New opportunities for participants of Standartised OTC Derivatives Market
On 29 July 2019, MOEX’s Standartised OTC Derivatives Market migrated to the Unified Collateral Pool, allowing securities to be posted as collateral for trades on the market.
The Unified Collateral Pool model delivers cross-market clearing and offers the following capabilities for participants:
- A single trading account to allocate collateral across all MOEX markets;
- Unified assets acceptable as collateral;
- Lower settlement costs on the back of netting efficiencies on all CCP-cleared markets;
- Cross-margining between the markets, resulting in lower margin requirements.
As of the end of June, 53 brokerage firms and banks had opened unified accounts.
Moscow Exchange’s Standartised OTC Derivatives Market offers trading and clearing for interest rate, FX and cross currency swaps, FX forwards and options with maturities from three days to five years depending on the instrument type. Market participants may benefit from interest on initial margin and deposit margin, low capital costs, low counterparty risk with flexible OTC instrument parameters, and the absence of a requirement to enter into a master agreement and RISDA (commonly used documents for OTC derivatives trades). In 2018, trading volume increased more than sevenfold compared to 2017, to RUB 884 billion. From January to 26 July 2019, trading volume was RUB 359 billion versus RUB 171 billion from January to July 2018.