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In the first six months of 2007 the total volume of exchange-based trading on all markets of the MICEX Group amounted to 37.14 trillion rubles (1.43 trillion US dollars), 1.7 times more than in the same period of 2006. The average daily volume of exchange-based trades on the MICEX Group’s markets grew to 312 billion rubles (about 12 billion dollars). At present, by total turnover, the MICEX is the largest exchange in Russia, the CIS, Central and Eastern Europe. This year the MICEX Stock Exchange has joined the list of the world’s 20 leading stock exchanges by turnover on the share market. This makes the MICEX Stock Exchange the main floor where liquidity for Russian assets forms.
In 2006 the exchange-based corporate securities market demonstrated the largest volume of operations and the fastest growth. Its share in the total exchange-based turnover for the MICEX Group grew to 48% (in 2006: 37%). In the first six months of 2007, on the MICEX Stock Exchange, the total volume of transactions in non-government securities, including stocks, bonds, shares of investment funds and repos, reached 17.84 trillion rubles (685.0 billion dollars), 2.2 times more than in the same period of the previous year. At present the MICEX Stock Exchange organizes trading in 1089 securities of 662 issuers. Of them, 295 securities of 181 issuers are listed. Since the beginning of 2007, the number of securities traded on the MICEX SE has grown by 12.6%, while the number of issuers whose securities are admitted to exchange-based trading has grown by 12.8%. The MICEX Stock Exchange plays an important role in IPOs of Russian issuers. In the first six months of 2007, 8 companies made their IPOs, using the services of the MICEX SE, including Sberbank, VTB Bank and other issuers. Together they attracted 565 billion rubles (21.8 billion dollars) worth of investments. This is the second largest figure in the world after the London Stock Exchange (over 26 billion dollars). The MICEX SE launched the Sector for Innovation and Growth Companies (IGC Sector), created with the support of the RF Information and Communications Ministry. The first group of listing agents was accredited in the IGC Sector. The Sector is implementing projects aimed at bringing new issuers to the exchange-based market. In June Finam – Information Technologies closed-end venture fund placed its shares in the Sector. Finam – Information Technologies was the first issuer whose securities are traded in the IGC Sector. Today the total number of organizations – participants in trading on the MICEX Stock Exchange is 616 organizations. Of them, 503 are admitted to trading, including 288 credit institutions and 215 non-credit institutions. They serve over 460 thousand registered clients, including 425 thousand individual investors (on 1.01.2007: 231 thousand).
In the first six months of 2007 the volume of trades in stock on the MICEX Stock Exchange amounted to 12.58 trillion rubles (482.6 billion dollars), 2 times more than in the same period of 2006. Best selling securities were shares in RAO UES (28.5% of the total turnover), Gazprom (25.0%), Sberbank (11.3%), Norilsk Nickel (8.7%), LUKoil (8.5%), Surgutneftegaz (4.7%), Rostelecom (4.6%), Tosneft (2.9%), Uralsvyazinform (1.2%) and Tatneft (1.0%). The volume of equity repos grew 4.8 times against the first six months of 2006 and amounted to 5.1 trillion rubles (196.7 billion dollars). The MICEX organizes trading in 300 stocks of 192 issuers. On 30.06.2007, the capitalization of the market for shares traded on the MICEX reached 24.86 trillion rubles (963.6 billion dollars), 1.5 times more than in the previous year. Situation on the Russian stock market is reflected in the MICEX Index, which in the first six months of 2007 reached its historical maximum of 1777.84 points at the close (16.04.2007). In the first six months of 2007 the MICEX worked out and put into effect the new rules of calculating the MICEX Index. The number of securities comprising the Index grew from 21 to 30 most liquid stocks representing the main segment of the country’s economy. Besides Russian legal requirements for indexes on which investment funds can be based, the developers of the rules of calculating the MICEX Index took into account the requirements of the US regulating agencies and the UCITS directives. The MICEX began to calculate sectoral indexes, such as MICEX O&G (index for oil and gas companies), MICEX PWR (index for power generating companies) and MICEX TLC (telecoms).
The market for corporate and regional bonds continues to grow rapidly. Its share in the total turnover has reached 14.2%. In the first six months of 2007 the total volume of transactions in all types of non-government bonds on the MICEX Stock Exchange increased 2.6 times over the same period of the previous year and amounted to 5.26 trillion rubles (202 billion dollars), including transactions in corporate bonds (4.0 trillion rubles or 153.9 billion dollars), regional bonds (1.22 trillion rubles or 46.7 billion dollars) and municipal bonds (37 billion rubles or 1.4 billion dollars). The largest volume of transactions was accounted for by bonds of the following issuers: Federal Network Company UES, Russian Railways, Gazprom, LUKoil and Mortgage Housing Financing Agency. In the first six months of 2007, 131 issues of corporate bonds were placed for the total amount of 316.1 billion rubles. The volume of bond repos grew 4 times to 3.44 trillion rubles (132.2 billion dollars). Today 624 bonds of 439 issuers are traded on the MICEX SE, including 516 corporate bonds (390 issuers), 87 regional bonds (33 issuers) and 21 municipal bonds (16 issuers).
The volume of exchange-based trading in shares of investment funds grew 7 times over 2006 and amounted to 9.6 billion rubles (368 million dollars). At present the MICEX SE organizes trading in 157 shares of 58 management companies. Best selling securities are shares of the following investment funds: AG Capital Intera (AG Asset Management), Yedinstvo RIGroup-Fund, Yugra Real Estate (REGION Development), Commercial Real Estate (Troika Dialog). Trading in shares of investment funds grew after the MICEX Stock Exchange had established the institution of market makers and exchange specialists. These are participants in trading who maintain buy and sell quotations of these securities. At present 5 participants in trading have the status of specialist or market maker. They maintain quotations of 8 shares of investment funds.
In the first six months of 2007 the share of the exchange-based currency market in the total turnover of the MICEX Group amounted to 42% (in 2006: 49.7%). The volume of exchange-based transactions in foreign currencies reached 599.6 billion dollars (15.6 trillion rubles), 1.4 times more than in the same period of the previous year. Cash transactions accounted for 390.9 billion dollars, while swaps accounted for 208.7 billion dollars????. The largest volume of transactions was accounted for by operations in instrument USD/RUB_UTS_TOM (275.6 billion dollars). Participants’ interest in the EUR/RUB segment keeps growing. The volume of transactions in euros amounted to 10.5 billion euros, 2.7 times more than in 2006. The volume of euro swaps amounted to 4.3 billion euros, 4.6 times more than in the same period of the previous year. At the moment, clearing on the exchange-based currency market is being transferred to the National Clearing Center (joint-stock commercial bank), which is an affiliate company specially established for this purpose. The MICEX is also launching a unified trading session of inter-bank currency exchanges (???) using centralized clearing.
On the government securities market and the money market, in the first six months of 2007, the total volume of transactions grew 1.8 times and amounted to 3.03 trillion rubles (116 billion dollars), including auctions and secondary trading in GKO/OFZ, OBR, repos and the Bank of Russia’s deposit operations. The share of this segment in the total turnover of the MICEX Group amounted to 8.2%. The volume of inter-dealer repos on the government securities market amounted to 1.38 trillion rubles, having increased 3.1 times against the same period of the previous year. In the framework of its money and credit policy the Bank of Russia actively placed its own bonds (OBRs). The volume of placement of OBRs amounted to 448.8 billion rubles. Turnover of the Bank of Russia’s deposit operations grew 1.2 times over 2006 and reached 260.8 billion rubles. The MICEX completed the formation of the infrastructure securing the provision of the Bank of Russia’s lombard loans with the use of the MICEX trading system.
Participants’ stable interest in the derivatives market promoted trading in currency derivatives on the MICEX. In the first six months of 2007, in the MICEX Derivatives (Standard Contracts) Market Section the volume of trading reached 25.5 billion dollars (666.8 billion rubles), 1.6 times more than in the same period of 2006. Open interest for the RUB/USD contract grew almost 2 times -- to a record 2.7 billion dollars -- over the end of the previous year (at the end of 2006: 1.4 billion dollars). Participants show growing interest in new instruments: futures on the compounded MosIBOR overnight interest rate and the 3-month MosPrime Rate. In the first six months of 2007 the volume of trading in these instruments exceeded 3.6 billion rubles. In June 2007 the MICEX Stock Exchange launched trading in futures on the MICEX Index. Professional participants demonstrated clear interest in the new instrument: 42 new organizations joined the MICEX SE’s derivatives market as participants in trading. Liquidity in the new segments of the MICEX Group’s derivatives market is maintained by market makers who support bilateral quotations.
The MICEX Group is implementing a program to establish regional exchange centers and provide settlement services of all regional exchange-based market. In the first six months of 2007 APICEX and RCSEX changed their names for “The MICEX - Far East” and “The MICEX – South” correspondingly. The MICEX is the main shareholder in these exchanges. Regional affiliate companies of the MICEX must change their business model from that of a regional currency exchange representing the MICEX in certain areas of business to that of a full-fledged front office of the MICEX Group in the region. Regional exchange centers must emphasize interaction with regional issuers, participants in trading and investors.
In the first six months of 2007 the MICEX became an affiliated member of the World Federation of Stock Exchanges (WFE). In 2002 the MICEX joined the WFE as a correspondent member. The WFE is the leading association in the exchange industry, comprised of over 100 exchanges across the world. The status of affiliated member of the WFE will help the MICEX to widen its client base by attracting nonresident investors, as Western investors can increase limits on national exchanges which are full or affiliated members of the WFE.
Recently the MICEX has signed a memorandum of understanding with Hong Kong Exchanges and Clearing Ltd. (HKEx), comprised of the Hong Kong Stock Exchange, the Hong Kong Futures Exchange and the Hong Kong Clearing House. The agreement is of mutual benefit for both sides, as it reflects the growing interest of the Hong Kong Exchange in attracting Russian issuers to one of the leading financial markets in Asia, while the MICEX is interested in attracting Asian investors to Russia’s internal stock market.
