MICEX adds CCP, dark pool ahead of integration

MICEX, the domestic Russian stock exchange, has updated securities trading rules, including the launch of a central counterparty to help entice greater foreign investment.
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MICEX, the domestic Russian stock exchange, has updated securities trading rules, including the launch of a central counterparty (CCP) to help entice greater foreign investment.

Up until now, MICEX’s clearing facility, the National Clearing Centre (NCC), has been recognised by US regulator, the Securities and Exchange Commission, as a depository rather than a CCP. This meant US funds were not allowed to invest on MICEX.

MICEX trades were cleared in the NCC under its new CCP status from 1 November on a T+0 basis. While the change will allow greater foreign participation in MICEX, market observers have noted that the T+0 clearing regime, which means trades have to be fully collateralised before they can be settled, remains a major impediment.

The Russian exchange adds that the CCP will require new technology to help clear different instruments and offer new functionality.

This month, MICEX also plans to offer dark trading functionality that will enable members to trade large blocks of stock at the mid-point price displayed on the main exchange with minimum market impact. The exact date of launch and feature of the dark service will be announced in due course.

From 14 November, MICEX will add a post-trade action mechanism that will operate from 18.45 until 18.50. Market participants will also be able to receive information on orders with 20 best prices submitted in the course of the post-trading auction.

“The changes that come into force on 1 November will boost the development of the entire Russian stock market. Transition of clearing to the organisation with access to the inter-bank market and the Central Bank’s refinancing system will significantly improve the reliability and stability of Russia’s clearing and settlement infrastructure,” said Ruben Aganbegyan, president, MICEX. “This approach is consistent with best international practices. The introduction of the post-trading auction is a convenient technology which participants are accustomed to on other countries’ exchanges.”

MICEX is currently in the process of merging with Russia’s other main stock exchange, RTS, after securing approval to merge from the country’s Federal Antimonopoly Service. The two markets are expected to combine into one legal entity by December and begin the process of integrating staff and technology platforms shortly after.

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