Russian brokerage Broker Credit Service (BCS) has embarked on an expansion of its institutional electronic trading service, following the hiring of a team from rival firm Renaissance Capital.
RenCap's former electronic trading head, Stanislav Surikov, recently joined BCS as head of prime brokerage and electronic trading. He will lead a team of three, including Michael Smith, who will be responsible for sales and building up BCS's international presence via a new London office, Rizwan Kayani, who joins as COO of the institutional division and Yulia Yaroslavtseva, who will manage client relationships. Smith was previously director of electronic trading at RenCap.
Previously, BCS was primarily focused on servicing retail clients, offering direct market access and brokerage services for domestic Russian markets and access to major international markets via global brokers. The firm accounts for around 10-15% of daily trading on MICEX, one of two Russian stock exchanges, via a client base of 100,000 retail traders and between 200 and 300 domestic institutions.
“We see a great opportunity at BCS to leverage existing capabilities and extend the range of products we offer to buy-side institutions and build up prime services,” Surikov told theTRADEnews.com. “We have a huge amount of liquidity from domestic clients, so it makes sense to use this flow to our advantage.
Surikov said BCS would attract business through its ability to “eliminate the some of the costs and risks associated with the current clearing and settlement procedure” on MICEX. “We have a big inventory, due to the massive amount of retail liquidity we have internally, and will use this to offer clients short-selling capabilities and arbitrage strategies that wouldn't otherwise be possible,” he said. MICEX's National Securities Depository offers settlement on a T+0 basis, which requires cash or stock to be deposited before a transaction can take place.
As well as DMA, BCS will offer algorithmic trading tools, access to synthetic products and prime services, which Surikov deems crucial in any institutional offering involving MICEX. BCS is currently investing in the connectivity required to expand access capabilities internationally, with the aim of having a full offering up and running by the end of the year. BCS also plans to develop a tool that will allow buy-side institutions to access its internal liquidity anonymously and will expand its offering to international clients via the new London office.
The Russian post-trade environment is likely to be reformed following the merger of MICEX with RTS, the country’s other main exchange that settles on a T+4 basis. On 5 August, shareholders of both MICEX and RTS agreed to a merger of the two bourses. The deal is now awaiting the approval of the Federal Antimonopoly Service of the Russian Federation, although this is not expected to be the problem given the Russian government's support for the deal as part of its wish to turn Moscow into an international financial centre.