Russian Traders Better Cows as Moscow Clocks Go BackKsenia Galouchko
When Russia widened the time difference between Moscow and London three years ago, stock trader German Nikonenko found himself working 12-hour days. With the country about to scrap the idea, he might get his life back.
“This change is for the better because otherwise we had to stay at the office really late,” Nikonenko, the chief equity trader at UralSib Capital in Moscow, said by phone on July 7. “The smaller the time difference with London the better, because you can plan your personal time and sports exercise. You wouldn’t go jogging at 11 p.m., would you?”
The wider time difference has made it more difficult for brokers in Moscow to serve clients in Europe and for traders in London to be active in Russia’s early market hours, hurting volume and revenue. The spread grew to four hours from three hours in 2011 after then-President Dmitry Medvedev ordered the switch to permanent summer time, saying seasonal clock changes disrupted the human biorhythm and confused milk cows.
Besides giving folks like Nikonenko more downtime, the bill Russian lawmakers passed July 9 that turns the clocks back by one hour raises the prospect of boosting volume in Russia’s 21.3 trillion-ruble ($620 billion) benchmark Micex index.
“Liquidity should increase as the trading day in Moscow and London will overlap more,” Andrey Braginskiy, a spokesman at the Moscow Exchange, wrote in an e-mail on July 8.
The Micex was little changed at 1,483.72 at 5:36 p.m. in Moscow today. The Bloomberg Russia-US Equity index slid 0.1 percent to 91.45 in New York. The Market Vectors Russia ETF, the biggest U.S. exchange-traded fund that holds Russian shares, added 0.1 percent to $26.61.
Turnover in equities, mutual-fund shares and Russian depositary receipts on the Moscow Exchange fell 21 percent between October last year and February to 692 billion rubles, before the Ukraine crisis temporarily revived trading, according to data from the bourse.
The average 30-day value of trades in London of the 10 biggest Russian companies with at least five years of history in both markets is about 33 percent greater than in Moscow, according to data compiled by Bloomberg.
The switch “should be positive” for liquidity as better-coordinated trading hours between London and Moscow will allow for more transactions by clients who participate in both markets, Tim Wiswell, head of Russian equity sales and trading at Deutsche Bank AG in Moscow, said by e-mail on July 9.
“Of course it will be nice to not have to stay that extra hour,” he said.
Under the bill, which still requires President Vladimir Putin’s signature, most Russian regions will turn back the clocks on Oct. 26. There won’t be any more switches after it’s implemented, according to the legislation.
“This decision is serious and it is here to stay,” Valentina Matviyenko, the speaker of the upper chamber of parliament, said in an interview broadcast on Rossiya 24 on July 9. “We’ll be one hour closer to Europe. I think, both literally and figuratively. This is very important.”
Traders criticized Medvedev’s original decision because they resented the impact on their personal lives and trading revenue. Slava Rabinovich, chief executive officer at Diamond Age Capital Advisors in Moscow, said in 2012 that the ability of the rest of the world to change time without hurting cows and people undermined the rationale for the move.
The four-hour difference with London in winter kept brokers in Moscow at their desks as late as 9 p.m. to serve clients and monitor markets in the rest of Europe, according to Uralsib’s Nikonenko. London-based traders at the firm who covered Russian shares had it worse because they had to come in at 5 a.m. to prepare for the opening of trading in Moscow, he said.
The switch will be a step further in OAO Moscow Exchange’s effort to boost trading and encourage more foreign investors to trade Russian stocks locally rather than in London and New York.
The exchange wants to reduce the volume of Russian equities trading abroad to between 20 percent and 25 percent of the total by 2015, Alexander Afanasiev, chief executive officer at the Moscow bourse, said in a June 2013 interview. It was about 40 percent in 2013, he said.
John Heisel, the Moscow-based vice president of sales and trading at Renaissance Capital Holdings Ltd., said by e-mail yesterday that the time shift will make things “slightly easier,” while not having any practical effect on his life or the market.
As for the government’s decision to widen the time difference three years ago, Heisel said he’s not sure who it was supposed to benefit.
“I don’t think they asked anyone in the business community, financial or otherwise,” he said.