Moscow Exchange: Shaping Russia’s Financial Markets

Ruben Aganbegyan of the newly formed MICEX-RTS (Moscow Exchange) discusses the challenges and benefits presented by the recent merger both locally and globally.

The Impact of the Exchange Merger on Trading in Russia
The merger lays the foundation for tomorrow’s success today. It is a landmark transaction for the Russian market. The primary challenge faced by the united exchange is withstanding foreign competition. Therefore the most important benefit of the merger will be the market’s increased competitiveness and stronger position in the international arena. Both RTS and MICEX bring enough to the table to complement one another. MICEX came with a strong position in cash equities, fixed income and FX trading. RTS came with derivatives and clearing. This has created a very strong basis for growth and increased investment into new products and technologies. In general, the united platform will provide better infrastructure for Russian capital markets. Moscow Exchange plans to have a strong voice in shaping Russia’s financial markets and will become a regional financial hub with the potential to create a CIS exchange platform network.

The Financial Impact of the Merger
We understand that the market expects us to reduce costs and create a comfortable environment for business. Our fee policy is determined by the Supervisory Board, which makes decisions based on the recommendations of the Customers’ Committee. Fee changes are subject to the approval of this committee in a vote of at least 75% of its members. If the Customers’ Committee has objections, the resolution in question will be reconsidered in order to find common ground. The Supervisory Board can lift the veto imposed by the Customers’ Committee, but only in order to resolve a dividend situation.

Algorithmic Trading
Algorithmic trading already accounts for a large percentage of trading on MICEX-RTS. There is a global trend toward an increased share of algorithmic trading at all exchanges. This makes it necessary for banks and brokerages to expand their infrastructures in order to process the rising volumes of trades and orders. The exchange also needs to develop both technologies and regulations concerning algorithmic and high frequency trading (HFT).

We have extensive plans for improving the trading environment for HFT and algo traders. MICEX-RTS will modernize its technology infrastructure and provide a seamless transition and uniform access to its participants. The exchange already provides access via the internationally recognized FIX Protocol and allows qualifying clients to host their HFT platforms at co-location facilities. The technology migration and upgrade plans will take place during the next year.

Currently the priorities for technological development are reducing data distribution intervals, expanding core services capacity and stabilizing FIX solutions.

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