The widening of the range of services and the increase of their quality led to the growth of the number of the MICEX currency market participants. The total number of members of the MICEX Currency Market Section as of 1 July 2003 was 507 lending institutions, of them 32% - regional participants in trades.
The growth of the turnover of the exchange currency market and the number of its participants was reached thanks to the launch of new instruments and the improvement of the mechanism of trades.
The launch of a new instrument and the extension of the UTS time
Since 15 April, trades have been held in the UTS in the US dollar for Russian rubles with tomorrow settlements. After the launch of the new instrument, the Bank of Russia decided to change the order of fixing the official exchange rate of the US dollar to the Russian ruble as a result of trades in the UTS with today settlements and use for this purpose the average weighted exchange rate of the US dollar in the UTS trades with tomorrow settlements as of 11:30 of the day of trades.
The modification of the UTS met the needs of market participants. In the first month the new instrument accounted for about 20% of the UTS turnover, while today it accounts for over 60%, and its liquidity has grown considerably.
The UTS' share in the total turnover of the currency market has also grown - from 37% of the trading volume in 2002 to 46% in the first six months of 2003.
The improvement of the SELT mechanism
The main efforts are focused on the improvement of the risk management system, the development of up-to-date technologies, the increase of the quality of services and the reduction of participants' costs. The MICEX emphasizes the development of the system of the Internet-based access and electronic document turnover. For instance, the number of participants using the Internet-based access to trades in foreign currency has grown almost twofold since the beginning of 2003.
The MICEX expects to increase the trading volume by widening the range of its services and traded instruments and reaching the optimal price-quality ratio for its services.
An example is the growth of participants' interest in SWAP transactions. In 2002, banks began to conclude overnight currency SWAP transactions in large lots. In June, the total volume of these operations exceeded 16% of the turnover of the MICEX currency market (14% at the end of 2002).
The currency market structure did not change significantly. The main traded currencies were the US dollar and the euro.
Dollar-ruble instruments are the most liquid, accounting for 97,3% of the trading volume. Of this, 81,2% is cash transactions and 16,1% is SWAP operations.
Although the average daily volume of trades in the euro grew 1,6-fold (from 7 million in 2002 to 11,5 million in the first six months of 2003), the share of the euro in the total volume of trades on the MICEX has not yet exceeded 3%. The share of other currencies in the total volume of trades is insignificant.
Regional currency exchanges continue to play an important role on the financial market. In the first six months, the share of regional currency exchanges in the UTS turnover amounted to 12,2%.
The growing attractiveness of exchange trades is the result of the combination of the principles of the exchange market with the advantages of the interbank market. The system of electronic trades gives all participants of trades equal possibilities to conclude conversion transactions during the whole workday, in strict confidentiality, and secures the proper level of the currency market liquidity. The reliability of operations is secured by the exchange's guarantee of settlements and its risk management system.
SELT's possibilities and its compatibility with the latest electronic information and communication systems open up new prospects for the development of the Russian currency market and, in future, for cooperation with the national currency markets of the CIS and other countries.
