Diversification and vertical integration underpin the Group’s unique business model: Moscow Exchange Group offers a highly diversified product line and a full range of trading and post-trading services to its customers.
Moscow Exchange facilitates trading across a wide range of asset classes: equities, bonds, derivatives, currencies, money market instruments and commodities. As a result, the Group’s business model is resilient to fluctuations in the economic cycle, as different assets traded on Moscow Exchange’s markets find demand from investors and market participants during its various phases.
Moscow Exchange’s Equity & Bond Market hosts trading in shares, federal government bonds (OFZs), regional and corporate bonds, sovereign and corporate Eurobonds, depository receipts, investment shares, mortgage participation certificates (MPCs) and exchange-traded funds (ETFs). Settlement for shares is T+2 (two business days after the transaction date). For trades in the 20 most-liquid shares, the required collateral amounts to
On Moscow Exchange’s Derivatives Market, the following instruments are traded: index futures (MICEX index, RTS index, RVI volatility index); futures on Russian and foreign shares, OFZs and the Russia-30 Eurobond, currency pairs and interest rates; precious-metals contracts (gold, silver, platinum, palladium, copper); oil and sugar futures; as well as options on some of these futures.
The standardised OTC derivatives market with the central counterparty (CCP) was established to implement the G20’s resolution adopted at its 2009 meeting in Pittsburgh that standardised derivatives should trade on exchanges. G20 countries, including Russia, confirmed their intent to strengthen the role of central counterparties. The Bank of Russia in the near future expects to make clearing with the CCP mandatory.
The following currencies are traded on Moscow Exchange’s FX Market: USD, EUR, CNY, GBP, HKD, UAH, KZT and BYR. The most heavily traded pairs are USD/RUB and EUR/RUB, which in 2014 accounted for over 80% and 15% of total on-exchange FX transactions, respectively. The weighted average value at 11:30 a.m. MSK for the USD/RUB currency pair with next-day settlement is used by the Bank of Russia to determine the official USD exchange rate.
On the Money Market, Moscow Exchange provides the following types of repo services: repo transactions with the CCP; interdealer repo; direct repo with the Bank of Russia; and repo with collateral management. Deposit and credit transactions for the Bank of Russia, Pension Fund of Russia, Federal Treasury of Russia and Vnesheconombank are also available.
On Moscow Exchange’s Commodity Market, gold and silver have been traded since October 2013. Government purchase interventions on the grain market are conducted on the National Mercantile Exchange, which is the authorised exchange of the Russian Ministry of Agriculture.
In addition to trading services, Moscow Exchange offers a complete range of clearing and settlement / depository services to its clients.
Clearing services are provided by the NCC Clearing Bank, which acts as the central counterparty for all of Moscow Exchange’s markets. The NCC Clearing Bank is the only qualified central counterparty in Russia. It was given this status by the Bank of Russia in 2013, and it has been a systemically important central counterparty since 2014. The NCC Clearing Bank’s equity was RUB 38.9 bln as of 1 January 2015.
Settlement and depository services are provided by the NSD. In 2014, the Bank of Russia recognised the NSD as a systemically important central depository and settlement depository and repository, and assigned it the status of a nationally significant payment system. The volume of securities in storage amounted to RUB 24.9 trln as of 1 January 2015.
The Group also offers information products and technical services. The information products include real-time market data, trading results and index data. Moscow Exchange’s indices are the key indicators of the Russian stock, bond and futures markets. The main stock market indices are the MICEX Index and RTS Index, calculated on the basis of the same securities but in different currencies (the MICEX in roubles and the RTS in U.S. dollars). Part of the Exchange’s commission income comes from the use of indices for arranging trading in futures and options on the RTS and MICEX indices. Technical services include a broad range of professional solutions for access to the Exchange and e-trading markets based on modern exchange technologies.
Most of Moscow Exchange’s tariffs (except for the Derivatives Market) are based on the single-tariff principle — a typical turnover tariff covers the tariffs for trade arrangement as well as clearing and integrated technical services. The bulk of the market income comes from tariffs linked to volumes of transactions entered into by market participants (turnover tariffs). Moscow Exchange uses its tariffs as a financial market development tool, providing participants on the Money, FX and Equity Markets with the option of selecting tariff plans. The variety of tariff plans enables participants to optimise their effective commission rates depending on their trading partners and volumes, thus encouraging overall market growth and development.
Moscow Exchange’s tariffs take into account specific features of the products traded on particular. Tariffs on the Derivatives Market are charged depending on the number of contracts per transaction. For traders who close transactions within a trading day, a discounted tariff is levied (scalper discount). Return premiums for intra-broker transactions are provided to participants on the Equity and Money Markets. Tariffs on the bond market in Negotiation Transaction Mode (NTM) limit the maximum commission fee for each transaction.
Moscow Exchange’s pricing policy is regularly reviewed in consultation with both market participants and the regulator. This creates a viable balance between the interests of the entire Russian financial market and Moscow Exchange as a business.
Moscow Exchange’s operating income is derived from fee and commission income and interest income from management of the Group’s own funds as well as client funds, primary customer balances placed with the NCC Clearing Bank and NSD. The funds are invested in compliance with the approved investment policy. The majority of the Group’s assets consist of highly liquid funds placed on correspondent accounts in European and American banks. Other investments include: government and corporate bonds denominated both in roubles and foreign currency; interbank deposits, repos and reverse repos as well as FX swaps. Most investments are of short maturity; counterparties’ minimum credit quality is limited by regulatory requirements of the Bank of Russia.