The BRICS Securities and Derivatives Markets - Hong Kong ...

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The BRICS Securities and Derivatives Markets2.4 Other international cooperation initiativesBM&FBOVESPA partnered with CME Group in the development of the PUMA TradingSystem and a derivatives order routing arrangement. This routing arrangement allowsBM&FBOVESPA customers to trade CME Group’s products through the PUMA system.Similarly, customers of CME Group can access the Brazilian derivatives market through theCME Globex platform. This was further strengthened by the signing of a cross-listingagreement in March 2012 involving S&P 500 Index futures and BOVESPA Index futures, thebenchmark futures products of the two exchanges. Besides CME Group, NASDAQ OMXhas provided technologies to BM&FBOVESPA for market data and market surveillance.Separately, BM&FBOVESPA formed an alliance with Chi-X Global in 2012 to launchChi-FX Brazil, a new trading platform for overseas investors to trade BM&FBOVESPA-listedstocks in their local currencies.Furthermore, BM&FBOVESPA has signed memoranda of understanding (MOU) with anumber of exchanges, including the Toronto Stock Exchange (TSX, now part of TMX Group),the Santiago Stock Exchange in Chile, the Colombian Stock Exchange (BVC), the MexicanExchange (BMV), the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange(SZSE).3. RUSSIAIn Russia, the principal exchange operator is Moscow Exchange MICEX-RTS (“MoscowExchange”). It was formed in December 2011 when the two principal exchange operators atthat time — MICEX Group and RTS Group — merged. Besides the Moscow-basedexchange, the group has exchange centres in regions like Ural, Volga and Siberia.There are a few regional exchanges which are not part of the Moscow Exchange Group.These include the St. Petersburg Currency Exchange, the Samara Currency InterbankExchange and the St. Petersburg Exchange (in which Moscow Exchange has a minorityshareholding). The first two exchanges, as implied by their names, focus on currencytrading while the St. Petersburg Exchange mainly trades commodities and related derivatives.The principal regulator of the exchanges and the capital market in Russia is the FederalService for Financial Markets (FFMS). The Central Bank of Russia (CBR) is responsiblefor regulating Russia’s banking industry and forex market and is the organiser of thegovernment securities market. The Federal Anti-monopoly Service (FAS) and the Ministryof Finance (MOF) are two other important supervisory bodies in Russia’s regulatoryframework, with authority over the maintenance of competition in the financial market andthe issuance of public debt securities respectively.- 8 - Research & Corporate Development, HKEx31 December 2012
The BRICS Securities and Derivatives Markets3.1 Market segmentsProducts of Moscow Exchange can be classified into forex, corporate securities, governmentsecurities and derivatives (financial and commodity). Moscow Exchange also extends itsoffering of commodity products through its associate, National Mercantile Exchange(NAMEX). Besides on-exchange products, Moscow Exchange operates an OTC marketwhich has several systems for reporting OTC trades. One function of the OTC market is tofacilitate trading in securities of foreign issuers, including depository receipts (DRs) on thesesecurities.The post-trade processing of transactions on Moscow Exchange is handled by its fivesubsidiaries — National Clearing Centre (NCC), RTS Clearing Centre (RTS-CC), NationalSettlement Depository (NSD), Depository Clearing Company (DCC) and RTS SettlementChamber (RTS-SC) — for different securities market sectors (see below) and asset classes.NCC and RTS-CC are the clearing houses for the forex market and derivatives marketrespectively. They also provide clearing services for different sectors of the securitiesmarket. Settlement and depository services for the securities market are provided by NSDand DCC. RTS-SC is a non-banking credit institution which provides settlement services totrading participants on Moscow Exchange. As the post-trade facilities of a merged exchange,these five institutions are in the process of integration.3.2 Forex marketForex trading is a significant business segment of Moscow Exchange, given that MICEX wasfounded in 1992 as a currency exchange. In 2011, total trading volume on the on-exchangecurrency market reached RUB86.8 trillion (US$3 trillion), representing 29% of the aggregateturnover on the regulated markets of Moscow Exchange. The electronic currency tradingsystem of MICEX supports trading (including currency swaps) in US dollar, euro, Ukrainianhryvnia, Kazakhstan tenge, Belarusian rouble and, since December 2010, Chinese renminbi(RMB). Similar to the global market, forex trading on MICEX has been dominated by USdollar and euro, which account for almost 100% of the trading volume.3.3 Securities marketsCorporate securities listed on Moscow Exchange comprise equities (including Russiandepository receipts (RDRs)), corporate debt securities and investment funds, and are traded onthree sectors — Main Market (formerly under MICEX), Standard, and Classica (formerlyunder RTS-SE). The Main Market is the most liquid sector, accounting for over 80% ofequity turnover and more than 99% of bond trading volume in the Russian securities market.Figure 3-1 shows the market capitalisation of domestic listed companies and the annualsecurities turnover on MICEX from 2002 to 2011.- 9 - Research & Corporate Development, HKEx31 December 2012
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