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Advantages of the IGC Sector

Question: Why should one enter the IGC Sector instead of other market segments on the MICEX SE?

1. The IGC Sector is the place where high-tech and small and medium-sized companies meet their investors.

In the Sector, the special criteria for admitting securities are effective, taking into account the special features of high-tech companies and small and medium-sized companies, as well as the needs of specific groups of investors who deal with the securities of these companies. Now, investors no longer have to choose their companies from the enormous number of issuers represented at the stock exchange, nor do issuers have to made additional effort in areas such as information disclosure, marketing, PR, and IR in order to find their investors. All that has been already done: the securities are concentrated in a single point, namely, in the IGC Sector of the MICEX SE. The IGC Sector is the place where investors meet issuers.

2. The Sector means concentration of liquidity guaranteeing successful implementation of IPO procedures, establishment of fair issuance price levels, and maintenance of a liquid secondary equity market.

The Sector is not technologically separate from the Stock Exchange’s main market and the rules of trading and settlements used in the Stock Exchange are also effective in the Sector. Any of the Traders or their clients may buy and sell the Sector’s securities directly, without passing through any additional procedures. It means that the enormous amount of monetary funds circulating at the Stock Exchange (a daily trading volume is up to 3 billion dollars) will be also used in the operations performed in the Sector. The Stock Exchange’s overall liquidity will support the liquidity of the Sector market.

Concentration of investors’ monetary funds in the Sector guarantees the issuers successful implementation of IPO procedures as well as establishment of fair issuance price levels and maintenance of a liquid secondary equity market that enables investors to dispose of assets rapidly and without losses.

To maintain liquidity, special stock exchange mechanisms may be used, including the institution of specialists and market makers working under contractual obligation with the Stock Exchange.

3. The Sector means on-exchange listing.

Most of the securities traded on the Stock Exchange are not included on Quote Lists; these securities do not have the status of listed securities; they are traded in a so-called non-listed segment of the MICEX SE. The IGC Sector provides the opportunity to be included on the MICEX SE’s Quote Lists. For companies in the Sector, listing means the following:

  • Enhancing investment attractiveness. To investors, on-exchange listing is a mark of high quality. Inclusion on the MICEX SE’s Quote Lists acknowledges the issuer’s stable financial position and liquidity of the issuer’s securities.
  • Extending the investment base. According to Russian law, many institutional investors, including pension funds and unit investment funds, may only acquire securities included on the MICEX SE’s Quote Lists. In addition, banks and financial companies (including foreign ones), acting in accordance with their internal regulations and common business practice, establish high limits on operations with financial instruments included on Quote Lists, thus having the opportunity to invest more in the same.
  • The possibility of entering foreign financial markets. Listing at the Stock Exchange is necessary for the issuer to obtain permission to issue ADRs / GDRs.

4. The Sector means more than trading; it is also a service environment.

What is created on the MICEX SE is more than a mere trading Sector. The Stock Exchange has formed a service environment consisting of partner companies rendering services in the spheres of investment and corporate consulting, PR and IR support, information disclosure and issue-related advice. The MICEX SE’s partner companies will help the issuer at all stages of preparation for entering the Stock Exchange, including assistance in preparation for IPO. They have unique experience operating in the sphere of consulting and support for high-tech and small and medium-sized companies. Moreover, these companies’ partnership with the Stock Exchange carries with it the Stock Exchange’s responsibility for high-quality and effective work.

A special role in this system is assigned to Listing Agents. A Listing Agent is a company acting as a financial consultant and guaranteeing the reliability of information disclosed by the Sector’s company upon issuing securities and entering the Sector, as well as supporting the company’s disclosure of information upon maintenance of a security in the Sector. The Stock Exchange accredits a Listing Agent in accordance with the Regulation on Accreditating Listing Agents, which determines the functions and duties of a Listing Agent, as well as its liability in case of improper fulfillment of its obligations. The institution of Listing Agents is intended to help companies in the Sector reconstruct their information disclosure systems in accordance with the needs of investors operating in the Sector, thus ensuring protection of the investors’ rights and minimizing the risk of disseminating unreliable data and information. The Stock Exchange is responsible for nominating Listing Agents and acknowledges their powers on an annual basis.

5. The Sector means prestige.

Inclusion of a company’s securities into the Sector gives the issuer company a special image distinguishing it from hundreds of small companies whose securities are now traded on the Stock Exchange. The Stock Exchange has not admitted all of the dozens of securities that formally comply with its requirements to the Sector. Any issuer must pass through a multi-stage selection procedure including, among other things, consideration of its candidature by an Expert Council established specially for this purpose that consists of independent experts with many years of experience in working with high-tech and small and medium-sized companies. Therefore, inclusion of a security into the Sector designates the company as a blue chip, the elite of the stock market, which is an important non-monetary factor for capital growth and attracting investors.