchange, will compete with the Vladivostok Stock Exchange, in operation since 1992. And there is now a dispute as to whether the new exchange will really offer anything new.

Ivan Panchenko, stocks department manager at the currency exchange, says a revolution in securities trading is taking place in Russia.

Because the new market is run by banks, which in Russia are allowed to trade in securities, they now have an incentive to provide more client services — like local accounts for foreigners, who need an account in order to buy and sell shares here.

“It will be easier for foreigners to participate,” said Panchenko.

Before, the only place foreigners could buy shares was in Moscow, since foreigners could only open accounts there, he said.

However, VSE Vice President Andrei Yakinchuk says that’s not true; foreigners need only go through an investment company abroad to buy stocks here.

Stock trading in Russia has become something of a two-headed monster, said Dmitry Krischenko, a representative of FEJI Capital, which is an investor in the Vladivostok Stock Exchange.

Both the Federal Commission — analogous to the U. S. Securities Exchange Commission — and the Central Bank are encouraging the development of securities trading, but with different systems.

The Federal Commission, which has been in the business longer, is encouraging local stock markets to operate independently. However, their lack of a unified network means it takes seven days to confirm a purchase, since everything goes through Moscow, said Panchenko, from the currency exchange.

The Central Bank, which before traded only in bonds and currency, realized that government securities are not profitable, says Krischenko, and has branched out. Using its huge network — and capital, it is establishing this new system.

But, says Krischenko, investors must pay for their shares ahead of time and hope that they have paid enough.

Vyacheslav Odintsov, director of the Primorsky Central Depository, which works with the VSE, puts it like this: The new exchange’s stock prices are readily available and information is easier to get, though the prices are higher. The VSE’s stocks are cheaper because the investment houses make deals with the companies listed. But it’s more difficult to find out stock prices.

He predicts rivalry between the two systems soon.

“It’s difficult to negotiate with [the new stock exchange],” said Odintsov. “They have such a different system, and they have a lot of money.

“I just hope each exchange will operate its own sector of the market.”

The new stock exchange has already begun a web site with 24-hour-a-day stock information for subscribers; full-scale operations will begin early October.