Raiffeisenbank A Market Maker On The MICEX Corporate Bonds Market

On 14 January, 2003, ZAO Raiffeisenbank Austria began to act as a market maker in the MICEX Stock Market Section. It means that this bank now provides bilateral firm quotations of 8 bond issues of 6 issuers, namely:

bonds of the second issue of OAO Aeroflot;

bonds of the first issue of OAO Vyksunski Metallurgical Works;

bonds of the first issue of OAO Sistema Finance Investments;

bonds of the first issue of OOO Russki Alumini Financy;

bonds of the fourth issue of OAO Tumen Oil Company;

bonds of the fifth issue of OAO Tumen Oil Company;

bonds of the first issue of OAO Tsentrtelecom;

bonds of the second issue of OAO Tsentrtelecom. In compliance with the MICEX Rules of trades, a market participant, who has concluded an agreement on the performance of market maker's functions, is under obligation to maintain, in the main trading mode, continual bilateral quotations, within the established spread, during the whole trading session (except for the quotation break).

According to the MICEX CEO Alexander Zakharov, "this step, made by one of the leading banks on the Russian stock market, is a very indicative event. The emergence of such an important market maker for a wide range of bonds shows the maturity of the secondary market of corporate bonds, which is marked by higher liquidity, stability and lower risks for investors, including conservative investors. This is especially important in the light of pension and insurance reforms". It is quite possible, the MICEX CEO noted, that the example of Raiffeisenbank will be followed by other main players on the market of corporate and subfederal bonds - Russia's largest banks and financial companies. This, in its turn, will bring about further increase of the market liquidity.

The corporate bonds market has intensively developed on the MICEX since 1999. In 1999-2002, over 90 issuers distributed corporate bonds on the MICEX, their total issue reaching 113 billion rubles at face value. In 2002, 67 bond issues of 57 issuers were distributed on the MICEX to the total sum of 49 billion rubles at face value. At present time, 106 issues of corporate bonds of 74 issuers circulate on the MICEX. The MICEX is the main trading floor for these instruments. In 2002, the liquidity of the secondary market of bonds grew considerably: the daily average turnover grew from 159 million rubles (2001) to 403 million rubles (2002).