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The MICEX has sent to participants in trading – 535 members of the Currency Market Section – a letter offering them to sign, before 28 September, a package of documents needed to obtain access to trading and clearing. This measure is part of the procedure of transferring clearing to the National Clearing Center (NCC). Participants in trading are offered to sign the Supplement to the Agreement of the Order and Terms of Purchase and Sale of Foreign Currency with Use of Centralized Clearing (the Trade Agreement), which came into effect on 8 August 2007 after it had been signed by leading operators of the currency market: Alfa-Bank, VTB Bank, Bank of Moscow, Vnesheconombank, Gazprombank, Deutsche Bank, MDM-Bank, MMB, Sberbank, Citybank and Raiffeisenbank Austria.
The letter, signed by the MICEX President Alexander Potemkin, says that the agreements comprising the package of documents will come into effect simultaneously from the date of the implementation of the Rules of Purchase and Sale of Foreign Currency in the Unified Trading Session of Interbank Currency Exchanges (Rules of the UTS) after the MICEX Board takes an appropriate decision. “The launch of the new pattern of trading in foreign currency with the use of centralized clearing within the MICEX Group,” says the letter, “will enable to improve the reliability of the risk management system, make relations among participants legally transparent and will help participants to use the financial assets more effectively.”
The key component of the project to modernize the system of clearing for participants in trading in foreign currency is a new financial institution, which will act as counterparty in all transactions concluded in the course of trading and provide centralized clearing for the results of trading. This role will be played by the joint-stock commercial bank The National Clearing Center, established within the MICEX Group. In the framework of the new pattern of trading in foreign currency the MICEX will organize and hold trading in the UTS and act as the technological center.
The division of functions between the MICEX and the NCC has made it necessary to update the normative and contractual basis of the exchange-based currency market. Now it will include the Agreement of the Order and Terms of Purchase and Sale of Foreign Currency with Use of Centralized Clearing (the Trade Agreement). This document determines the order and terms of operations in the UTS as well as the responsibilities of the parties in the course of concluding transactions and performing obligations. Besides, 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.
The forms of agreements and other documents which participants in trading need to sign in order to participate in the new pattern of trading with the use of centralized clearing are published on the web site of the MICEX in the section “Trading and Settlements in the UTS” on the page “Novelties in Trading and Settlements in the UTS” / “Documents to be signed” at: http://www.micex.ru/currency/ets_n.html. This page also carries the main documents regulating the operation of the MICEX currency market and the main changes implemented in connection with the transfer of the MICEX’s clearing and settlement functions on the exchange-based currency market to the NCC.
Find more information on clearing services on the web site of the NCC (www.nkcbank.ru) in the section “How to participate in clearing”.
Brief information on the NCC
The National Clearing Center (NCC) was established on 24 October 2005 with the authorized capital of 235 million rubles and stated capital of 1.5 billion rubles. The NCC’s founders are the Moscow Interbank Currency Exchange and non-profit partnership The National Depository Center. On 6 June 2007 the NCC completed the procedure of emission of additional shares, the volume of issue amounting to 465 million rubles. The NCC’s shareholders are the MICEX (99.329% of the authorized capital) and the NDC (0.671%). The NCC holds the Bank of Russia’s license to carry out banking operations in Russian rubles and foreign currency (without attracting individuals’ deposits). The NCC specializes in clearing in exchange-based and OTC markets, which includes determining the obligations of participants in clearing, offsetting these obligations and organizing the execution of obligations for transactions in compliance with the RF law.
