Big Brokers Bigger as Small Go to Wall

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Leading brokerages are getting bigger — increasing assets, equity capital and trade turnover — while the number of market players is falling, according to the National Association of Participants in the Stock Market, or NAUFOR.

Fifteen of the leading companies control 50 percent of the market, and the leaders remain unchanged.

In 2000, brokerages concluded agreements worth 2.07 trillion rubles ($71.2 billion). In the fourth quarter, turnover rose by 21 percent to 655 billion rubles, despite the decline in market players by approximately 200 companies.

Stock turnover totaled 1.35 billion rubles, or 65 percent, bonds 87.5 billion rubles, or 4 percent, and veksels — promissary notes — 621 billion rubles, or 31 percent.

The equity of all brokerages as of Jan. 1, 2001, totaled 15.8 billion rubles — the top 10 having 11.5 billion rubles.

As of June 1, 2000, the equity of all brokerages was negative — 1.2 billion rubles.

If the indicators for companies that are part of one financial group are united, the unquestionable leader for stock turnover is Troika Dialog, which controls 18.5 percent of the market.

The top five also includes the largest Moscow brokerages; their overall turnover amounts to a total of 586 billion rubles, or 43.4 percent of the market.

AVK, the general agent of the St. Petersburg government for municipal city borrowing, and BM-Securities of Moscow compete with Troika Dialog in bond trading.

The dramatic increase in equity is connected with the removal of outsiders from the market and the growing capitalization of the market leaders, said Daniel Ioffe, the head of NAUFOR's analytical department.

The Central Surgut Depositary was No. 1 in capital growth, with 7.8 billion rubles, and NIKoil was second in the ranking, with 648 million rubles.

The Central Surgut Depositary has a license for brokerage and dealer activities, but the volume of its operations with stock amounted to 50 rubles. "We are obliged to include the Central Surgut Depositary in the ranking of the professional players; after all it has the licenses," said Ioffe.

The profit of players in the stock market totaled 1.1 billion rubles for 2000.

The share of loss-making companies fell from 34 percent to 31 percent for three quarters of 2000. KM Invest earned the largest profit in 2000 with 122 million rubles.

NIKoil occupies 10th place in the list of the largest brokerages, and neither Aton nor United Financial Group is in the top 20.

Also, the largest brokers, in accordance with Russian accounting standards, do not show the profits for all of their affiliated groups.

"No one is obliged to show all of their offshores," said Ioffe.

When compiling ratings, as opposed to the rankings, brokers present their accounts to NAUFOR according to international standards, and the "picture is somewhat different."

"The results [using Russian or international accounting] can differ by 1,000 times," said Ioffe.