The Bank of Russia and the MICEX Settlement House have signed an agreement of cooperation, under which the two organizations will interact in providing credits of the Bank of Russia to lending institutions. This will enable to organize, through the MICEX SH, the service of collateral crediting transactions concluded in accordance with the Statute of the Bank of Russia #236-P of 4 August 2003 “On the Order of Providing the Bank of Russia’s Credits to Lending Institutions, Covered by Collateral in the Form of Securities” and in accordance with the “Rules of Effecting Transactions with Lending Institutions by the Bank of Russia Using the MICEX System of Electronic Trading in the Bank of Russia’s Deposit and Lending Operations.”
Thus, in the nearest future, lending institutions will be able to effect credit transactions with the Bank of Russia using the MICEX System of Electronic Trading (collateral crediting). The technological feasibility of collateral crediting operations with the use of the MICEX System of Electronic Trading appeared on 2 October 2006. The Rules that came into effect on that day enabled lending institutions to effect credit transactions with the Bank of Russia using the MICEX System of Electronic Trading. The latter were added to the Bank of Russia’s deposit operations which had existed before.
Collateral crediting implies that the Bank of Russia extends to a lending institution collateral credit covered by collateral in the form of securities from the Collateral List of the Bank of Russia which belong to the lending institution.
Credit transactions are effected by entering and registering in the MICEX trading system an order from a lending institution and a reciprocal order from the Bank of Russia. Credit transactions can be effected through an American auction or on fixed terms (at fixed interest rates).
Using its electronic document interchange system the MICEX provides participants with reports on deposit and credit transactions with the Bank of Russia, effected with the use of MICEX trading system, as well as on entered orders.
The effecting of deposit and credit transactions with the Bank of Russia with the use of the MICEX System of Electronic Trading gives market participants the following advantages:- increased promptness of effecting deposit and credit transactions with the Bank of Russia;
- a high-tech system of effecting transactions, based on the automated mode of effecting transactions, preparing and transferring reports and electronic document interchange;
- low participation costs coupled with different options of technological access;
- prompt use of funds kept in accounts with settlement centers of the Orderly Securities Market for operations in other MICEX markets (foreign exchange, government securities, shares, corporate bonds, etc.);
- interface and technologies unified with other MICEX product.
Background
By the size of assets, the MICEX Settlement House is among Russia’s 30 largest lending institutions. It secures reliable settlements in all exchange-based markets. The volume of traders’ payments, made daily through the correspondent account of the MICEX SH with the Bank of Russia in settlements for transactions effected on the MICEX, amounts to 200 billion rubles. About 400 Russian banks, accounting for about 30% of the Russian banking system, have opened their accounts with the MICEX SH. Clients’ balances in accounts with the MICEX SH amount to over one third of the amount of funds of all lending institutions of Moscow region kept in accounts with the Bank of Russia. At present, the MICEX SH provides settlements for the Bank of Russia’s deposit operations effected through the MICEX trading system. The Bank of Russia’s deposit operations with lending institutions, effected with the use of the MICEX System of Electronic Trading, were launched in March 2004. Today, they are among instruments available to participants in the MICEX markets. The MICEX market for the Bank of Russia’s deposit operations is developing rapidly. In 2006, the turnover of these operations amounted to 468.2 billion rubles, having exceeded 2.4 times the turnover for 2005. In 2006, the total number of transactions exceeded 2100.
