Two Russian brokers have invested in new systems to support their equity trading services, ahead of higher demand from institutional investors once the RTS and MICEX exchanges complete their proposed merger.
Emerging markets investment bank Renaissance Capital has announced that it will implement a trade surveillance solution, Redeye, from specialist technology provider RedKite Financial Markets.
Renaissance Capital chose the technology to help it monitor and analyse its global equities trading operations. The solution contains an insider trading module that enables Renaissance Capital to identify suspicious transactions and detect market abuse. Operating in near real time, and with tools to detect front running, RedKite estimates that the product confers 25-30% greater efficiency per compliance officer.
“Trading algorithms adapt their parameters to deal with market changes,” said Mathew Coupe, director of sales and marketing at RedKite. “When looking at market abuse, you also need to change the parameters in real time to be able to move to the market momentum and volatility. That enables you to take out a large number of false positives that might otherwise affect your perception.”
“In light of the increasing market regulation taking place around the world, in particular in Russia, it was crucial that we found a market surveillance solution,” said Mark Harris, group head of compliance, Renaissance Group.
Meanwhile Russian financial group Otkritie Capital has partnered with trading software provider QuantHouse, to launch low-latency market data MICEX via its QuantFEED solution. The collaboration was designed to allow Otkritie's international clients to gain competitive advantage from faster access to market data. It also opens up Russian securities to a broader investor audience by providing a single consolidated feed for Russian data.
QuantFEED captures raw data from within the exchange, carries out microsecond decoding and delivers normalised data. Previously, Otkritie provided standard FIX market data through a single API only for Moscow clients. The partners plan to add RTS market data before the end of 2011.
Equity trading flows into Russia are expected to grow in volume following the impending merger of Russia's two biggest exchanges, MICEX and RTS, which is expected to smooth access for international institutional investors. MICEX signed an agreement to merge with fellow Russian exchange RTS in June 2011. The combined exchange will migrate to a new trading platform and implement more streamlined post-trade processes that are more in line with international norms.
Currently RTS is denominated in US dollars and settles trades in T+4 days whilst MICEX uses the ruble and requires T+0 settlement. The T+0 settlement model involves stock being deposited prior to a trade taking place. This can be a barrier to investment for firms that are used to longer settlement cycles in other markets and is often blamed for low liquidity levels. Regulatory changes to bring Moscow in line with international market standards have already been introduced this year; in June a 30% tax on foreign investors income earned from equity sales was repealed, while a law banning insider trading was passed in late January. In August, Credit Suisse became the first broker to connect to Russia's MICEX Stock Exchange via the FIX message protocol.