* This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, June 24 (Reuters) - Western sanctions on Russia have forced hundreds of thousands of private investors to change brokerages to avoid their investments being frozen, the head of a stock market association told Reuters.

Russia has had a retail investment boom since the COVID-19 pandemic, with small players seeking to make money amid a record number of domestic share flotations and low deposit rates.

But the West's sweeping sanctions against Russia for what Moscow calls a "special military operation" in Ukraine triggered a reshuffle on the Russian market, challenging its financial infrastructure and increasing investors' fears about buying Western shares.

Sanctioned brokerages had to transfer clients to unsanctioned rivals - often other smaller domestic players - under a mechanism developed by the central bank.

But the system was not without flaws, said Alexei Timofeev, the head of the National Association of Stock Market Participants (NAUFOR), an investor association, that has more than 400 members, including companies and banks.

The central bank reported a jump in so-called "sanctions complaints" in March, when people found their funds were blocked by foreign clearing houses and could not be transferred. The flow of complaints is ebbing, but the central bank received around 24,000 between February and May.

Timofeev said in an interview with Reuters the industry was not fully capable of processing the "hundreds of thousands" of transfers in such a short time.

"We have a large number of complaints on the issue... It is clear that the blocking itself and the efforts necessary to defend clients from it were of an extraordinary nature."

The West imposed sanctions on Sberbank, VTB and Alfa Bank, Russia's largest banks that were also top brokerage houses, leaving scores of clients holding foreign stocks and needing to move their funds to unsanctioned players.

The central bank has estimated around 6 trillion roubles ($112.7 billion) of foreign shares held by Russians have been frozen as a result of Western sanctions.

"We are deciding on brokers' responsibility with regard to whether they did everything possible to protect the interests of their clients," Timofeev said.

NAUFOR has the power to impose fines on brokers and take other measures.

Russia now plans to change the law to let private investors open a second special account where they can keep their shares and financial assets that have been frozen due to sanctions.

As with other areas of Russia's economy, private investors may now have to look east. Timofeev said there was now interest growing in Asian rather than Western securities and that access to them would determine how the Russian market develops.

SPB Exchange, Russia's second-largest bourse, began trading a dozen Hong Kong-listed securities this week and plans to bring this to 1,000 next year.

"Foreign securities are still the theme of the Russian market because there is an exceptionally meagre set of domestic instruments," he said.

There are fewer Russian companies traded domestically than in other more advanced markets and the overall free-float value is relatively low.

(Reporting by Reuters)