The Trade Agreement Regulating The Order And Terms Of Purchase And Sale Of Foreign Currency On The MICEX With The Use Of Centralized Clearing Comes Into Force

Bank of Moscow, Deutsche Bank, MMB and Sberbank have recently signed the agreement regulating the order and terms of purchase and sale of foreign currency on the MICEX with the use of centralized clearing (the Trade Agreement). This has completed the procedure of signing the Trade Agreement among the Bank of Russia, the MICEX, the National Clearing Center (NCC) and leading operators of the currency market. Before, the Trade Agreement was signed by Gazprombank, VTB, Alfa-Bank, Vensheconombank, Citybank, Raiffeisenbank Austria and MDM-Bank.

According to the MICEX President Alexander Potemkin, after the signing of the Trade Agreement by a group of Russia’s largest banks the MICEX Group’s project to transfer clearing from the MICEX to the NCC has entered its final stage. It is important that the largest operators have confirmed their readiness to use the new pattern of clearing on the exchange-based currency market. Under this arrangement the National Clearing Center will act as a central counterparty in transactions. The project, which is to be launched this autumn, will be an important step in the improvement of the infrastructure of the rapidly developing financial market of Russia, combined with the strengthening of the international positions of the Russian ruble.

The transfer of clearing on the MICEX Group’s currency market to the National Clearing Center requires the implementation of a new pattern of relations among participants in trading, which includes the participation of a central counterparty. This measure will help to improve the reliability of the risk management system, make relations among participants more transparent and enable participants to use their financial assets more effectively.

The Trade Agreement establishes the order and terms of purchase and sale of foreign currency in the UTS with the use of the MICEX trading system. Under the Agreement the MICEX guarantees the performance of the NCC’s obligations for transactions concluded in the course of trading in case the NCC fails to perform appropriate obligations. The size of the MICEX’s liability is 2.6 billion rubles.

Now that Russia’s largest banks have signed the Trade Agreement the MICEX intends to sign bilateral supplements to the Trade Agreement with other market participants.

Soon, all participants in trading on the exchange-based currency market will receive from the MICEX letters containing detailed information on the procedure of trading on the MICEX currency market and a package of agreements which have to be concluded with the MICEX and the NCC, including the notarized copy of the Trade Agreement.