Moscow Exchange introduces major upgrade to settlement of Russian securities
Moscow Exchange begins settlement of securities on the T+2 basis, bringing its procedures in line with international best practices. As with other recent reforms, the move makes trading on Russia"s main exchange more attractive to both international and Russian market participants.
Starting today trading members of the Moscow Exchange require only partial collateral to execute trades. Full settlement and delivery of securities will take place two days after the trade date, a process known as T+2 settlement. Previously 100% advance depositing of both cash and securities was required, known as T+0.
The move to T+2 settlement for the more than 1780 securities listed on the Exchange will be executed in stages. From March 25 to June 30, 2013, settlement in T+2 will be available for the fifteen (15) most liquid stocks and all issues of government bonds. They will concurrently continue to be available on a T+0 basis.
Beginning July 1, 2013, the Exchange will extend the list of T+2 eligible securities and settlement for these names in T+0 will end.
"The system of pre-payment for trades played a positive role as the Russian securities market was getting off the ground. Trading in Russia is now integrated into the global financial markets and our issuers expect the latest in settlement and risk management tools. The globally recognized T+ settlement model lowers costs for market participants, increases efficiency of deployed capital and will lead to higher trading volumes. This system is already in place on Moscow Exchange's foreign exchange market; now has come the time for it to be implemented on the equities market," said Alexander Afanasiev, Chief Executive Officer of the Moscow Exchange.
The plan to migrate to T+2 settlement was first announced a year ago. Since then the Exchange and its members have adjusted their IT systems and converted back office procedures in preparation for the new settlement regime. At this time more than 90 investment banks and brokers are able to settle in the new regime. It is expected that all trading members of the Exchange will be able to trade in T+2 by July 2013.
The reform of the settlement cycle is part of a larger program to upgrade Russia"s capital markets and ensure that Moscow is the primary platform for trading across Russian asset classes. This program began with the merger of Russia"s two main exchanges creating Moscow Exchange that was completed in December 2011. Since then, Russia has established a central securities depository, opened up the bond market to Euroclear and Clearstream and created a central counterparty for clearing across all markets. Last month Moscow Exchange completed a successful initial public offering, listing its shares on its own trading platform.
The following securities are eligible for T+2 settlement starting March 25: common and preferred shares of Sberbank (SBER), common shares of the following issuers: Federal Grid Company (FEES), Gazprom (GAZP), Moscow Exchange (MOEX), Lukoil (LKOH), Norilskiy Nickel (GMKN), Novatek (NVTK); Rosneft (ROSN), RusHydro (HYDR), Severstal (CHMF), Surgutneftegaz (SNGS), Uralkali (URKA), VTB(VTBR), preferred shares of Transneft (TRNFP), as well as 34 government bonds (ОFZs).
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About the Moscow Exchange
OJSC Moscow Exchange MICEX-RTS ("MOEX") operates Russia"s largest public trading markets for equity, bonds, derivatives, foreign exchange and money market products as well as Russia"s Central Securities Depository (CSD) and the country"s largest clearing service provider, National Clearing Centre. In the year ended 31 December 2012, it ranked among the world"s top-20 exchanges for equity trading by market capitalisation and among the top-ten exchanges for bond trading by trading volume (by value) and for exchange-traded derivatives by number of contracts traded. Moscow Exchange has 694 companies listed on its securities exchange, as at 31 December 2012, including many of Russia"s largest companies.
The Moscow Exchange was formed in December 2011 as a result of a merger between Russia"s two main exchange groups. The merger brought together MICEX Group, the oldest domestic exchange and operator of the leading securities, foreign exchange and money market platform in Russia, and the RTS Group, at the time the operator of Russia"s leading derivatives market. This combination created a vertically integrated public trading market across most major asset classes. Following the merger the Company became an open joint stock company (OJSC) and was named Moscow Exchange. Moscow Exchange completed the initial public offering of its shares on February 15, 2013.
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