In the first three quarters of 2007 the total volume of exchange-based trading on all markets of the MICEX Group amounted to 69.07 trillion rubles (2.68 trillion US dollars), 1.93 times more than in the same period of last year. The average daily volume of exchange-based transactions on the MICEX Group’s markets grew to 375.4 billion rubles (about 14.6 billion dollars). At present, by the total trade volume the MICEX is the largest exchange in Russia, the CIS and Eastern Europe. This year the MICEX Stock Exchange has joined the list of the world’s 20 largest stock exchanges by the volume of trading on the share market. This makes it the main floor where liquidity for Russian assets forms.
The exchange-based corporate securities market continues to account for the largest volume of operations. Its share in the total exchange-based turnover of the MICEX Group grew to 43.8% (in 2006: 39.2%). In January-September 2007 the total volume of transactions in non-government securities, including stocks, bonds, shares of investment funds and repos, on the MICEX Stock Exchange reached 30.24 trillion rubles (1.17 trillion dollars), 2.2 times more than in the same period of the last year. At present the MICEX Stock Exchange organizes trading in 1198 securities of 721 issuers. 324 securities of 204 issuers are listed. Since the beginning of 2007 the number of securities traded on the Exchange has grown by 23.4%, while the number of issuers whose securities are admitted to exchange-based trading has reached 25%. The MICEX Stock Exchange plays an important role in IPOs of Russian issuers. This year 10 companies used the Exchange’s services to make their IPOs/SPOs, including Sberbank, VTB Bank and other companies. Together they raised 591 billion rubles (22.8 billion dollars). This is the world’s second largest figure after the London Stock Exchange. This year the MICEX Stock Exchange has launched the Sector for Innovation and Growth Companies (IGC Sector), established with the support of the Information and Communications Ministry of Russia. The Sector accredited first listing agents and is bringing new issuers to the exchange-based market. In June-July 2007, after the initial public placements, trading was launched in shares of closed-end investment fund Finam – Information Technologies and shares of Armada Company. These are the first issuers to have their securities traded in the IGC Sector. Today 624 organizations participate in trading on the MICEX Stock Exchange is. Of them 515 are admitted to trading, including 296 credit and 219 non-credit institutions. They serve over 407.7 thousand clients, including 389.7 thousand individual investors (on 1.01.2007: 231 thousand).
In January-September 2007 the volume of transactions in stocks on the MICEX Stock Exchange amounted to 21.26 trillion rubles (823.2 billion dollars), 2.2 times more than in the same period of 2006. Best selling securities included shares in Gazprom (27.3% of the total turnover), RAO UES (24.8%), Sberbank (10.9%), Norilsk Nickel (9.4%), LUKoil (8.3%), Surgutneftegaz (5.0%), Rostelecom (4.8%), Rosneft (3.2%), Tatneft (1.1%) and Uralsvyazinform (1.0%). The volume of equity repos amounted to 10.2 trillion rubles (394.4 billion dollars), 4.9 times more than in the same period of 2006. Today 313 stocks of 201 issuers are traded on the MICEX Stock Exchange. On 30.09.2007 the capitalization of the market for stocks traded on the MICEX SE amounted to 25.72 trillion rubles (1.03 trillion dollars), 1.3 times more than in 2006.
Situation on the Russian stock market is reflected by the MICEX Index, which marked its 10th anniversary on 22 September 2007. This year the maximum value of the Index at the close amounted to 1807.28 points (23.07.2007), while its minimal value reached 1516.09 points (30.05.2007). Since the beginning of 2007 the MICEX Index has grown by 3.90%. Today the MICEX Index is comprised of 30 securities of issuers representing the main sectors of the Russian economy. Stocks comprising the MICEX Index account for about 98% of the total turnover for the share market on the MICEX Stock Exchange. The capitalization of securities comprising the MICEX Index is about 830 billion dollars. This is more than 80% of the capitalization of the Russian exchange-based share market. Today, shares in LUKoil, Gazprom, Sberbank, Norilsk Nickel, Surgutneftegaz, RAO UES, MTS and Rosneft have the largest weight in the MICEX Index. Management companies use the MICEX Index as the underlying asset for 29 index funds. Their total net asset value is 5.8 billion rubles, which is over 93% of NAV of all index funds existing on the Russian stock market. This year the MICEX Stock Exchange has launched indices of the oil and gas sector (MICEX O&G), the electric power sector (MICEX PWR) and the telecom sector (MICEX TLC), as well as indices of the metallurgical and mining sectors (MICEX M&M) and the index of the machine-building sector (MICEX MNF). Sectoral profiles of these indices are formed on the basis of sectoral segmentation of the basket of the MICEX Index. In August 2007 three capitalization indices (MICEX LC, MICEX MC, MICEX SC) were launched.
The market for corporate and regional bonds continues to grow rapidly. Its share in the total exchange-based turnover has reached 13% (last year: 10.6%). In January-September 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 last year and amounted to 8.96 trillion rubles (347 billion dollars), including transactions in corporate bonds (7.0 trillion rubles or 269.8 billion dollars), regional bonds (1.94 trillion rubles or 74.9 billion dollars) and municipal bonds (61 billion rubles or 2.4 billion dollars). The largest trade volume is accounted for by bonds of the following issuers: Federal Network Corporation UES, Gazprom, Russian Railways, AIZhK and LUKoil. In the first three quarters of 2007, 162 issues of corporate bonds were placed to the total amount of 352.2 billion rubles. The volume of bond repos grew 4 times to 6.23 trillion rubles (241.7 billion dollars). Today 690 bonds of 489 issuers are traded on the MICEX SE, including 582 corporate bonds (438 issuers), 85 regional bonds (34 issuers) and 23 municipal bonds (17 issuers).
Investors' interest in shares of investment funds is growing rapidly. The volume of exchange-based trading in these securities has grown 7 times over 2006 and amounted to 14.0 billion rubles (540 million dollars). At present 187 shares of 73 management companies are traded on the MICEX Stock Exchange. The best selling investment funds are: AG Capital Intera (AG Asset Management), PIGroup-Fond Yedinstvo, First Mortgage (KUMAL), Yugra Real Estate and Region Land Fund (REGION Development). The launch of the institution of market makers and exchange specialists promoted the growth of liquidity of the exchange-based trading in shares of investment funds. Exchange specialists are participants in trading maintaining buy and sell quotations of securities. At present, 5 participants in trading have the status of specialist or market maker. They maintain quotations for 12 shares of investment funds.
The share of the exchange-based currency market in the total exchange-based turnover of the MICEX Group has amounted to 37.2% (in 2006: 49.7%). In January-September 2007 the volume of exchange-based trading in foreign currencies reached 995.7 billion dollars (25.7 trillion rubles), 1.4 times more than in the same period of 2006. The volume of spot transactions amounted to 605.3 billion dollars, while the volume of swaps reached 390.4 billion dollars. The largest trade volume (419.2 billion dollars) was accounted for by operations in USD/RUB_UTS_TOM instrument. Participants’ interest in the euro/ruble segment continues to grow. The volume of transactions in the euro amounted to 19.1 billion euros, 2.6 times more than in 2006. In January-September 2007 the volume of euro swaps increased to 8.7 billion euros, 3.8 times more than in the same period of 2006. Currently, clearing and settlement functions on the exchange-based currency market are being transferred to the National Clearing Center (NCC), which is a specialized affiliate organization. It is intended to launch a unified trading session of inter-bank currency exchanges (UTS) using centralized clearing. The NCC will act as a central counterparty for all transactions concluded in the course of trading and provide centralized clearing. In its turn, the MICEX will organize and hold trading in the ??? and act as the technological center.
This year the government securities market and the money market have demonstrated the fastest growth of exchange-based turnover. The total volume of transactions concluded in these markets in January-September 2007 has grown 4.6 times and amounted to 11.5 trillion rubles (450 billion dollars), including auctions and secondary trading in GKO/OFZ, OBR, repos and deposit operations of the Bank of Russia. The share of this segment in the total exchange-based turnover of the MICEX Group has amounted to 16.8% (last year: 9.4%). Growth of the volume of trading in government bonds came as a result of measures which the MICEX took to improve the liquidity of the market. One of those measures was changing the system of commission rates on the government securities market (from 1 July 2007) to promote participants’ activity. As a result, the costs of market participants connected with operations at auctions and secondary trading dropped more than 2 times. Repos show an especially impressive growth: their volume has amounted to 5.41 trillion rubles, having increased 4.3 times over the corresponding period of 2006. In the framework of its money and credit policy the Bank of Russia placed its own bonds (OBR). The volume of placement of OBR amounted to 477 billion rubles. The volume of deposit operations of the Bank of Russia grew 1.1 times over the corresponding period of 2006 and reached 394 billion rubles. In August the Bank of Russia began to provide lombard credits, using the trading MICEX system.
Stable growth of participants’ interest in the derivatives market contributed to the increase in the volume of exchange-based trading in futures. In January-September 2007, in the MICEX Derivatives (Standard Contracts) Market Section, the volume of trading reached 1.62 trillion rubles (62.8 billion dollars), 2.5 times more than in the same period of 2006. The volume of trading in currency futures amounted to 62.0 billion dollars (growth: 2.7 times). Open interest for the RUB/USD contract grew 3 times over the end of 2006 to 4.2 billion dollars (at the end of 2006: 1.4 billion dollars). August 2007 saw a record-high level of the average daily volume of trading in US dollar futures: 847 million dollars. This year the Exchange has launched the institution of market makers for interest rate futures (on the compounded MosIBOR overnight interest rate and the 3-month MosPrime Rate). In the first three quarters of 2007 the volume of trading in these futures reached 19.1 billion rubles, which means that the average daily turnover increased 10 times over December 2006. In August, a record-high average daily turnover was reached on the MICEX market for interest rate futures, which amounted to 15.3 million dollars. In June 2007 trading in the MICEX Index futures was launched on the derivatives market of the MICEX Stock Exchange. In the third quarter the volume of trading in this contract amounted to 765 million rubles. By the end of September open interest reached a record-high figure of 1366 contracts, having increased 2 times over August. Professional participants showed great interest in the new instrument: 117 organizations were admitted as participants in the derivatives market of the MICEX SE. Liquidity in this segment of the derivatives market is provided by market makers maintaining bilateral quotations on a regular basis.
The MICEX Group is establishing regional exchange centers and implementing a program aimed at providing settlement service of all exchange-based markets in Russia’s provinces. This year the Asian-Pacific Interbank Currency Exchange (APICEX) and the Rostov Currency and Stock Exchange (RCSE), in which the MICEX is the main shareholder, have changed their names for the MICEX – Far East and the MICEX – South. The main task of regional affiliate companies of the MICEX is providing transition from the model of regional currency exchange representing the MICEX in certain areas of business to the model of full-scale front office of the MICEX Group in the region. Regional exchange centers emphasize interaction with regional issuers, participants in trading and investors.
One of important events of 2007 was the upgrading of the MICEX’s status in the World Federation of Exchanges from correspondent member (since 2002) to affiliated member. The World Federation of Exchanges is comprised of over 100 exchanges from across the world. The upgrading of the MICEX’s status in the WFE will help the Exchange to increase the number of nonresident investors, as Western investors may increase? their limits on national exchanges which are members of the WFE. In July 2007 the MICEX and Hong Kong Exchanges and Clearing Ltd. signed a memorandum ? mutual understanding. Hong Kong Exchanges and Clearing Ltd. is comprised of the Hong Kong Stock Exchange, the Hong Kong Futures Exchange and the Hong Kong Clearing House. The memorandum is mutually beneficial as it reflects the growing interest of the Hong Kong Exchange in attracting Russian issuers to one of Asia’s leading financial markets, while the MICEX is interested in attracting investors from Asia to the internal market for Russian securities.
The MICEX Group (www.micex.com) is an integrated exchange, providing trading, clearing, settlement, depository and information services. The MICEX Group is comprised of the MICEX, the MICEX Stock Exchange, the National Mercantile Exchange, the MICEX Settlement House, the National Depository Center, the National Clearing Center, regional exchanges and regional settlement centers and some other organizations. They serve over 1700 participants in the exchange-based market, which are leading Russian banks and brokerages located in Moscow and other large financial and industrial centers of Russia. At present the MICEX Group operates several key markets: the share market, the market for corporate and regional bonds, the currency market, the market for government securities and the money market and the market for derivative financial instruments. By the total trade volume (in 2006: 52.04 trillion rubles or 1925 billion dollars, the average daily volume of transactions: 211 billion rubles or 7.8 billion dollars) it is the largest exchange in Russia, the CIS and Eastern Europe.