Homepage > News > The closing of the Moscow Stock Exchange blocks traders’ profits

The closing of the Moscow Stock Exchange blocks traders’ profits

By sheer genius or just a stroke of luck, traders who took short positions on the Russian stock exchange are now making huge profits. However, the economic sanctions imposed on Russia mean that it is not known whether they will manage to realize the win of USD 723 million.

The embargo imposed on the Kremlin in connection with the invasion of Ukraine resulted in the suspension of trading in Russian shares around the world. In response, the Russian authorities shut down the Moscow Stock Exchange. The current situation means that short traders may lose their profits before resuming trading.

Traders are at risk of losing their profits

Short traders may lose their unrealized gains before resuming trading in Russian equities due to the high interest charged for holding open positions. Most investors typically trade the Russian index with American Depositary Receipts (ADR) and Global Depositary Receipts (GDRs).

ADR / GDR short holders have high unrealized gains but cannot take advantage of them until their trades are closed and the gains are realized. With many securities on hold and the liquidity of the stocks that can be traded, this can be difficult. Moreover, the suspension of trading could further diminish these gains as interest rates charged by brokerage houses to short sellers may rise over time, – said Ihor Dusaniwsky, managing director at S3.

Russian indices fell by 97%

The average interest rate charged on US or other regional securities is 2.02%, significantly higher than the average interest rate recorded in December (0.65%). The inability of investors to close the deal and take profits is due to the sanctions imposed on Russia. According to Dow Jones, the Moscow GDR index fell by over 97% even before trading in Russian securities was suspended.

According to media reports, the largest short positions concern Sberbank PJSC, the largest Russian bank. Other targets for downside traders include Ozon Holdings, which said it may not be able to pay off its obligations if the trading suspension continues, and gas giant Gazprom PJSC.

Author: Izabela Kamionka

Are you a trader?

Help others and rate your broker! Use the search engine or find your broker on the list.

exante baner

Last news:

german economy

German Business Climate Dips, Indicating Looming Extended Recession

A successive drop in German business morale in June indicates an impending lengthier recession for ...
ropa naftowa

Nigeria’s Oil Market Faces Crisis as Half of Output Goes Unpurchased

The Nigerian oil market is currently facing a significant surplus, with nearly half of next ...
Week for Wall Street

Stock Futures Fall, Investors Eye Powell’s Testimony

Stock futures are indicating a downtrend ahead of the Federal Reserve Chair, Jerome Powell's second ...

Euro Maintains Position Despite Russia’s Drastic Reduction in Use – ECB Report

Despite Russia's significant reduction in its use, the Euro stood its ground as the world's ...

Add a comment

Your email address will not be published. Required fields are marked *


Note: Opinions and posts on ForexRev.com represent personal opinions and views of their respective authors and should not be interpreted as recommendations to purchase or sell securities. ForexRev.org assumes no responsibility or liability for such content.
Go to top