Under the agreement, Standard & Poor's has assumed commercial management for licensing the RTSI to investment managers, trading desks and product structurers for the creation of financial products. Standard & Poor's also immediately joins the RTS Information Committee which performs general control and amends the existing methodology of the RTS Index. Standard & Poor's representative becomes a permanent member in an advisory capacity to provide international market feedback on Russian index governance. The business arrangement is expected to entail co-branding and expansion of RTS's family of tradable and benchmark indices. This will enhance their appeal as portfolio management tools for global investors and will further pave the way for development of index-linked vehicles and listed index derivatives.
Over the last 12 months the existing headline RTS Index more than doubled in value - from 600 points to 1300 points. It currently captures more than USD 300 billion, about 80 percent, of the Russian stock market capitalization, excluding Gazprom shares (which before the beginning of 2006 traded exclusively on the St Petersburg Stock Exchange). The latter are expected to be added to RTSI soon, which will increase its coverage to about USD 490 billion, 85% of the market capitalization.
Cross-border investment into Russia more than doubled between 2002 and 2004, and there was a net inflow of capital to Russia at the end of 2005, fuelling demand for transparent and rigorous benchmarks that not only capture the uniqueness of Russian equities but also faithfully measure the market's performance. Standard & Poor's is the world leader for domestic headline indices through its local exchange partnerships, and RTS is the logical extension to Standard & Poor's existing network of 12 exchange partnerships in key geographies. In pursuing this commitment to the emerging markets, Standard & Poor's is responding to international investors seeking high growth areas and new strategy plays by capturing another vital component of the increasingly important BRIC economies (Brazil, Russia, India & China).
Robert Shakotko, Managing Director of Standard & Poor's Index Services, said, "Standard & Poor's strategy is to bring global index standards to local markets. Our clients have expressed a growing interest in products linked to Russian equities. We are therefore pleased to offer the RTS index, already the recognised brand among Russian indices, as part of S&P's global licensing program". Oleg Safonov, president of RTS, stated, "RTS sees multiple benefits in delegating commercial management to Standard & Poor's – both short and long-term. This will position RTS as the premier player for investing in the listed Russian economy through recognition of the S&P brand and its standards of quality. RTS benefits from instant commercial exposure to the world's largest existing index licensing network, as well as a valuable source of expert advice on index business development and management issues. For the Russian equity market, this means higher volumes and trading liquidity due to a certain internationalization of market participants who access the underlying stocks".
About Standard & Poor's
Standard & Poor's is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With approximately 6,300 employees located in 20 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com .
About RTS
Russian Trading System is the oldest stock exchange of the modern Russia. RTS was created in 1995 by professional market participants and is the leading Russian stock exchange in the number of traded securities. At present more than 1100 securities trade on RTS markets. More than 250 investment companies and banks serving both foreign and Russian investors work on RTS. RTS Group turnover in 2005 grew by 65.6% compared to 2004 and reached 62.7 billion US dollars.
RTS derivatives market – FORTS – is the leading Russian derivatives market and the world leader in the single stock futures segment. Total open interest in futures and options equals 2 million contracts, daily trading volume exceeds 300 thousand contracts.
RTS Index, the official exchange indicator, is the benchmark of the Russian securities market. RTS Index is calculated based on 50 securities using free-float factors. The share of each company in the total index is restricted to 15%. RTS Index futures contract is one of the most popular instruments on the Russian derivatives market, its share reaching 30% of the total trading volume on the market. For more information, visit www.rts.ru
