Correspondingly, over the year, the daily average volume grew to 106.3 billion rubles (3.7 billion dollars). According to the MICEX President Alexander Potemkin, the stable growth of the MICEX Group’s volumes is connected with the favorable situation in financial markets and points to the intensive development of the Russian exchange infrastructure, which is in great demand among professional participants.
According to the MICEX’s head, these results were obtained thanks to the rapid development of all sectors of the market, primarily, the forex market (growth: 1.7 times), the corporate securities market (1.5 times), the government securities market (2.1 times) and the derivatives market (14.3 times). Among the most important projects undertaken in 2005 A.Potemkin mentioned:
- the development of the exchange market in the euro, in which up-to-date procedures of trading were implemented;
- the launch of the MICEX Stock Exchange, which has become Russia’s leading floor where corporate, municipal and regional securities trade;
- the establishment of the National Clearing Center within the MICEX Group, which is to organize settlement and clearing service of transactions carried out in the MICEX’s orderly markets.
Beginning from June 2005, in the Unified Trading Session of inter-bank currency exchanges, trading in the euro/ruble segment has been held in accordance with new rules which enabled to extend the time of trading, launch new instruments and implement the system of risk management similar to that used in trading in the US dollar. In this stage of development of the euro market, new instruments were launched: euro/ruble with tomorrow settlements and currency swap tod/tom. To further improve the system of trading in currency, the MICEX extended the time of trading in the US dollar and lowered its commission for swaps, which resulted in significant growth of liquidity of this market segment. The number of members of the MICEX Currency Market Section reached 536 organizations.
In 2005, the volume of trading on the MICEX Stock Exchange grew 1.5 times. The total volume of transactions in non-government securities, including operations in stocks, bonds and repos, reached 6.40 trillion rubles (225.6 billion dollars) against 4.35 trillion rubles (151.2 billion dollars) in 2004. The share of the MICEX Stock Exchange in the total volume of the MICEX Group amounted to 24.4%. The volume of secondary trading in stocks grew 1.2 times to 3.28 trillion rubles (115.5 billion dollars) against 2.78 trillion rubles (96.5 billion dollars) in 2004. Over the last year, the MICEX Index grew by 83% (from 552.22 in the beginning of 2005 to 1011.00 points). The capitalization of the share market on the MICEX Stock?? Exchange grew to 7.44 trillion rubles (258.6 billion dollars).
In 2005, a number of companies raised funds through IPOs. Altai Bread, Lebedyanski and Severstal-Auto companies placed their shares on the MICEX SE for the total amount of 8.1 billion rubles (289 million dollars). The number of companies whose securities trade on the Exchange continues to grow. By the end of 2005, 674 securities of 418 issuers were traded on the MICEX Stock Exchange (in the beginning of 2005: 400 securities 258 of issuers). Of those, 178 securities 97 of issuers were listed.
These figures point to the growing role of the stock market segment in the exchange business, which affected the organizational structure of the MICEX Group: in the beginning of 2005, the MICEX Stock Exchange began its work. Today, 548 organizations - professional participants in the securities market trade on the MICEX SE. Their clients are 130 thousand investors, both legal entities and individuals.
The segments of regional and municipal bonds demonstrated stable growth: in 2005, 24 issues of bonds of 20 regions and municipalities worth of 53 billion rubles (1.9 billion dollars) were distributed; the total volume of transactions in these securities amounted to 827.5 billion rubles (29.2 billion dollars) and 37.5 billion rubles (1.32 billion dollars) correspondingly, which is 1.7 and 2.5 times more than in 2004.
In 2005, the government securities market experienced rapid growth of volumes (2.1 times). The total volume of transactions in government securities amounted to 2.88 trillion rubles (101.0 billion dollars) against 1.35 trillion rubles (46.8 billion dollars) in 2004. This resulted primarily from the increase in the number of repo operations, the volume of which grew 2.9 times to 1.81 trillion rubles. The liquidity of the government securities market also grew considerably, which is proved by the 1.3-fold increase of the volume of transactions in secondary trading to 533.7 billion rubles. The volume of placement of the bonds of the Bank of Russia (OBR) grew 6.6 times and reached a record-high figure 227.8 billion rubles. Overall, the share of the government securities market in the total volume grew to 11.0%. The efforts of market regulators, the MICEX and dealers were focused on measures aimed at the improvement of the effectiveness of the government securities market. These included the organization of service of out-of-the-system transactions and the implementation of a new technology of exchange of bonds. The number of instruments involved in transactions in the government securities market increased considerably.
In 2005, the MICEX and the Bank of Russia continued to implement their joint project in the money market: carrying out deposit operations of the Bank of Russia using the MICEX trading system. The number of participants in this market grew to 123. The volume of deposit operations amounted to 198.8 billion rubles (7.02 billion dollars).
Participants’ interest in the market of currency futures, restored on the MICEX, grew noticeably. The high volatility of the exchange rate of the US dollar contributes to the growth of the volume in this segment of the market. In 2005, the total volume in the Derivatives Market Section grew 14.3 times and amounted to 186.8 billion rubles (6.55 billion dollars). During the year, the open interest grew 14 times and reached the record figure of 56.5 billion rubles (1.96 billion dollars). The MICEX focuses its efforts on widening the range of traded instruments (by launching trading in option contracts) and improving the system of risk management.
In 2005, the MICEX continued to develop cooperation with international exchanges and financial institutions. The MICEX takes an active part in the work of the International Association of Exchanges of the CIS countries, which coordinates the efforts of exchanges to create orderly capital markets in the countries of the Commonwealth. In 2005, the MICEX and the Chicago Mercantile Exchange (???) signed a license agreement which enabled the MICEX to use SPAN technology, the system of analysis of risks of a portfolio which may include both underlying assets and derivative instruments. The MICEX also signed an agreement of cooperation with one of the largest US stock exchanges, the NASDAQ. The agreement signified the recognition of the MICEX as Russia’s leading exchange floor conforming to international standards of listing and disclosure of information on securities and issuers. The implementation of the agreements will enable to improve the reliability of the risk management system and the transparency of the Russian stock market for international investors.
