In 2014, a number of new products were introduced on the Moscow Exchange Derivatives Market. September saw the launch of deliverable futures contracts on the shares of Russia’s largest retailer Magnit and on shares of Moscow Exchange, as well as the launch of futures contracts on Russian sovereign Eurobonds with 2030 maturity. With the highly liquid sovereign Eurobond market offering ample potential, brokers were thus given additional opportunities to manage their portfolios.
The Exchange also began offering futures on Russian market volatility. The contract’s underlying asset is the Russian market volatility index (RVI), the method of calculation of which has been updated to meet current international standards. The RVI enables investors to predict market expectations and respond quickly to events, including of a macroeconomic nature. The new product helps hedge securities portfolios and positions in the RTS Index and MICEX Index futures, as well as create arbitrage strategies.
In October the Exchange began accepting as collateral for derivatives trades — along and securities. The addition of allows domestic and international brokers to apply varying approaches to collateral management and to minimise the funding costs associated with their own and clients’ operations.
Settlement times were synchronised for all FX futures contracts, at 12:30 p.m. MSK (with Moscow Exchange fixing) for based pairs, and at 11:00 a.m. London time (with Thomson Reuters fixing) for other pairs.
The Exchange devoted much attention to improving the trading and clearing platforms for the Derivatives, FX, and Equity & Bond Markets. The technical updates applied allowed the implementation of large-scale projects such as migration of delivery for single-stock futures to the T+2 market and risk-balancing between the Derivatives and FX Markets.
The risk-balancing service allows participants trading on the Derivatives and FX Markets to reallocate currency risk between their Derivatives Market positions and outstanding FX Market obligations, thereby reducing collateral for counter-positions.
In 2015, the Exchange will focus on developing interest-rate contracts, including those allowing investors to hedge against interest-rate risks associated with Russian federal government bonds (OFZs) with variable coupon rates.
In addition, it plans to expand its FX futures offering and to improve existing instruments for private and institutional customers. In early 2015, the Exchange launched futures contracts on the CNY/RUB, USD/CAD and USD/TRY pairs, which substantially broadened the range of strategies available to the most active brokers. Development of CNY/RUB instruments is especially important, as they diversify the market offering and boost CNY market liquidity.
The Exchange will push ahead with the development of options as part of its current programme to attract new clients and enhance liquidity. Weekly options and flex options will allow traders to choose the date and price at which contracts will be exercised. Flex options on the most-liquid shares and the RTS Index will be launched on the standardised OTC derivatives market, where market participants will be allowed to post securities as collateral. The range of underlyings will be expanded for FX and cross-currency swaps, and for FX futures, with the introduction of settlement in EUR and CNY.
The Exchange will also launch the Asset Managers Ranking project, whereby it will publish descriptions of asset managers’ strategies and track record managing accounts. This will give potential investors accurate information on asset managers’ performances and historical yields.