The MICEX Establishes New Rules Of Trading In Foreign Exchange In The Euro-Ruble Segment Of The Market

Trading in euro-ruble instruments has started in the MICEX Currency Market Section. Trading is conducted in compliance with new rules, which provide for the extension of the time of trading, the launch of new euro instruments and the adoption of risk management systems similar to those existing in trading in the US dollar. In the first trading session, held 20 June, over 200 transactions worth of 14.992 million euros were concluded, including contracts with today settlements (Tod) (10.475 million euros) and contracts with tomorrow settlements (Tom) (4,517 million euros). The trade volume exceeded 1.75 times the average daily trade volume in this market segment reached during the first five months of 2005. 79 banks participated in trading. According to participants in trading, the new rules will improve the attractiveness of the exchange segment of the “euro/ruble” market.

The new versions of the Rules of trading in foreign exchange in the unified trading session of inter-bank currency exchanges and the Rules of trading in foreign exchange on the MICEX, adopted by the MICEX Exchange Council 3 June 2005, are aimed at changing the system of risk management? in the “euro/ruble” exchange segment and creating favorable conditions for participants. In particular, they provide for:

• the launch of a new euro instrument with settlements on the next business day (TOM). Participants can also conclude TOD/TOM swap transactions. The new schedule of trading in the UTS in the euro:

  Instrument	Lot	Time of trading
  EUR/RUB_UTS_TOD	1 000 euros	from 10:30 till 11:30
  EUR/RUB_UTS_TOM	1 000 euros	from 10:30 till 14:00
  SWAP_EUR/RUB_UTS_TOD_TOM	100 000 euros	from 10:30 till 11:30

• change of parameters of the risk management system in the “euro/ruble” segment. In the UTS in the euro, the requirement that participants make 100% advance deposition of funds is replaced for the requirement that only partial deposition of funds should be made (4% for the TOD instrument and 6% for the TOM instrument);

• the maximum deviation of the exchange rate specified by a participant in his order in the course of trading in “euro/ruble” instruments. The maximum deviation is ±2% of the value of the central exchange rate of the previous business day;

• the extension of the mechanism of guaranteed settlements with the participation of the Bank of Russia to the “euro/ruble” segment;

• the use of a participant’s deposited ruble-denominated funds for setting the trade limit in trading held in the UTS in the US dollar and the euro;

• the establishment of a new commission rate for the purchase and sale of the euro in the UTS.

Thus, beginning from 20 June, 2005, the MICEX applies a varied scale of the commission rates for transactions in the euro, concluded in the course of one trading session (participants pay the commission in Russian rubles):

Total volume of transactions in the euro concluded for Russian rubles in the UTS (million euros)	Commission rate charged for the volume of each transaction in the UTS, %
Up to 0.5 inclusive	0.0040, but not less than 400 rubles for one session
From 0.5 to 2 inclusive	0.0025
Over 2	0.0020

The replacement of 100% deposition with partial deposition (without decreasing the reliability of the risk management system) will reduce participants’ costs in performing conversion operations in the euro.

According to the MICEX CEO Alexander Potemkin, the innovation will decrease the monopoly position of the US dollar in the Russian economy and help to reach the full convertibility of the ruble.