The stock market participants considered it timely to ask the Bank of Russia to expand the opportunities for individuals to work with gold, turning it into a full-fledged investment tool. Changes to the legislation were adopted last year, but will come into force only from the next.
The National Association of Stock Market Participants (NAUFOR) sent a letter to the Bank of Russia with a proposal to expand the capabilities of stock market investors when working with precious metals, in particular gold.
In a letter (Kommersant familiarized with it), it is noted that maximally ensuring investors' access to the gold market in the current conditions “will help preserve the savings of the population, protect Russian citizens from external shocks, and also against inflation risks”.
According to the president of NAUFOR Alexei Timofeev, the opportunity to purchase precious metals through securities brokers through brokers would be very useful now as a defensive asset and an additional opportunity for diversification.
At the end of last year, amendments to the law “On the Securities Market” were adopted, which allowed the purchase of precious metals to broker accounts and individual investment accounts (IIAs) and their use as collateral. However, these changes come into force only on January 1, 2021.
To date, individuals can purchase precious metals only to a brokerage account. At the same time, they are valued at zero cost in the investor’s total portfolio and cannot participate in collateral in various transactions, including in the derivatives market, as well as in revaluation of the portfolio. You can also buy precious metals in a bank account. However, when removing metal from the account in physical form, the client will need to pay 20% VAT.
What areas of investment choose in the era of coronavirus NAUFOR, in order to accelerate full access of investors to the precious metals market, asks the Bank of Russia to support the initiative to amend the law in terms of reducing the time for entry into force of provisions related to the possibility of acquiring gold using funds held in the IMS and using gold as security for obligations client to the broker. Anatoly Aksakov, head of the State Duma Committee on the Financial Market, told Kommersant that such an initiative has not yet been received by him, when this happens, a decision will be made on its advisability. At the same time, he noted that if the initiative is supported, according to the standard procedure, amendments to the law can be adopted within a couple of months. The Bank of Russia did not respond to a request from Kommersant.
Today, gold is traded on the Moscow Exchange, as well as settlement and delivery futures for it. At the same time, the volume of gold trading is insignificant - in total this year it amounted to 7 billion rubles, in general last year - 35 billion rubles.
When buying gold on a brokerage account, it is in the Moscow Exchange's vault on the broker's account. Igor Marich, Managing Director for Money and Derivatives Markets of the Moscow Exchange, said that when brokers get the necessary regulatory framework for accounting for precious metals, all categories of investors will benefit who will use precious metals as collateral will provide additional opportunities to improve market performance. “It will also become an additional incentive for the development of the exchange market for precious metals. Technologies and regulations of the exchange are ready for this innovation, ”he said. Gold is an alternative to savings in foreign currency in the light of sanctions risks and possible negative rates, says Alexander Dubrov, director of the Otkritie Broker investment products and services department.