National Clearing Center Signs Deal for Ruble Currency Trade 2007-07-19 07:49 (New York)

By William Mauldin

July 19 (Bloomberg) — Russia’s National Clearing Center, owned by the Moscow Interbank Currency Exchange, agreed to start clearing the exchange’s currency trades, valued at more than $1 trillion a year.
The clearing center also plans to handle over-the-counter currency trade between banks, broadening the range of currency deals that generate fees for the exchange, which is known as the Micex.
The center today signed an agreement on the exchange-based currency trades with Micex, Russia’s central bank and private banks including ZAO Gazprombank, VTB Bank, Citibank Inc. and Raiffeisen Zentralbank Oesterreich AG. Clearing for the currency trades will be switched from the Micex to the clearing center in the fall, the exchange said today in an e-mailed statement.
’’The signing of this agreement signifies the beginning of a new model for clearing in the currency market, with the National Clearing Center as the central counterparty,’’ an intermediary buyer and seller of currencies, said Viktor Utkin, chairman of the National Clearing Center, in an interview. ’’There hasn’t been a central counterparty before on the Russian market.’’
After it starts clearing currency trades in the fall, the National Clearing Center plans to take on stock and corporate-bond trading on the Micex Stock Exchange, he said.
Under current rules, investors wanting to sell stock are required to deposit the full value of the shares on the exchange. Going forward, only a fraction of the stock’s value will have to be deposited in advance of a deal, reducing the overall cost of trading, Utkin said.
The clearing center is currently working on an agreement with Clearstream International, the settlement unit of Frankfurt-based Deutsche Boerse, Utkin said.


OTC Market

When it begins clearing over-the-counter currency trades, the National Clearing Center will aim to charge participating banks a fee that is less than currency transactions on the Micex. The fee shouldn’t be so low to takes market share away from exchange-based currency trading there, Utkin said.
’’We don’t want to attract volume from the exchange, but just from the OTC market,’’ Utkin said.
The Micex charges between 0.0015 percent and 0.003 percent on ruble-dollar currency trades, depending on the size of the trade, according to a December press release.
The bourse oversees between 15 percent and 17 percent of ruble currency trading. Most of the rest is done over the counter, Utkin said. Currency trading on the Micex totaled 25.89 trillion rubles ($1 trillion) in 2006.

— Editor: Anderson.

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William Mauldin in Moscow at +7-495-771-7738 or
wmauldin1@bloomberg.net

To contact the editor responsible for this story:
Balduin Hesse at +44-20-7073-3474 or
bhesse2@bloomberg.net.