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. Last Updated: 07/27/2016

Mulling NYSE Listing? London Wants You

Whether it's hard currency or the stock exchange, Russians prefer American. In an attempt to break this trend, a delegation from the London Stock Exchange came to Moscow on Tuesday, trying to convince Russian companies to list with it instead of with New York.

Addressing a seminar attended by 27 Russian companies, LSE deputy chairman Ian Salter used all his skills to explain the advantages of London, but there is no sign yet that he succeeded.

"It is much easier and cheaper to get a listing from the LSE than from the NYSE, and transparency requirements are not as strict as in the States," Salter told journalists afterward. "Also, Russian companies traditionally had more relations with Europe."

Among other advantages Salter named was that "most trading in London is done by investment funds, which is good for those companies, which are interested in attracting medium- or long-term investment."

"In the U.S. ... there is more chance that your stocks will be finally found in the hands of the man in the street, who changes his mind very often," he said.

Yet Russian experts tended to disagree with his arguments, saying the LSE's advantages are not attractive enough for those Russian companies that want to become real international players.

"All Russian companies choose the NYSE because of several factors, the most important of which are broader investor base, higher liquidity and prestige," said Anya Goldin, partner with Latham and Watkins, which managed Wimm-Bill-Dann's recent initial public offering on the NYSE.

"Financial and disclosure requirements are not necessarily more tough in New York, but Russian companies are ready to go through the listing process because of NYSE prestige and other factors," she said, adding that "in the case of London, they think that it is just halfway to New York."

So far, four Russian companies, including WBD, have listed with the NYSE, whereas the London Stock Exchange has three: Tatneft, LUKoil and Gazprom. Eight other Russian stocks -- Mosenergo, Norilsk Nickel, Mobile TeleSystems, Rostelekom, Sibneft, Unified Energy Systems, Yukos and Surgutneftegaz -- are available on the LSE through the international order book.

Since 1996, when most Russian companies won listing from the LSE, the only one that has chosen London over New York is LUKoil. This year, LUKoil announced its plans to place American Depositary Receipts on the NYSE, but later chose the London Stock Exchange.

But, according to market players, the main market for LUKoil is still in the United States. "There were $5.7 million of LUKoil ADRs traded in London on Monday, while in New York this number was three times more -- $19 million," said James Fenkner, chief strategist with Troika Dialog.

In total, roughly $15 billion of Russian stocks were traded in London last year, $7 billion of which were accounted for by three listed companies.

"I could not think of any specific advantages of the LSE over the NYSE, except that it operates in closer working hours with Moscow than New York, but this is a natural difference," said Brian McMahon, a New York trader with Renaissance Capital, which became the first Russian investment bank to obtain membership on the London Stock Exchange last month.

"The liquidity seems to be better in New York in most cases, and this happens because more stocks are held by American accounts," he said.

"[Salter] is doing a great job by trying to change that, but the fact is that now New York is a much bigger market for Russian stocks," Fenkner said.