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EDX London‘s Russian IOB Equity Derivatives service has attracted $17.2 billion worth of trading since its launch a year ago. The service was launched in December 2006 to offer trading in index derivatives based on the FTSE Russia IOB Index, which measures the performance of the ten biggest and most liquid Global Depositary Receipts (GDRs) issued by Russian companies on the London Stock Exchange and traded on the International Order Book.
In addition to exchange-traded contracts on the index itself, the service offers order book trading in single stock options and futures on five of the most liquid index constituent companies, with dedicated liquidity provision from 3 market makers. Bilaterally negotiated derivatives trades on an additional 20 Russian and 7 Kazakh GDRs can be reported to the service to benefit from exchange and clearing processes and efficiencies.
Over 4.6 million stock contracts and 30,566 index contracts have been traded on the service since its launch, equivalent to an average month-on-month growth in contracts traded of 65 per cent. July and August were the two busiest months for the service, when the number of contracts traded per day averaged at 41,101. The single busiest day’s trading was 25 September when 173,540 contracts were traded with a notional value of $179.7 million.
November was a record month in terms of notional value, with a total $3.3 billion traded through the service. The average notional value traded per month from launch to the end of November was $1.4 billion, and the average number of contracts traded per month was 389,122.
Lee Betsill, of EDX London, said: “The Russian IOB service has got off to an excellent start, and is clearly meeting demand in the marketplace for exchange-traded derivatives. Twenty member firms are now using the service, and that number continues to expand with firms taking EDX membership specifically to use the Russian derivatives service. We’re looking forward to seeing the service grow and mature in what looks set to be an exciting year for EDX.”
John Keogh, a Managing Director at SIG, which provides market making for the FTSE Russia IOB derivatives service order book, said: “EDX's Russian derivatives service has really opened up access to the Russian derivatives market by giving exposure to Russia without the complexities associated with trading in the domestic market. It has also boosted the market’s quality. The pricing which we have provided to EDX’s screen-based service has improved transparency, providing a benchmark for pricing in the OTC options market, resulting in a contraction in bid-offer spreads that has helped to drive the increase in trading volumes.
“We are pleased to have come from a position where, having not previously been active in Russian derivatives, we are now one of the largest participants in Russian derivatives trading on EDX.”
Background
The FTSE Russian IOB service offers central counterparty clearing and multilateral netting of payments between participants in the Russian derivatives market. The London Stock Exchange operates both the derivatives trading platform and trading of the underlying DRs, which helps to ensure efficient processing of corporate actions and dissemination of market news, and supports the development of new derivatives products. Users of the FTSE Russian IOB service benefit from the execution and broking support from the EDX London and OMX Market Place Services at no additional cost. Settlement is into DTCC or Euroclear, and there is physical delivery of single stock derivatives.
About FTSE Russia IOB Index
The FTSE Russia IOB Index is a market capitalisation weighted index designed and calculated by FTSE Group. It measures the performance of the ten biggest and most liquid Russian Global Depositary Receipts on the London Stock Exchange's International Order book. Calculation of the index started on 23 October 2006. The index constituents; OAO Gazprom, Lukoil (OAO), Surgutneftegaz, MMC Norilsk Nickel, Unified Energy Systems of Russia, OJSC OC Rosneft, OAO Novatek, Sistema JFSC, OJSC Novolipetsk Steel and Evraz group. Full index details and ground rules are available at www.ftse.com/iob.
About EDX London
Created in 2003, EDX London combines the strength and liquidity of the London Stock Exchange with the advanced equity derivatives technology of OMX AB. EDX London is a jointly owned company, with 76 per cent held by the London Stock Exchange, and 24 per cent held by OMX AB.
Members of EDX London trade futures and options through a common order book accessible by all members of the Nordic linked exchange network, making business easier and more cost effective.
EDX London is a Recognised Investment Exchange, regulated by the United Kingdom’s Financial Services Authority.
