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. Last Updated: 07/27/2016

Luzhkov's Stock Shop Aims Small

Moscow Mayor Yury Luzhkov unveiled another pet project Tuesday, the Moscow Stock Center, aimed at luring billions of dollars in uninvested Russian savings and putting that money into the stock market.


The center, established in cooperation with the OLMA investment company, is designed to educate small investors about the market and help them invest their savings in Russian shares.


OLMA, which suggested the project to the government, has been working with small investors since 1992 and currently serves about 200,000 people, said general director Oleg Yachnik.


He described the center as a means of tapping the mass of small investors necessary to make small-scale investments profitable for a brokerage.


"It is not profitable for a large brokerage to work with individuals, to sell small stakes. It is profitable only if there is a large flow" of funds, Yachnik said.


"We would like this center to become national," he said.


OLMA currently offers shares in 16 companies, but through the stock center will offer trading in all shares listed on the Moscow Interbank Currency Exchange, Moscow Stock Exchange and the electronic Russian Trading System.


The brokerage offers prices at about a 3 percent spread to RTS prices.


The Moscow city government plans to open nine more stock centers in 1998, Luzhkov said at Tuesday's opening.


The centers will offer consultation and information as well as investing services.


"It is important to keep people from participating in pyramids," Luzhkov said, referring to the wave of pyramid investment schemes which popped up around Russia to feed off of the first round of voucher privatization.


The pyramids, such as that run by the infamous MMM company, are blamed widely for the hesitance many Russians have shown toward participating in the stock market.


Officials have long wrestled with the problem of establishing reputable mechanisms to convince the Russian people to invest their savings, which they "keep not in banks, not in business, but simply in stockings," said Viktor Sakharov, president of the Moscow Stock Exchange.


Luzhkov estimated that Muscovites alone hold $6 billion to $8 billion in savings.


The idea of a small-scale stock center is nothing new. But although Moscow has its share of so-called stock shops, most offer only five to 10 blue-chips, and generally are established to buy from the population at large and resell the stocks to large brokerage houses.