The Bank of Russia revealed the growing influence of social media on the stock market

More than 20 attempts to manipulate share prices have been identified by the Bank of Russia through Telegram channels.

Novice investors now rely heavily on social networks as a source of information.

The most noteworthy developments were the incorporation of gaming elements into investing, the increasing power of influencers, and a strong inclination towards taking risks.

In its July Financial Markets Risk Review, published on the CBR website, the Bank of Russia emphasized the influence of social media on retail investors.

By 2022, private investors had become the key players in the Russian stock market following the departure of residents from unfriendly countries. At times, their share in trading had risen to 81%.

The Central Bank Review has reported that, as a consequence, the market has seen the emergence of new trends such as gamification, the increasing impact of influencers on the decisions of retail investors, a rise in the amount of independent investment without the involvement of financial intermediaries, a heightened risk appetite, and investments in high-risk assets.

One of the most concerning potential trends in financial markets is the increasing influence of social networks on retail investors across the globe.

Against the backdrop of a surge in private investors entering the Russian financial market, the influence of telegram channels, bloggers, and influencers is also on the rise.

The reach of leading financial bloggers on social media extends to millions of subscribers. However, they are not held accountable for the information they provide, thus increasing the likelihood of rash and ill-advised decisions on the part of individual investors.

In 2022, the Bank of Russia uncovered evidence of manipulation involving the share prices of PJSC Rosseti Yug, PJSC GIT, PJSC Permenergosbyt and PJSC Saratovenergo through Telegram channels.

The Moscow Exchange reported that there were 8 attempts to manipulate share prices in January-February 2023, and 13 attempts in the same period in 2022.

Analysis conducted by the Bank of Russia showed that, in each quarter, 140,000 people (5-7% of active investors) were involved in trading of shares of the second and third tiers that were subject to "overclocking".

The Moscow Exchange and the Bank of Russia have proposed a range of measures to prevent unreasonable price fluctuations. These measures include the implementation of an asymmetric price corridor from ±40 to -40–10%, the introduction of discrete auctions (a special trading mode that replaces the suspension of trading in cases of abnormal jumps in securities) for non-index stocks, and an increase in the price step for a selection of low-liquid securities (the minimum value by which the price of a paper can change).