Moscow Exchange to Divert All Free Cash to Dividends

The Moscow Exchange plans to raise its dividend payout floor to 60% of net profit and channel all of its free cash flow into dividends, Reuters reported citing the exchange’s new dividend policy announced on Tuesday.

The bourse’s free cash flow, seen as a measure of profitability in financial analysis, takes into account investments needed to maintain and expand its business, as well as regulatory requirements applicable to the Moscow Exchange and its subsidiaries.

Russia’s main stock exchange has also approved a new strategy for the five-years to 2024, including longer trading hours and an expanded range of products and services.

The five-year plan of Russia’s main stock exchange, also revealed on Tuesday, is designed to ensure at least a 10% annual commission fee growth, the exchange said in a statement. It will also improve the cyber stability of the exchange’s key systems, it added.

“Our main goal is to maintain the reliability of our systems in line with the best industry standards and satisfy the needs of our customers,” the head of Moscow Exchange Yury Denisov told reporters when presenting the new strategy.

The Moscow Exchange plans to double its retail investor base from the current 3 million people in the next five years, said Denisov, who took over as CEO in May 2019.

The exchange said it would continue paying dividends on an annual basis. This has disappointed hopes of some analysts, particularly VTB Capital, for interim dividends. BCS Global Markets also said earlier that an interim dividend payout would have a positive impact on the Moscow Exchange shares.

“The new dividend policy has been designed to balance long-term growth and financial stability with the continued strengthening of the investment case,” Oleg Vyugin, Chairman of Moscow Exchange’s Supervisory Board said in a statement.

MOEX shares rose 1.9% on the day to 91.39 roubles each, their highest since Oct. 7, following the announcement on the new strategy.