Moscow exchange MICEX-RTS

Московская Биржа

Moscow Exchange was formed in 2011 by the merger of two largest stock exchanges of Russia – MICEX (date of establishment – 1992) and RTS (created in 1995). The need for the merger was due to the different types of activities, and created holding allowed to unite not only the exchange tools and technical platform, but also the national settlement Depository and the clearing center (NCC Bank (JSC)).

Moscow exchange – the path to establishing a stock market of Russia

During the USSR times, investors could hear about exchange platforms only via the receiver. In the country, that lived locked up for a long time, the concept of the exchange was very slim. Commodity exchanges started to become widespread, but there was no mentioning about stock trading, bonds and moreover about futures. There could not be any mentioning about the stocks, because the majority of property was communal.

The situation changed with the collapse of the Soviet Union. The first MICEX (Moscow interbank currency exchange) was created, which originally specialized in currency auctions, and later started trading with securities. After 1995, at its base the futures market began to form – investors first became acquainted in practice with futures (only in US dollar and  Euro) and corporate securities. Here are some interesting points on which we should focus in the development of the MICEX:

  • from 1992 to 1998, trading on the stock exchange took the form of auctions, where a single fixed rates of ruble to the us dollar and the Deutsche mark were established for all participants;
  • in 1997, a system of electronic lot trades was created, which was the main system combining 8 interbank currency exchanges in the 2000-ies. Later on its basis, trade currency swaps trade began;
  • MICEX organized 90% of transactions with stocks and 100% transactions with bonds in Russia. The transaction had a complex form and required the depositary. The principle of transactions was based on “delivery against payment” with 100% depositing of assets;
  • In 2003, 135 management companies were permitted to the platform, which offered more than 300 units of PIF to investors.

In 1995, RTS stock exchange went a somewhat different path of development. Instead of trying to expand the range of financial instruments, the stock exchange expressed preference for technological development:

  • classic stock market exchanges allowed to conclude a non-anonymous transactions with a choice of currency, calculation time and its method;
  • based on the value of the shares of the 50 largest companies of Russia, the RTS index was formed, which is an indicator until now;
  • based on the divisions of RTS, in 2000 the urgent FORTS platform was created, where the trading of futures and options are held until now. Since 2001, such transactions as arbitrage and hedging are held there.

Since 2005, the RTS implemented a number of projects, dividing and simplifying exchange markets, giving the opportunity to take part in the auction not only for large customers, but also for private investors (physical persons).

united exchange MICEX-RTS

In 2011 by the merger of MICEX (securities and currency) and RTS (the derivatives market) Moscow exchange appeared.

Unlike their colleagues (e.g. ICE, LSE, Shanghai stock exchange) Moscow exchange has no special achievements. Almost every quarter failures occur in the trading system, when investors lose access to a particular sector in 1-3 hours. Not so long ago, the media actively discussed the actions of the MB relative to disconnect from the trading system of several banks. Then it was about the fraudulent actions of third parties, attacked banks, but it underscores the vulnerability of the electronics of the exchange and its members from external threats. We hope that all these defects is the consequence of the youth of the exchange, and soon they all will be eliminated.

Interesting facts about Moscow Exchange:

  • the staff of the exchange is around 1500 employees, of which 52% are men;
  • the logo of the exchange is based on the infinity symbol and the background, is the Red Square and “Red Square” by Kazimir Malevich;
  • all transactions are performed in electronic form only;
  • the symbol of the Moscow stock Exchange is a bell. Strike the bell means the attraction of new issuers or the launch of new product;
  • exchange is among the 25 largest exchanges by trading volumes in derivatives and bonds. The papers of more than 700  of issuers are traded there;
  • in 2013 (15 February), the stock exchange went IPO, and today its largest shareholders are the Bank of Russia (11,7%), Sberbank and Vnesheconombank (slightly less than 10%) and EBRD (6%).

Moscow exchange logo

Today, the Moscow exchange consists of several different platforms, each specializing on its direction:

  • stock market. Here you can find everything beginning with stocks and bonds, ending with investment certificates, shares, depository receipts. Estimates are held the day after the transaction;
  • derivatives market. Here are options and futures on currency pairs, interest rates, precious metals, futures on oil and sugar, Eurobonds and foreign stocks;
  • currency market. In addition to the major currencies it includes the trades of the Ukrainian hryvnia, the Kazakh tenge and the Hong Kong dollar;
  • financial market. Works with REPO (transaction of the underlying asset with the subsequent reverse transaction at a fixed period of time). The counterparts are: the Bank of Russia, Federal Treasury, Pension Fund of the Russian Federation;
  • commodity market. The main product is gold and silver, but in 2014 year it started “the grain Market”.

In addition, the Moscow exchange provides services of Clearing centre and the Depositary.

To sum up. Moscow exchange is still quite young but ambitious holding company, but it has a future. There are still a lot of gaps, but they are all eventually disposable. The exchange is actively expanding tools, making trading more interesting and profitable.

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