HFT and algorithmic trading do pose certain threats, including equipment failure, a flash crash or technical glitches that the trading system and market must be ready for. This issue requires the joint cooperation of brokers, system providers and the exchange. MICEX-RTS is actively involved in developing its IT platform and intends to invest in developing the technology so as to be ready to process an increasing number of orders. International investors are more and more willing to engage in direct trading and even though the Russian market is at a very early stage of that process, the growth potential is huge.
The Impact of the Merger on Clearing Systems
One of the main priorities of the merger was to improve the market through sharing resources and working together to build a fully-fledged trading and clearing infrastructure for all products with a single entry point for market participants. MICEX-RTS is working towards the creation of a single clearing center, which will operate in accordance with global standards and will meet the requirements of both local and international clients.
Over almost two decades, the lack of T+ and a central depository kept most foreign investors away from the Russian market. By the end of 2012, two extremely important things will happen: National Settlement Depository (NSD) will become the central depository and T+ settlement along with delivery versus payment (DVP) will be developed. The central depository law adopted at the end of 2011 completely changes Russia’s business practice concerning the safekeeping of securities. The law has set the basis for a central depository, an organization exclusively performing the functions of depository and nominal holder of securities traded on the stock market. The outstanding legislative work is expected to be completed by the end of 2012. At that point, the Russian cash equities market will be fully compliant with the 17f-7 SEC rule. In addition, the T+/DVP is expected to go live around the third quarter of 2012. The launch of this facility will bring the Russian market up to date with the most common international practices for settlement.
The Next Project for MICEX-RTS
One of the priority projects MICEX-RTS is about to launch is the company’s IPO. The shareholders of the Moscow Exchange tasked us to prepare the company for IPO by the end of 2012; however, the placement itself will take place a bit later. Much depends on the market situation and MICEX-RTS’s strategy will focus on becoming one of the leading global exchanges, which will help establish Moscow’s position as a regional financial center.
Moscow Exchange: Shaping Russia’s Financial Markets
