Moscow Exchange Launches Metals Trading Today, After Cross-listing Gold ETF Last Week

Russia's main bourse announces metals trading in an effort to modernized its commodities markets and in completion of the metal

Moscow ExchangeRussia’s local bourse, the Moscow Exchange, has announced today the launch of precious metals which began trading on October 21, 2013. The project was originally presented on June 26, 2013 to members of the exchange’s FX market division, who in addition to Forex licenses, also hold licenses to trade in precious metals.

Trading hours will be from 10:00 through 23:50 MSK, and include gold and silver contracts that are aimed at speculators as well as users of the actual commodity, including hedgers. The fungibility of the metals can be treated as collateralized deposits, and thereby enable firms to use the metals as cash assets to refinance with the Central Bank of Russia and on the interbank market via the new metals account.

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According to the press release posted on the corporate website, metals trading will be conducted via its FX market’s trading and clearing platform, allowing trading members to employ the platform risk management system, have positions unified with FX instruments, and to use existing settlement codes RUB, USD, EUR, and CNY. Quotes are set in RUB per gram, and trades are settled in RUB, and precious metals are eligible as collateral.

Metals Trading via Moscow Exchange FX Members

The National Clearing Center acts as the central counterparty and clearing house to which member firms are liable. Banks should be able to make transactions in bullion by the end of the month, and Brinks and ТBSS, which specialize in transporting and storing precious metals, were chosen to tender the precious commodities.

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According to information posted on the Moscow Exchange’s website, the total trading volume of the exchange’s FX market was RUB 117 trillion, up 34.7% year-on-year in 2012. Overall volume of spot trades was RUB 61.5 trillion and swap-trading volume was RUB 55.4 trillion (up 31.2% and 38.8% year-on-year respectively) as of 2012. The positive dynamics were attributed to being driven by both favorable market conditions for this segment, and a series of major innovations introduced by the exchange in 2012.

The enhancements announced today to its commodities markets, with the addition of metals, serves to be a key part of its modernized exchange trading offering which ranks among the world’s top 20 exchanges by total capitalization of securities traded, and also among the 10 largest exchange platforms by bonds and derivatives trading, according to its corporate website.

Metals Trading Follows Last Week’s Cross-Listing of Gold ETF

The Russian market is seeing a strong demand for high quality commodity assets from all investor categories.The exchange hinted that it would launch trading in platinum and palladium in the first half of 2014, if there is enough interest from investors.

Moscow Exchange FinEx GOLD ETFThis follows last week’s launch from the Moscow Exchange with UK-based ETF issuer FinEx Group for a gold ETF that tracks the London gold fixing price set in USD every trading day, and priced in RUB under the name ‘FinEx Physically Held Gold ETF (USD).’ The ETF has been cross-listed on the Irish Stock Exchange since March, where the fund was first launched before arriving at the Russian Bourse late last week.

The topic of Forex regulation in Russia will continue to be discussed this the week by Forex Magnates in advance of key meetings and reviews by state regulators in the region, pertaining to the future challenges and growth opportunities for the FX asset class, both off-exchange and on-exchange in the newly developed advanced economy.

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